<PAGE>
As filed with the Securities and Exchange Commission on December 7, 1999
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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US Unwired Inc.*
(Exact name of registrant as specified in its charter)
Louisiana 4812 72-1457316
(State or other (Primary standard industrial (IRS employer
jurisdiction classification code number) identification number)
of incorporation or
organization)
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
(800) 673-2200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
---------------
Thomas G. Henning
General Counsel and Secretary
US Unwired Inc.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
(318) 436-9000
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Copies to:
Anthony J. Correro, III
Louis Y. Fishman
Correro Fishman Haygood Phelps
Walmsley & Casteix, L.L.P.
201 St. Charles Avenue, 46th Floor
New Orleans, Louisiana 70170-4600
(504) 586-5252
---------------
Approximate date of commencement of proposed sale of the securities to the
public: As soon as practicable after this registration statement becomes
effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Amount Maximum Aggregate Amount of
Title of Each Class of Securities to be Offering Price Offering Registration
to be Registered Registered Per Unit(1) Price(1) Fee
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<S> <C> <C> <C> <C>
13 3/8% Series B Senior Subordinated
Discount Notes Due 2009............. $209,224,000 100% $211,748,850 $55,901.70(1)
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Guarantees of 13 3/8% Series B Senior
Subordinated Discount Notes due
2009................................ -- -- -- -- (2)
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</TABLE>
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(1) Calculated in accordance with Rule 457(f)(2). For purposes of this
calculation, the Maximum Aggregate Offering Price is the aggregate book
value of the Series A Notes at November 30, 1999, that may be received by
US Unwired Inc. or cancelled in the exchange transaction in which the
Series B Notes will be offered.
(2) Pursuant to Rule 457(n), no registration fee is required for the guarantee
of the Series B Notes registered hereby.
The Registrants hereby amend this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the SEC, acting pursuant to said
Section 8(a), may determine.
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* Some of the subsidiaries of US Unwired Inc. will guarantee the securities
being registered hereby and are therefore registrants also. Information about
such additional registrants appears on the following page.
<PAGE>
ADDITIONAL REGISTRANTS
Louisiana Unwired, LLC
(Exact name of registrant as specified in its charter)
Louisiana 4812 72-1407430
(State or other (Primary standard industrial (IRS employer
jurisdiction classification code number) identification number)
of incorporation or
organization)
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
(800) 673-2200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------
Thomas G. Henning
General Counsel and Secretary
US Unwired Inc.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
(318) 436-9000
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Copies to:
Anthony J. Correro, III Louis Y. Fishman
Correro Fishman Haygood Phelps
Walmsley & Casteix, L.L.P.
201 St. Charles Avenue, 46th Floor
New Orleans, Louisiana 70170-4600
(504) 586-5252
----------------
Unwired Telecom Corp.
(Exact name of registrant as specified in its charter)
Louisiana 4812 72-0647424
(State or other (Primary standard industrial (IRS employer
jurisdiction classification code number) identification number)
of incorporation or
organization)
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
(800) 673-2200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
----------------
Thomas G. Henning
General Counsel and Secretary
US Unwired Inc.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
(318) 436-9000
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
Copies to:
Anthony J. Correro, III Louis Y. Fishman
Correro Fishman Haygood Phelps
Walmsley & Casteix, L.L.P.
201 St. Charles Avenue, 46th Floor
New Orleans, Louisiana 70170-4600
(504) 586-5252
----------------
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER 7, 1999
PROSPECTUS
[US Unwired Logo]
Offer to Exchange
$1,000 principal amount of 13 3/8% Series B Senior Subordinated Discount Notes
due 2009
for each $1,000 principal amount of existing
13 3/8% Series A Senior Subordinated Discount Notes due 2009
($400,000,000 principal amount outstanding)
THE EXCHANGE OFFER
. Expires 5:00 p.m., New York City time, , 2000, unless extended.
. The exchange offer is not conditioned upon a minimum aggregate principal
amount of existing notes being tendered.
. All existing notes tendered according to the procedures in this prospectus
and not withdrawn will be exchanged.
. The exchange offer is not subject to any condition other than that it not
violate applicable laws or any applicable interpretation of the staff of the
SEC or conflict with any threatened judicial or administrative proceeding.
THE EXCHANGE NOTES
. The terms of the exchange notes to be issued in the exchange offer are
substantially identical to the existing notes, except that we will issue the
exchange notes in a transaction registered with the SEC. In addition, the
exchange notes will not be subject to the transfer restrictions to which the
existing notes are subject, and provisions relating to the payment of
liquidated damages will be eliminated.
. The exchange notes, like the existing notes, will be general unsecured
obligations of US Unwired. They rank junior in right of payment to our
senior debt and equal in right of payment to our other existing and future
senior subordinated debt. As of September 30, 1999, assuming we had
completed our financings and applied the proceeds as intended, we would have
had approximately $9.9 million of senior debt.
. The exchange notes, like the existing notes, will bear interest at the rate
of 13 3/8% per year, payable semi-annually in arrears on each May 1 and
November 1, beginning May 1, 2005.
. The exchange notes, like the existing notes, will be fully and
unconditionally guaranteed by all of our existing and future restricted
subsidiaries, excluding our operating subsidiary that holds all of our local
exchange operating assets. You should carefully consider the risk factors
beginning on page 19 of this prospectus. Please note that a holder of
existing notes is already subject to most of these risk factors.
----------------
Neither the SEC nor any state securities commission has approved or
disapproved of these securities 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 , 2000.
<PAGE>
FOR NEW HAMPSHIRE RESIDENTS
Neither the fact that a registration statement or an application for a
license has been filed under RSA 421-B with the State of New Hampshire nor the
fact that a security is effectively registered or a person is licensed in the
State of New Hampshire constitutes a finding by the Secretary of State of New
Hampshire that any document filed under RSA 421-B is true, complete and not
misleading. Neither any such fact nor the fact that an exemption or exception
is available for a security or a transaction means that the Secretary of State
of New Hampshire has passed in any way upon the merits or qualifications of, or
recommended or given approval to, any person, security or transaction. It is
unlawful to make, or cause to be made, to any prospective investor, customer or
client any representation inconsistent with the provisions of this paragraph.
FOR UNITED KINGDOM RESIDENTS
There are restrictions on the offer and sale of securities in the United
Kingdom. No action has been taken to permit the Notes to be offered to the
public in the United Kingdom. This document may only be issued or passed on in
or into the United Kingdom to any person to whom the document may lawfully be
issued or passed on by reason of, or of any regulation made under, Section 58
of the Financial Services Act 1986 of the United Kingdom. It is the
responsibility of all persons under whose control or into whose possession this
document comes to inform themselves about and to ensure observance of all
applicable provisions of the Public Offers of Securities Regulations 1995 and
the Financial Services Act 1986 of the United Kingdom in respect of anything
done in relation to the Notes in, from or otherwise involving the United
Kingdom.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Frequently Used Terms......................................................
Special Note Regarding Forward-Looking Statements.......................... 1
Note Regarding Industry Data............................................... 1
Summary.................................................................... 2
Risk Factors............................................................... 19
Risks Related to the Exchange Offer...................................... 19
If you do not properly tender your existing notes, you will continue to
hold unregistered notes and your ability to transfer your existing
notes will be impaired................................................ 19
We cannot be sure than an active trading market will develop for the
Notes................................................................. 19
Risks Related to US Unwired.............................................. 20
We have substantial indebtedness which could adversely affect our
financial health and prevent us from fulfilling our obligations under
the Notes............................................................. 20
We will require a significant amount of cash to service our
indebtedness. Our ability to generate cash depends on many factors
beyond our control.................................................... 21
Your right to receive payments on the Notes is junior to our and our
guarantor subsidiaries' existing indebtedness and possibly all of our
and our guarantor subsidiaries' future borrowings..................... 21
Not all of the subsidiaries will guarantee the Notes................... 22
Unexpected events may cause us to change our financing requirements.... 22
We may be unable to implement a major communications network
successfully.......................................................... 23
Our success depends on our relationship with Sprint PCS and its
success............................................................... 24
Our relationship with Sprint or its successor may be adversely affected
by the proposed merger of Sprint and MCI WorldCom..................... 24
Our competitors may have more resources or other advantages which may
make it difficult for us to compete effectively....................... 25
Changes in technology and customer demands could adversely affect us... 26
If the Sprint PCS network is not built out on a nationwide basis, we
may not be able to provide our customers with the traveling services
they demand........................................................... 26
Year 2000 issues could cause interruption or failure of our computer
systems............................................................... 27
Our geographical proximity to the Gulf Coast may cause us to face
service interruptions associated with inclement weather conditions.... 27
Risks Related to the Industry............................................ 28
We are subject to broad and evolving government regulation............. 28
The loss of any of our FCC licenses would impair our business and
operating results..................................................... 28
The future prospects of the PCS industry remain uncertain.............. 30
Subscriber turnover is greater in the PCS industry than in the cellular
industry.............................................................. 30
Radio frequency emissions may pose health concerns..................... 31
Risks Related to the Notes............................................... 31
We may not be able to satisfy our obligations owed to you if change of
control events occur.................................................. 31
Federal and state statutes allow courts, under specific circumstances,
to void or modify the Notes and the guarantees of the Notes........... 31
You may face tax and bankruptcy law concerns........................... 32
The Exchange Offer......................................................... 33
Use of Proceeds............................................................ 45
Capitalization............................................................. 46
Selected Historical Consolidated Financial Information..................... 47
Management's Discussion and Analysis of Financial Condition and Results of
Operations................................................................ 49
The Wireless Communications Industry....................................... 64
Business................................................................... 67
Sprint PCS Agreements...................................................... 91
Management................................................................. 99
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Certain Relationships and Related Transactions.............................. 105
Securities Ownership of Certain Beneficial Owners and Management............ 108
Certain Indebtedness........................................................ 110
Description of Notes........................................................ 112
Description of Capital Stock................................................ 155
Certain U.S. Federal Tax Considerations..................................... 160
Plan of Distribution........................................................ 166
Legal Matters............................................................... 167
Available Information....................................................... 167
Experts..................................................................... 168
Index to Financial Statements............................................... F-1
</TABLE>
<PAGE>
FREQUENTLY USED TERMS
For purposes of this prospectus, "PCS" refers to personal communication
systems. "US Unwired," "we," "us" and "our" refer to US Unwired Inc. and its
subsidiaries and affiliates. "LA Unwired" refers to Louisiana Unwired, LLC, the
PCS operating subsidiary of US Unwired. "Sprint PCS" refers to SprintCom, Inc.
and Sprint Spectrum L.P. and other affiliates of Sprint PCS. "Sprint" refers to
Sprint Corporation and its affiliates, other than Sprint PCS. "Exchange notes"
refers to the 13 3/8% Series B Senior Subordinated Discount Notes due 2009 that
we are offering by this prospectus. "Existing notes" refers to our outstanding
13 3/8% Series A Senior Subordinated Discount Notes due 2009. "Notes" refers to
both the existing notes and the exchange notes. A "holder," "Holder" or
"registered holder" means any person in whose name Notes are registered on the
books of US Unwired, and any participant in a book-entry transfer facility
whose name appears on a security position listing as the owner of Notes. A
"beneficial owner" of Notes means any person whose Notes are held in the name
of a nominee who is the registered holder of the Notes.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
All statements contained in this prospectus, as well as statements made in
press releases, and oral statements that may be made by us or any of our
officers, directors or employees acting on our behalf, that are not statements
of historical fact, including, but not limited to, statements regarding our
current business strategy, future operations, technical capabilities,
construction plan and schedule, commercial operations schedule, funding needs,
prospective acquisitions or joint ventures, financing sources, pricing, future
regulatory approvals, markets, size of markets for wireless communications
services, financial position, estimated revenues, projected costs, prospects,
plans and objectives of management, as well as information concerning expected
actions of third parties, such as equipment suppliers, service providers and
roaming partners, and expected characteristics of competing systems are based
upon current expectations and constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 and, as
such, speak only as of the date made. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors that could cause our
actual results to be materially different from historical results or from any
future results expressed or implied by such forward-looking statements. Among
the factors that could cause actual results to differ materially are the
following: the availability of sufficient capital to finance our business plan
on terms satisfactory to us; competitive factors; changes in labor, equipment
and capital costs; our ability to obtain necessary regulatory approvals;
technological changes; our ability to comply with the indenture relating to the
Notes and the terms of our other credit agreements; future acquisitions or
strategic partnerships; general business and economic conditions; and other
factors described under the heading "Risk Factors." We wish to caution readers
not to place undue reliance on any forward-looking statements. In addition to
statements that explicitly describe such risks and uncertainties, readers are
urged to consider statements that include the terms "believes," "belief,"
"expects," "plans," "anticipates," "intends," "estimates," "projects" or the
like to be uncertain and forward-looking. We have no obligation to update or
revise publicly any forward-looking statements, whether as a result of new
information, future events or otherwise. Although we believe that the
expectations underlying the forward-looking statements are reasonable, we
cannot assure that such expectations will prove to be correct.
We disclose important factors that could cause our actual results to differ
materially from our expectations under the heading "Risk Factors" and elsewhere
in this prospectus. These disclosures qualify all forward-looking statements
attributable to us or persons acting on our behalf.
NOTE REGARDING INDUSTRY DATA
The industry data presented in this prospectus is based upon third party
data or has been derived from sources of industry data. Even though we believe
that this industry data is reasonable and reliable, in certain cases the data
cannot be verified by information available from independent sources.
Accordingly, we cannot give you any assurance that the industry data is
accurate in all material respects.
1
<PAGE>
PROSPECTUS SUMMARY
This summary highlights selected information from this prospectus to help
you understand our business and the terms of the exchange notes. You should
carefully read all of this prospectus to understand fully our business and the
terms of the exchange notes as well as some of the other considerations that
may be important to you in connection with your interest in the Notes and the
exchange offer.
The Company
General
We have the largest population coverage and the most subscribers of any
affiliate of Sprint PCS, the fastest growing wireless company in the United
States. We intend to be a leading provider of wireless PCS service throughout
the Gulf States region by marketing our services under the Sprint PCS name.
Sprint and MCI WorldCom announced on October 5, 1999 that the boards of
directors of both companies have approved a definitive merger agreement whereby
the two companies would merge to form a new company called WorldCom. The merger
is subject to various conditions, including the approvals of the shareholders
of both companies, the Federal Communications Commission, the Justice
Department, various state government bodies and foreign antitrust authorities.
We do not expect the merger to have a negative impact on our affiliation with
Sprint or its successor if the merger is completed.
Our service area covers eastern Texas, southern Oklahoma, southern Arkansas,
significant portions of Louisiana, Alabama and Mississippi, the Florida
panhandle and southern Tennessee, and is contiguous with Sprint PCS's recently
launched markets of Houston, Dallas, Little Rock, New Orleans, Birmingham,
Tallahassee and Memphis. We are constructing a 100% digital, 100% wireless PCS
network that, when complete, will include a service area covering a population
of approximately 9.9 million. As of September 30, 1999, we had built out our
network in nine markets covering a population of approximately 3.0 million and
were providing wireless PCS service to approximately 33,000 subscribers
(assuming completion of the Meretel transaction described in the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations"). We intend to complete the construction of our network
by June 2001. After the completion of this financing, our buildout plan will be
fully funded.
Under a long-term management agreement with Sprint PCS, we have the
exclusive right to offer Sprint PCS products and services, on spectrum licensed
to Sprint PCS, throughout our entire service area under the Sprint(R) and
Sprint PCS(R) brand names. Our exclusive relationship with Sprint PCS allows us
to take advantage of the strength and reputation of Sprint PCS's national
brand. We believe that the benefits of our affiliation with Sprint PCS in our
service area include:
.strong brand recognition and national marketing campaigns;
.exclusive Sprint PCS traveling partner;
2
<PAGE>
.access to Sprint PCS products and services;
.availability of Sprint PCS "Free and Clear" one-rate pricing plans;
.nationwide coverage;
.established direct and indirect distribution channels;
.volume-driven vendor discounts;
.access to Sprint PCS engineering and network design;
.reduced startup costs;
.long-term management agreement; and
.availability of technology and service advances developed by Sprint PCS.
We manage our operations to perform to the high standards of service and
technical quality by which Sprint PCS is known and on which Sprint PCS has
built the fastest growing wireless company in the United States.
In addition to our wireless PCS service, we provided cellular and paging
service to approximately 85,000 subscribers in southwest Louisiana as of
September 30, 1999. Our Louisiana cellular and paging business had $39.8
million in revenues for the 12 months ended September 30, 1999.
We have a long heritage in the telecommunications business. The Henning
family, which controls US Unwired, has been involved in telecommunications
continuously since 1928. The Henning family has a history of being first-to-
market in southwestern Louisiana with many major telephony developments,
including first wireline operator in Cameron Parish, Louisiana (1928), first
cellular provider in southwestern Louisiana (1987) and first PCS service
provider in southwestern Louisiana (1997).
We funded the initial phase of the PCS network buildout through a sale of
our non-Louisiana cellular assets in 1998. The net proceeds from the sale of
the cellular properties were reinvested in the development of our PCS
properties.
We recently raised additional capital through a $50 million investment by
The 1818 Fund III, L.P., a Delaware private equity partnership managed by Brown
Brothers Harriman & Co. That investment is structured as Series A preferred
stock that is convertible into 13.8% of the common equity of US Unwired,
assuming the exercise of options granted to management to purchase up to
500,000 shares of the common equity. The proceeds of the sale of the preferred
stock, together with our available senior credit facilities and the proceeds of
the offering of the existing notes, all of which are referred to as our
financings, will be used to fund the full buildout of our PCS network and for
other general corporate purposes.
3
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Sprint PCS
Sprint, a diversified telecommunications provider, launched, through an
affiliate, the first commercial PCS service in the United States in 1995. Since
that time, Sprint PCS, a group of subsidiaries of Sprint, has engaged in the
development of PCS as a wireless standard and is continuing an aggressive
campaign to deploy a nationwide 100% digital, 100% PCS network through its own
efforts and affiliations with third party wireless operators such as ourselves.
As of September 30, 1999, Sprint PCS, together with its affiliated
companies, operated PCS systems within the United States and its territories
covering approximately 180 million people in more than 280 metropolitan markets
and provided service to nearly 4.7 million subscribers.
Our Affiliation with Sprint PCS
As an affiliate of Sprint PCS, we have entered into management agreements
with Sprint PCS under which we will have the exclusive right to market Sprint
PCS products and services in our service area on spectrum for which Sprint PCS
acquired licenses from the Federal Communications Commission in 1994 and 1996.
These agreements govern our relationship with Sprint PCS, stipulate
construction and performance guidelines and are structured with the following
principal points:
. each agreement has a term of 50 years with an initial period of 20 years
and three automatic, successive 10-year renewal periods;
. each agreement requires total collected revenue sharing of 8% to Sprint
PCS and 92% to US Unwired, except that US Unwired retains 100% of
revenues from non-US Unwired Sprint PCS customers traveling in our
service area, extraordinary income and equipment sales; and
. each agreement contains various put and call options regarding both the
sale of our PCS business and network and/or the purchase of the Sprint
PCS licenses upon termination or breach of contract by either us or
Sprint PCS.
We believe that our service area is important to Sprint PCS's plan to have a
100% digital, 100% PCS network with nationwide coverage. To date, Sprint PCS
has made considerable investments in the licenses covering our service area. We
estimate that Sprint PCS paid over $100 million to acquire the PCS licenses in
our service area and to clear the licensed markets for microwave radio
frequency service.
Benefits of Our Affiliation with Sprint PCS
Our exclusive relationship with Sprint PCS provides us with many operational
and business advantages, including:
Exclusive access to Sprint PCS products and services. We are the
exclusive provider of Sprint PCS's 100% digital, 100% PCS products and
services in our service area. We have the right to market Sprint PCS
products and services in our service area and provide these products and
services under the Sprint(R) and Sprint PCS(R) brand names.
4
<PAGE>
Strong brand recognition and national advertising support. We expect to
benefit from the strength and reputation of the Sprint(R) and Sprint PCS(R)
brands. In our local markets, we have the royalty-free use of the Sprint(R)
and Sprint PCS(R) brands and logos, and we benefit from Sprint PCS's
national advertising campaigns and developed marketing programs at no
additional cost.
Sprint PCS "Free and Clear" one-rate pricing plans. We offer to our
customers the same strategic free long distance, free traveling on the
Sprint PCS network and accompanying promotional campaigns, including
handset and accessory promotions, that Sprint PCS offers to all of its
customers throughout the United States.
Established distribution channels. We have access to all the national
distribution channels used by Sprint PCS. These channels include:
. major national third party retailers such as Radio Shack, Office
Depot, Circuit City, Dillard's, Sam's Wholesale Club, Office Max and
Best Buy;
. Sprint PCS's national inbound telemarketing sales program;
. Sprint PCS's Business-to-Business and national accounts sales
programs; and
. Sprint PCS's electronic commerce sales platform.
Nationwide coverage. We operate our PCS network seamlessly with the
Sprint PCS network. This provides our customers with the ability to place
calls in any Sprint PCS service area throughout the United States without
incurring charges for traveling on Sprint PCS's network or, under certain
pricing plans, incurring long distance charges.
Exclusive traveling partner to Sprint PCS. We are the exclusive provider
of traveling services for all non-US Unwired Sprint PCS customers in our
service area and benefit from the increased traffic created by other Sprint
PCS customers who travel in our service area.
Sprint PCS engineering and network design. In markets where we utilize
spectrum owned by Sprint PCS, Sprint PCS provides the engineering services
required for microwave clearance and handles all of the design, planning
and relocation of any radio cell sites.
Economies of scale of a nationwide network. We have access to network
and subscriber equipment under Sprint PCS's vendor contracts that provide
for volume discounts. These discounts will reduce the overall capital
required to build our PCS network and will lower the cost of subscriber
equipment.
Reduced startup costs. We estimate that Sprint PCS spent over $100
million to purchase a substantial portion of the licenses covering our
service area and for microwave clearing. As a Sprint PCS affiliate, we did
not have to acquire most of the licenses, and this reduced our start-up
costs.
Availability of technology and service advances developed by Sprint PCS.
Sprint PCS's extensive research and development effort produces ongoing
benefits through both new technological products as well as enhanced
service features. We have immediate access to any developments produced by
Sprint PCS for use over the nationwide PCS network.
5
<PAGE>
Our Competitive Strengths
In addition to the advantages provided by our strategic affiliation with
Sprint PCS, we have the following competitive strengths:
Extensive territorial reach. With a population of approximately 9.9
million in our service area, we cover a significant percentage of the
population in the Gulf States region (which includes Louisiana,
Mississippi, Alabama, eastern Texas, and the Florida panhandle), southern
Tennessee, southern Arkansas and southern Oklahoma. Our service area
possesses characteristics that are favorable to wireless communications,
which include:
. extensive highway miles and commuter zones;
. high commuter activity;
. concentration of major industries;
. major regional tourist destinations; and
. a large number of higher education institutions.
Existing corporate infrastructure. We retained most of our corporate
staff following the sale of our non-Louisiana cellular assets to assist in
the buildout of our Sprint PCS network. Accordingly, we have internal
capabilities to handle billing, customer care, accounting, treasury and
legal services in our markets where we currently offer PCS service and a
substantial majority of our new markets. We believe that providing these
functions ourselves is more cost-effective than outsourcing them to third
parties. In a limited number of markets, however, Sprint PCS will provide
us on a contract basis with selected back office functions such as billing
and customer care.
Cash flow from cellular and paging operations. Our cellular and paging
operations provide a significant source of funding for the buildout of our
PCS network. Our internally-generated cash flow reduces our need to access
outside capital to fund our business plan.
Significant number of owned licenses. In addition to the licenses
provided to us through our agreements with Sprint PCS, we own thirteen 10
MHz PCS licenses and three 25 MHz cellular licenses within our service area
and nine 10 MHz PCS licenses outside our service area. Combining the Sprint
PCS licenses with our own licenses, we have access to 40 MHz of bandwidth
in many of our markets. We believe that this access positions us well for
the possible future introduction of wireless internet and data transmission
service.
High-quality customer care. We are committed to building strong customer
relationships by providing high-quality customer care. We serve our
customers from our state-of-the-art call center facility in Lake Charles,
Louisiana. Our customer care representatives are accessible from any of our
handsets at no charge to the customer. Additionally, we are staffing each
of our retail outlets with full-time customer care representatives to
interface directly with the customers concerning billing and service
issues. Our web-based services include online account information that
allows customers to check billing or otherwise manage their accounts.
6
<PAGE>
Our Business Strategy
Our principal business strategy is to become the leading provider of
wireless PCS services in each market in our service area. We intend to achieve
this goal by offering high-capacity, high-quality, advanced communications on
our 100% digital, 100% PCS wireless network. We believe the following elements
of our business strategy will distinguish our wireless service offerings from
those of our competitors and will enable us to compete successfully in the
wireless communications marketplace:
Leverage relationship with Sprint PCS. We intend to capitalize on the
benefits from our relationship with Sprint PCS:
. strong brand recognition and national marketing campaigns;
. exclusive Sprint PCS traveling partner;
. access to Sprint PCS products and services;
. availability of Sprint PCS "Free and Clear" one-rate pricing plans;
. nationwide coverage;
. established direct and indirect distribution channels;
. volume-driven vendor discounts;
. access to Sprint PCS engineering and network design;
. reduced startup costs;
. long-term management agreement; and
. availability of technology and service advances developed by Sprint
PCS.
Execute integrated marketing plan. Our marketing approach leverages
Sprint PCS's nationwide presence and brand name. We emphasize the improved
quality, enhanced features and favorable pricing of Sprint PCS service. In
addition, we leverage the clout of the Sprint PCS organization through
Sprint PCS's:
. household name recognition;
. dynamic national advertising campaigns;
. reputation for providing high-end quality product and service;
. organized national accounts sales force;
. e-commerce website; and
. pre-negotiated contracts with national retail chain outlets.
On the local level, we offer a complementary strategy through:
. multi-media marketing efforts, including point-of-sale, print,
television and radio campaigns for our own co-branded US Unwired(R)
and Sprint PCS(R) retail outlets;
. our network of approximately 270 independent agent representatives;
and
. direct mail efforts and our website, www.usunwired.com.
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<PAGE>
Execute high-quality buildout plan. We are constructing a state-of-the-art,
high quality 100% PCS network utilizing 100% digital technology.
. Our network design has a high density of cell sites which, together
with the use of digital PCS technology, allow our system to handle
higher traffic demand than cellular operators, thereby allowing us to
offer lower per-minute rates.
. Our network design allows extensive use of micro- and mini-cell sites
to service expensive, difficult to reach locations and coverage gaps
within our wireless network.
. We will maintain low construction costs for our network by planning to
co-locate on existing towers as our primary strategy and developing
our radio frequency design around this strategy.
Network Buildout and Financing Plan
We expect the combined proceeds of our financings to meet our anticipated
funding requirements of $294.7 million to provide full buildout of our PCS
network and funding of anticipated operating losses for the period from July
1999 through December 2001. Simultaneously with the offering of the existing
notes, we issued to The 1818 Fund $50 million of Series A preferred stock, the
proceeds of which we will use for general corporate purposes, including the
buildout of our PCS network. Under our current business model, we anticipate no
need to return to the capital markets for any additional financing for the
foreseeable future and expect to be self-funding for working capital and
maintenance capital expenditures.
As of September 30, 1999, we had completed the buildout and launched our PCS
service in the following nine markets covering an aggregate population of
approximately 3.0 million: Alexandria, Houma, Lake Charles, Monroe and
Shreveport, Louisiana and Beaumont, Longview-Marshall, Texarkana and Tyler,
Texas. When we complete our network buildout, we expect to cover 55% to 75% of
the population in a majority of markets in our service area.
We anticipate that we will complete network construction of our markets and
be providing PCS service to a licensed population of approximately 3.4 million
by December 1999, to a licensed population of approximately 8.4 million by
December 2000, and to our entire service area of approximately 9.9 million
licensed population by June 2001. We are providing the overall project and
construction management of the design, site acquisition, installation and
testing of our PCS transmission system.
Network communications equipment. Lucent Technologies, Inc. will supply the
radio base stations, switches and other related PCS transmission equipment,
software and services necessary for our seven built out markets and our markets
that we expect to build out by December 2000. Lucent has assigned a dedicated
project management team to assist us in the installation and testing of the
transmission equipment. We are currently entertaining competing bids for the
provision of these products and services for our remaining markets.
8
<PAGE>
Corporate Structure
The following chart illustrates our proposed corporate structure, and
identifies our Subsidiary Guarantors, following the completion of our
financings and other future events described in this prospectus, assuming we
apply the proceeds as intended:
[Chart appears here]
Unwired Telecom Corp., a Louisiana corporation, is an operating subsidiary
that holds all of our owned cellular licenses and cellular and paging operating
assets.
US Unwired is a Louisiana corporation with principal executive offices at
One Lakeshore Drive, Suite 1900, Lake Charles, Louisiana 70629. Our phone
number is (800) 673-2200, and our website is www.usunwired.com. LA Unwired is a
Louisiana limited liability company. The mailing addresses and phone numbers of
the principal executive offices of LA Unwired and Unwired Telecom are the same
as US Unwired's.
9
<PAGE>
Summary of the Exchange Offer
On October 29 1999, we completed a private offering of $400,000,000 in
aggregate principal amount at maturity of 13 3/8% Series A Senior Subordinated
Discount Notes due 2009. These existing notes were sold for a total purchase
price of $209,224,000.
We entered into a registration rights agreement with the initial purchasers
in the private offering in which we agreed, among other things, to deliver to
you this prospectus and to use our commercially reasonable efforts to issue the
exchange notes on the earliest practicable date and, in any event, within 30
business days of the effectiveness of the registration statement of which this
prospectus is a part. If we fail to satisfy our registration obligations under
the registration rights agreement, each holder of existing notes will be
entitled to receive liquidated damages equal to $.05 per week per $1,000
principal amount held. The liquidated damages will be increased by $.05 per
week per $1,000 principal amount of existing notes for each 90-day period
during which the exchange notes are not issued. The maximum amount of
liquidated damages is $.50 per week per $1,000 principal amount of existing
notes.
This exchange offer entitles you to exchange your existing notes for
exchange notes that are issued in a transaction that is registered with the SEC
and which have substantially identical terms to the existing notes with the
exceptions noted immediately below this paragraph. After the exchange offer is
complete, you will no longer be entitled to any exchange or registration rights
for your existing notes or your exchange notes. We believe that the exchange
notes that will be issued in this exchange offer may be resold by you without
compliance with the registration and prospectus delivery provisions of the
Securities Act, subject to specified conditions. You should read the discussion
under the headings "Summary of Terms of Exchange Notes," "The Exchange Offer"
and "Description of the Notes" for further information about the exchange
notes.
The Exchange Offer........ We are offering to exchange the existing notes for
up to $400,000,000 principal amount of the exchange
notes. Existing notes may be exchanged only in
increments of $1,000 principal amounts.
The terms of the exchange notes are substantially
identical to the existing notes, except that the
exchange notes will not be subject to transfer
restrictions and holders of exchange notes will
have no registration rights. Also, the exchange
notes will not contain provisions for the payment
of liquidated damages.
Resale.................... We believe the exchange notes may be offered for
resale, resold and otherwise transferred by you
without compliance with the registration and
prospectus delivery provisions of the Securities
Act provided that:
. you acquire the exchange notes in the ordinary
course of your business;
. you are not participating and have no
understanding with any person to participate in
the distribution of the exchange notes issued to
you; and
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<PAGE>
. you are not our affiliate.
If you are a broker-dealer that is issued exchange
notes for your own account in exchange for existing
notes acquired by you as a result of market-making
or other trading activities, you must acknowledge
that you will deliver a prospectus meeting the
requirements of the Securities Act in connection
with any resale of the exchange notes. You may use
this prospectus for an offer to resell, resale or
other retransfer of the exchange notes issued to
you.
Expiration Date........... , 2000, at 5:00 p.m., New York City time,
unless we extend the exchange offer. It is possible
that we will extend the exchange offer until all
existing notes are tendered. You may withdraw
existing notes you tendered at any time before 5:00
p.m., New York City time, on the expiration date,
as described under the headings "The Exchange
Offer--Terms of the Exchange Offer; Period for
Tendering Existing Notes" and "The Exchange Offer--
Withdrawal Rights."
Interest on the Notes..... The exchange notes, like the existing notes, will
bear interest at a rate of 13 3/8% per year,
payable semi-annually on May 1 and November 1,
commencing May 1, 2005. April 15 and October 15 are
the record dates for determining holders entitled
to interest payments.
Conditions to the
Exchange Offer........... The exchange offer is subject only to the following
conditions:
. the exchange offer must comply with applicable
laws or any applicable interpretation of the
staff of the SEC; and
. no judicial or administrative proceeding shall
have been threatened that would limit us from
proceeding with the exchange offer.
Conditions to the
Exchange of your
Existing Notes........... The exchange of your existing notes is subject only
to the following conditions:
. your tender of your existing notes; and
. your representation that you are not our
affiliate, that the exchange notes you will
receive are being acquired by you in the ordinary
course of your business and that at the time the
exchange offer is completed you have no plans to
participate in the distribution of the exchange
notes.
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<PAGE>
Book-Entry Interests...... The existing notes were issued as global securities
and were deposited when they were issued with State
Street Bank and Trust Company as custodian for The
Depository Trust Company, or DTC. Beneficial
interests held in the existing notes by
participants in DTC are shown on, and transfers of
the existing notes can be made only through,
records maintained in book-entry form by DTC and
its participants. We refer to these beneficial
interests as "notes held in book-entry form" or
"book-entry interests."
Procedures for Tendering
Existing Notes........... If you wish to tender your existing notes for
exchange pursuant to this exchange offer, you must
transmit a properly completed and duly executed
letter of transmittal, including all other
documents required by the letter of transmittal, to
the exchange agent at one of the addresses set
forth under the heading "The Exchange Offer--
Exchange Agent" on or prior to the expiration date.
By executing the letter of transmittal, you will
represent to us that, among other things:
. you will acquire the exchange notes that you
receive in the ordinary course of your business;
. you have no arrangement with any person to
participate in a distribution of the exchange
notes; and
. you are not our "affiliate."
If you are a broker-dealer that receives exchange
notes for your own account in exchange for existing
notes that you acquired as a result of market-
making or other trading activities, you must
acknowledge that you will deliver a prospectus
meeting the requirements of the Securities Act in
connection with any resale of the exchange notes.
The letter of transmittal states that if you
acknowledge that you will, and do, deliver a
prospectus meeting the requirements of the
Securities Act, you will not be deemed to admit
that you are an "underwriter" within the meaning of
the Securities Act. You may use this prospectus for
an offer to resell, resale or other retransfer of
exchange notes issued to you.
In addition to transmitting the letter of
transmittal:
. certificates for existing notes must be received
by the exchange agent along with the letter of
transmittal;
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<PAGE>
OR
. a timely confirmation of a book-entry transfer
(what we call a "book-entry confirmation") of
your existing notes, if this procedure is
available, into the exchange agent's account at
DTC pursuant to the procedure for book-entry
transfer described under the heading "The
Exchange Offer--Book-Entry Transfer," must be
received by the exchange agent prior to the
expiration date;
OR
. you must comply with the guaranteed delivery
procedures described under the heading "The
Exchange Agent--Guaranteed Delivery Procedures."
Special Procedures for
Beneficial Owners........ If you are a beneficial owner of existing notes
held in book-entry form by, or registered in the
name of, a broker, dealer, commercial bank, trust
company or other nominee and wish to tender those
existing notes in the exchange offer, please
contact the registered holder as soon as possible
and instruct it to tender the existing notes on
your behalf and comply with the instructions in
this prospectus. If you are the registered holder
for a beneficial owner of Notes, you should, upon
receipt of this prospectus, promptly seek
instructions from the beneficial owner whether the
beneficial owner would like for you to tender any
or all of the existing notes that you hold for the
account of the beneficial owner. We have included a
form of letter to a beneficial owner in the letter
of transmittal accompanying this prospectus.
Withdrawal Rights......... You may withdraw existing notes that you tender by
furnishing a notice of withdrawal to the exchange
agent containing the information described under
the heading "The Exchange Offer--Withdrawal Rights"
at any time before 5:00 p.m. New York City time on
the expiration date, which initially is , 2000
but is subject to extension.
Acceptance of Existing
Notes and Delivery of
Exchange Notes........... We will accept for exchange any and all existing
notes that are properly tendered before the
expiration date in accordance with the discussion
under the heading "The Exchange Offer--Procedures
for Tendering Existing Notes." The same conditions
described under the heading "The Exchange Offer--
13
<PAGE>
Certain Conditions to the Exchange Offer" will
apply. The exchange notes will be issued promptly
following the expiration date.
U.S. Federal Income Tax
Considerations........... Generally, the exchange of existing notes for
exchange notes in the exchange offer will not be a
taxable event for U.S. federal income tax purposes.
See "Certain U.S. Federal Tax Considerations."
Use of Proceeds........... We will not receive any proceeds from the exchange
of existing notes for exchange notes pursuant to
the exchange offer.
Exchange Agent............ State Street Bank and Trust Company is serving as
exchange agent for the exchange offer.
You should read the discussion under the heading "The Exchange Offer" for
more detailed information concerning the terms of the exchange offer.
Summary of Terms of Exchange Notes
The form and terms of the exchange notes to be issued in the exchange offer
are substantially identical to the form and terms of existing notes except that
the exchange notes will be issued in a transaction registered under the
Securities Act and, accordingly, will not bear legends restricting their
transfer. In addition, the exchange notes will not contain the liquidated
damages provisions related to the registration of the existing notes and
consummation of the exchange offer. The exchange notes will evidence the same
debt as the existing notes, and both the existing notes and the exchange notes
will be governed by the same indenture.
Securities Offered........ Up to $400.0 million in aggregate principal amount
at maturity of 13 3/8% Series B Senior Subordinated
Discount Notes due 2009.
Issuer.................... US Unwired Inc.
Maturity.................. November 1, 2009
Interest and Accretion.... The Notes will accrete in value at a rate of
13 3/8% per annum until November 1, 2004, compounded
semi-annually. At that time, interest will begin to
accrue and will be payable in cash semi-annually on
May 1 and November 1 of each year, commencing on
May 1, 2005. The yield to maturity of the Notes is
13 3/8% (computed on a semi-annual bond-equivalent
basis) calculated from October 29, 1999.
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<PAGE>
Subsidiary Guarantees..... Our obligations under the Notes will be fully and
unconditionally guaranteed (the "Subsidiary
Guarantees") by all of our existing and future
restricted subsidiaries (other than LEC Unwired,
our operating subsidiary that holds all of our
local exchange operating assets) (collectively, the
"Subsidiary Guarantors"). The Subsidiary Guarantees
will be subordinate in right of payment to all
existing and future senior indebtedness of the
Subsidiary Guarantors. The Subsidiary Guarantees
will rank equal in right of payment to other
existing and future senior subordinated
indebtedness of the Subsidiary Guarantors and
senior in right of payment to all of the existing
and future obligations of the Subsidiary Guarantors
that are expressly subordinated in right of payment
to the Subsidiary Guarantees.
Ranking................... The Notes will be our general unsecured obligations
and will rank equally in right of payment to all of
our existing and future senior subordinated
indebtedness and senior in right of payment to
existing and future obligations that are expressly
subordinated in right of payment to the Notes. The
Notes will rank junior to all existing and future
Senior Debt, as defined in the Indenture governing
the Notes.
Assuming we had received the proceeds of our
financings on September 30, 1999 and applied them
as intended, the Notes would have been subordinated
to $9.9 million of Senior Debt.
Optional Redemption....... We may redeem the Notes at our option, in whole or
in part, at any time on or after November 1, 2004
at the redemption prices set forth in this
prospectus, plus accrued and unpaid interest, if
any, and liquidated damages, if any, thereon to the
date of redemption.
In addition, at any time prior to November 1, 2002,
we may redeem up to 35% of the principal amount of
the Notes originally issued with the net cash
proceeds of specified sales of common equity. In
that case, the redemption price will be equal to
113 3/8% of the accreted value as of the date of
redemption, plus liquidated damages, if any,
thereon, to the redemption date. At least 65% of
the aggregate principal amount of the Notes
originally issued must remain outstanding following
each such redemption.
Change in Control......... Upon certain change of control events you may
require us to repurchase all or any part of your
Notes. The repurchase will be
15
<PAGE>
in cash at a price equal to 101% of the accreted
value thereof (if the date of repurchase is prior
to November 1, 2004) and 101% of the aggregate
principal amount thereof (if the date of repurchase
is on or after November 1, 2004), plus accrued and
unpaid interest and liquidated damages, if any, on
the Notes, to the date of repurchase.
A change of control of our company may be deemed to
be a default under our credit facilities. For this
and other reasons, we cannot assure that in the
event of a change of control we would have
sufficient funds to purchase all Notes tendered.
Certain Covenants......... The indenture contains covenants that limit, among
other things, our ability to:
. pay dividends, redeem capital stock and make
other restricted payments or investments;
. incur additional indebtedness or issue preferred
equity interests;
. merge, consolidate or sell all or substantially
all of our assets;
. create liens on assets; and
. enter into transactions with affiliates or
related persons.
Anti-Layering............. We will not incur any indebtedness that is
subordinate in right of payment to any of our
Senior Debt and senior in any respect in right of
payment to the Notes. No Subsidiary Guarantor will
incur any indebtedness that is subordinate in right
of payment to any Senior Debt of such Subsidiary
Guarantor and senior in any respect in right of
payment to its Subsidiary Guarantee.
Risk Factors.............. You should read and carefully consider the
discussion under the heading "Risk Factors."
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<PAGE>
Certain Financial Information
The following tables set forth certain unaudited financial information for
our Louisiana cellular operations provided through Unwired Telecom and our PCS
operations provided through LA Unwired for the three years ended December 31,
1996, 1997 and 1998, and for the nine months ended September 30, 1998 and 1999.
You should read the information in these tables in conjunction with our
consolidated financial statements and the related notes and the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations," all of which are included elsewhere in this prospectus.
LA Unwired PCS Operations
The table below reflects the results of our PCS operations, provided through
LA Unwired, which we commenced in our markets in the third quarter of 1998. The
information presented below excludes the PCS operations provided through our
minority ownership interest in Meretel.
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended September
December 31, 30,
---------------- ------------
1996 1997 1998 1998 1999
---- ---- ------ ---- -------
<S> <C> <C> <C> <C> <C>
Revenues (in thousands)....................... -- -- $1,509 339 $11,592
Ending subscribers/(1)/....................... -- -- 5,698 591 23,379
Penetration/(2)/.............................. -- -- 0.4% N/A 1.1%
Monthly churn/(3)/............................ -- -- 1.5% N/A 3.5%
Average monthly service revenue per
subscriber/(4)/.............................. -- -- $ 91 92 $ 67
</TABLE>
Louisiana Cellular Operations
In July 1998, we sold all of our assets related to our Mississippi, Alabama
and Kansas cellular markets, along with our majority interest in Mississippi 34
Cellular Corporation, to raise capital for entry into the PCS market. The table
below reflects the results of our Louisiana cellular operations, which began in
1985. The information presented below excludes the Mississippi, Alabama and
Kansas cellular markets and the results of the majority interest in Mississippi
34 Cellular Corporation.
<TABLE>
<CAPTION>
Nine Months
Ended September
Year Ended December 31, 30,
------------------------- ----------------
1996 1997 1998 1998 1999
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenues (in thousands).......... $31,955 $37,829 $41,555 $30,929 $29,161
Ending subscribers............... 45,276 56,852 67,204 62,807 60,548
Penetration/(2)/................. 12.1% 15.2% 17.6% 16.8% 15.9%
Monthly churn/(3)/............... 1.4% 1.3% 1.8% 1.7% 2.8%
Average monthly service revenue
per subscriber/(4)/............. $ 57 $ 48 $ 45 $ 46 $ 42
</TABLE>
- --------
(1) Upon completion of the asset exchange with Meretel described in the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations," our subscriber base will increase to approximately
33,000.
(2) Represents the ratio of ending subscribers to the total population of the
markets. Because these numbers do not materially change, the population
used to calculate penetration for the nine months ended September 30, 1998
and September 30, 1999 were the populations for the years ended 1997 and
1998, respectively. Penetration for LA Unwired at September 30, 1999 was
less than 0.1%.
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<PAGE>
(3) Represents the ratio of disconnects to the average number of subscribers
divided by the number of months in the period. Average subscribers is
defined as the number of subscribers at the beginning of the period plus
the number of subscribers at the end of the period divided by two. For the
LA Unwired 1998 calculation, the number of months in the period includes
only October, November and December, as there was only minimal activity in
the third quarter of 1998. The effect of including the third quarter would
have materially understated monthly churn.
(4) Determined for a period by dividing (i) the sum of the access, airtime,
roaming, long distance, features, connection, disconnection and other
revenues for such period by (ii) the average number of subscribers for such
period, divided by the number of months in such period. For the LA Unwired
1998 calculation, the number of months in the period includes only October,
November and December, as there was only minimal activity in the third
quarter of 1998. The effect of including the third quarter would have
significantly understated the average monthly service revenue per
subscriber.
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<PAGE>
RISK FACTORS
You should carefully consider the following factors and other information in
this prospectus in connection with your interest in the Notes and the exchange
offer.
Risks Related to the Exchange Offer
If you do not properly tender your existing notes, you will continue to hold
unregistered notes and your ability to transfer your existing notes will be
impaired.
We will only issue exchange notes in exchange for existing notes that are
timely received by the exchange agent together with all required documents,
including a properly completed and signed letter of transmittal. Therefore, you
should allow sufficient time to ensure timely delivery of the existing notes,
and you should carefully follow the instructions on how to tender your existing
notes. Neither we nor the exchange agent is required to tell you of any defects
or irregularities with respect to your tender of the existing notes. If you do
not tender your existing notes or if we do not accept your existing notes
because you did not tender your existing notes properly, then, after we
consummate the exchange offer, you may continue to hold notes that are subject
to the existing transfer restrictions. If you are a broker-dealer that receives
exchange notes for your own account in exchange for existing notes that you
acquired as a result of market-making activities or any other trading
activities, you will be required to acknowledge that you will deliver a
prospectus meeting the requirements of the Securities Act in connection with
any resale of these exchange notes. After the exchange offer is consummated, if
you continue to hold any existing notes, you may have difficulty selling them
because there will be fewer existing notes outstanding and no further
requirements that we offer to exchange them for registered notes.
We cannot be sure that an active trading market will develop for the Notes.
Prior to this offering, there has been no public market for the existing
notes. We do not intend to apply for listing of the exchange notes on any
securities exchange or for quotation through The Nasdaq Stock Market. In
addition, the liquidity of any trading market in, and any market price quoted
for, the exchange notes may be negatively impacted by changes in the overall
market for high yield securities and by changes in our financial performance or
prospects or in the prospects for companies in our industry generally. As a
result, you cannot be sure that an active trading market will develop for the
exchange notes.
To the extent that a large amount of the existing notes are not tendered or
are tendered and not accepted in the exchange offer, the trading market for the
exchange notes could be materially impaired. Generally, a limited amount, or
"float," of a security could result in less demand to purchase the security
and, as a result, could result in lower prices for the security. We cannot
assure you that a sufficient number of existing notes will be exchanged for
exchange notes so that this does not occur.
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<PAGE>
Risks Related to US Unwired
We have substantial indebtedness which could adversely affect our financial
health and prevent us from fulfilling our obligations under the Notes.
We have a substantial amount of debt. Assuming we had received the proceeds
from all of our financings on September 30, 1999 and applied them as intended,
our outstanding debt would have consisted of:
. approximately $209.2 million in accreted value of the Notes of US
Unwired; and
. approximately $2.6 million of debt guaranteed by US Unwired, representing
our proportionate share of the indebtedness of Meretel (assuming
completion of the Meretel transaction described in the section entitled
"Management's Discussion and Analysis of Financial Condition and Results
of Operations").
We may incur additional debt in the future. The indenture governing the
Notes will permit us to incur additional debt, subject to limitations. Our
credit facilities provide for total borrowings of up to $130.0 million.
The substantial amount of our debt will have a number of important
consequences for our operations, including:
. we will have to dedicate a substantial portion of any cash flow from
operations to the payment of interest on, and principal of, our debt,
which will reduce funds available for other purposes;
. we may not have sufficient funds to pay interest on, and principal of,
our debt (including the Notes);
. we may not be able to obtain additional financing for capital
requirements, capital expenditures, working capital requirements and
other corporate purposes;
. some of our debt, including borrowings under our credit facilities, will
be at variable rates of interest, which could result in higher interest
expense if interest rates increase;
. our borrowings under the credit facilities are secured by a significant
portion of our assets, including the pledge of the membership interests
of LA Unwired and the capital stock of Unwired Telecom and security
interests in all tangible and intangible assets of LA Unwired and Unwired
Telecom, including assignments of all Sprint PCS agreements and network
contracts;
. we may not be able to adjust to changing market conditions or withstand
competitive pressures;
. we may be inflexible in planning for, or reacting to, changes in our
business and our industry;
. we may be at a competitive disadvantage compared to our competitors that
have less debt; and
. we may be unable to borrow additional funds due to the financial and
other restrictive covenants in our credit agreements, and our failure to
comply with those covenants could result in an event of default which, if
not cured or waived, could impair our ability to repay the Notes.
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<PAGE>
We will require a significant amount of cash to service our indebtedness. Our
ability to generate cash depends on many factors beyond our control.
Our ability to make payments on our debt, including the Notes, depends upon
our future operating performance, which is subject to general economic and
competitive conditions and to financial, business and other factors, many of
which we cannot control. A substantial portion of our cash flow from operations
will be dedicated to the payment of principal and interest under our credit
facilities. In addition, beginning in 2005, we will have significant cash
interest payment service obligations under the Notes. We cannot assure you that
our business will generate sufficient cash flow from operations or that future
borrowings will be available to us under our credit facilities in an amount
sufficient to enable us to pay our indebtedness, including our obligations
under the Notes, or to fund our other liquidity needs. We may attempt to delay
or reduce capital expenditures, restructure or refinance our debt, sell assets
or operations or seek additional equity capital. We may be unable to take any
of these actions on satisfactory terms, or at all, or in a timely manner.
Further, none of these actions may be sufficient to allow us to service our
debt obligations. Our existing debt agreements limit our ability to take some
of these actions, and the indenture governing the Notes will contain similar
restrictions. Our failure to earn enough to pay our debts or to undertake
successfully any of these actions could, among other things, impair the market
value of the Notes.
In addition, US Unwired is a holding company, and we conduct all of our
operations through subsidiaries. Our ability to meet our debt service
obligations will depend upon our receiving dividends from those operations. The
indenture governing the Notes may allow our subsidiaries to enter into future
loan agreements which restrict or prohibit them from paying dividends. State
law may also limit the amount of the dividends that our subsidiaries are
permitted to pay.
Your right to receive payments on the Notes is junior to our and our guarantor
subsidiaries' existing indebtedness and possibly all of our and our guarantor
subsidiaries' future borrowings.
The Notes and the subsidiary guarantees rank behind all of our and our
guarantor subsidiaries' existing indebtedness (other than trade payables) and
all of our and their future borrowings (other than trade payables), except any
future indebtedness that expressly provides that it ranks equal with, or
subordinated in right of payment to, the Notes and the guarantees. As a result,
upon any distribution to our creditors or the creditors of the guarantors in a
bankruptcy, liquidation or reorganization or similar proceeding relating to us
or the guarantors or our or their property, the holders of our and our
guarantor subsidiaries' senior debt will be entitled to be paid in full in cash
before any payment may be made with respect to the Notes or the subsidiary
guarantees.
In addition, all payments on the Notes and the guarantees will be blocked in
the event of a payment default on senior debt and may be blocked for up to 179
of 360 consecutive days in the event of certain non-payment defaults on senior
debt.
In the event of a bankruptcy, liquidation or reorganization or similar
proceeding relating to us or the guarantor subsidiaries, holders of the Notes
will participate with trade creditors and all other holders of our and our
guarantor subsidiaries' subordinated indebtedness in the assets remaining after
we and our guarantor subsidiaries have paid all of the senior debt. However,
because the indenture
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requires that amounts otherwise payable to holders of the Notes in a bankruptcy
or similar proceeding be paid to holders of senior debt instead, holders of the
Notes may receive less, ratably, than holders of trade payables in any such
proceeding. In any of these cases, we and the guarantor subsidiaries may not
have sufficient funds to pay all of our creditors and holders of Notes may
receive less, ratably, than the holders of senior debt.
Assuming we had completed our financings on September 30, 1999, and applied
the proceeds as intended, the Notes and the subsidiary guarantees would have
been subordinated to $9.9 million of senior debt and approximately $130.0
million would have been available for borrowing as additional senior debt under
our credit facility. We will be permitted to borrow substantial additional
indebtedness, including senior debt, in the future under the terms of the
indenture.
Not all of the subsidiaries will guarantee the Notes.
Subsidiaries that are designated as unrestricted subsidiaries and LEC
Unwired will not guarantee the Notes. In the event of a bankruptcy, liquidation
or reorganization of any of the non-guarantor subsidiaries, holders of their
indebtedness and their trade creditors will generally be entitled to payment of
their claims from the assets of those subsidiaries before any assets are made
available for distribution to us. Assuming we had received the proceeds of our
financings on September 30, 1999 and applied them as intended, the Notes would
have been effectively junior to $9.3 million of indebtedness and other
liabilities (including trade payables) of these non-guarantor subsidiaries, and
approximately $8.7 million would have been available to those subsidiaries for
future borrowing under credit facilities. LEC Unwired generated 7.8% of our
consolidated revenues in the nine months ended September 30, 1999 and held 6.9%
of our consolidated assets as of September 30, 1999.
Unexpected events may cause us to change our financing requirements.
We will make significant capital expenditures to finish the design,
construction, testing and deployment of our PCS network. We estimate that the
combined net proceeds of our financings will be sufficient to:
. fund the planned construction of our network;
. fund operating losses; and
. satisfy debt service requirements for the next several years.
The actual expenditures necessary to achieve these goals may differ
significantly from our estimates. We would have to obtain additional financing
if:
. any of our sources of capital is unavailable or insufficient;
. we significantly depart from our business plan;
. we experience unexpected delays or cost overruns in the construction of
our network, including changes to the schedule or scope of our network
buildout;
. our operating costs increase;
. changes in technology or governmental regulations create unanticipated
costs;
. we acquire additional licenses;
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. we experience faster than expected subscriber growth;
. we are granted additional buildout properties by Sprint PCS to construct
and manage;
. our business plans change; or
. our projections prove to be inaccurate.
We cannot predict whether any additional financing will be available or the
terms on which any additional financing would be available. If we cannot obtain
additional financing when needed, we will have to delay, modify or abandon some
of our plans to construct the remainder of our network.
We may be unable to implement a major communications network successfully.
We may not be able to acquire the sites necessary to complete our network.
We must lease or otherwise acquire rights to use sites for the location of base
station transmitter equipment and obtain zoning variances and other
governmental approvals to complete the construction of our network and to
provide wireless communications services to subscribers. In addition to the
sites currently in use, we will need to lease additional sites to complete
construction of our network. Local zoning ordinances may restrict our ability
to obtain sites and construct antennas, and such ordinances may prevent us from
successfully completing the buildout of our network. If we encounter
significant difficulties in leasing or otherwise acquiring rights to these
sites, we may need to alter the design of our network, and this could impair
our ability to complete construction of our network in a timely manner.
We may have difficulty obtaining infrastructure equipment. The demand for
the equipment needed to construct our network is considerable, and
manufacturers of this equipment could have substantial backlogs of orders.
Accordingly, the lead time for the delivery of this equipment may be long. Some
of our competitors purchase large quantities of communications equipment and
may have established relationships with the manufacturers of this equipment.
Consequently, they may receive priority in the delivery of this equipment. Even
though our agreements with vendors contain penalties for their failure to
deliver the equipment according to schedule, the vendors may fail to deliver
the equipment to us in a timely manner. If we do not receive the equipment in a
timely manner, we may be unable to provide wireless communications services
comparable to those of our competitors. In addition, we may be unable to
satisfy the requirements regarding the construction of our network contained in
FCC regulations and our agreements with Sprint PCS. Our failure to construct
our network in a timely manner could limit our ability to compete effectively,
cause us to lose our licenses or cause us to breach our agreements with Sprint
PCS.
We depend on consultants and contractors who could fail to perform their
obligations. We have retained an equipment vendor and other consultants and
contractors to assist in the design and engineering of radio frequency, the
identification and construction of our cell sites, switch facilities and
towers, the leasing or other acquisition of rights to use sites for the
location of cell sites, and the installation, maintenance and support of our
information technology systems. The failure by this vendor or any of these
consultants or contractors to fulfill its contractual obligations could impair
our ability to meet our buildout requirements timely and our operating results.
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Our success depends on our relationship with Sprint PCS and its success.
Our business strategy depends on our relationship with Sprint PCS. We depend
on co-branding, traveling and service relationships under our management and
other agreements with Sprint PCS, and these agreements are central to our
business plan. It is important for you to understand that there are
circumstances under which Sprint PCS can terminate our right to use their brand
name as well as the following other important rights under the agreements:
. The agreements may be terminated if we fail to buildout and operate our
network in accordance with Sprint PCS's requirements, if any of Sprint
PCS's FCC licenses is lost or jeopardized or if we become insolvent.
. If our rights to use the Sprint PCS(R) brand name and logo and related
rights are revoked or otherwise become unavailable, or if any of the
agreements we have entered into with Sprint PCS are not renewed or are
terminated, our operations could be impaired.
. We use our relationship with Sprint PCS to obtain, on preferred terms
from Sprint PCS's vendors, the infrastructure equipment and handsets for
the construction and operation of our network. Any disruption in our
relationship with Sprint PCS could impair our ability to obtain this
equipment or our relationship with our vendors.
. Sprint PCS assists us with the design, development and operation of our
network and the compliance with the program requirements of the
management agreements. We depend upon Sprint PCS to provide this
assistance.
. Sprint PCS maintains requirements regarding the construction of our
network, and, in many instances, these requirements are more stringent
than those imposed by the FCC. If we fail to meet these requirements,
some of the exclusivity provisions contained in our agreements with
Sprint PCS could be terminated.
. A significant disruption to the Sprint PCS system or weakening of Sprint
PCS brands and systems could impair our operations and profitability.
Sprint PCS and its other affiliates are subject, to varying degrees, to the
same risks that affect us, and we cannot be sure that Sprint PCS and its
affiliates will be successful in developing their wireless businesses.
The termination or non-renewal of our management agreements with Sprint PCS
may trigger various put and call options, including our right to require Sprint
PCS to purchase all of our operating assets used in connection with our PCS
network, Sprint PCS's right to require us to sell these assets to them, our
right to require Sprint PCS to assign to us, subject to governmental approval,
some of their licensed spectrum and Sprint PCS's right to require us to
purchase, subject to governmental approval, some of their licensed spectrum. If
we sell our PCS network operating assets to Sprint PCS, the proceeds from the
sale may not be sufficient to satisfy the Notes. If we purchase licensed
spectrum from Sprint PCS, we may not have sufficient funds to satisfy the
Notes.
Our relationship with Sprint or its successor may be adversely affected by the
proposed merger of Sprint and MCI WorldCom.
Sprint and MCI WorldCom announced on October 5, 1999 that the boards of
directors of both companies have approved a definitive merger agreement whereby
the two companies would merge to
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form a new company called WorldCom. Although the companies have approved the
merger, the completion of the merger is still subject to various conditions,
including the approvals of the shareholders of both companies, the Federal
Communications Commission, the Justice Department, various state governmental
bodies and foreign antitrust authorities. If the merger is not consummated for
these or other reasons, Sprint's business may be adversely affected which could
have a negative impact on us as a Sprint PCS affiliate. If the merger is
successfully completed, we expect our relationship with Sprint and its
successor to continue with little or no adverse effects. However, we cannot be
sure that the merger will not have a negative impact on us as an affiliate of
Sprint PCS.
Our competitors may have more resources or other advantages which may make it
difficult for us to compete effectively.
Competition in the wireless communications services industry is intense.
Many of our competitors have substantially greater financial, technological,
marketing and sales and distribution resources than we do. In addition,
competitors who entered the wireless communications services market before us
may have a significant time-to-market advantage over us. Some of our
competitors may market competitive services, such as local dial tone, long
distance and internet, together with their wireless communications services. We
may not be able to compete successfully with competitors who have substantially
greater resources or a significant "time-to-market" advantage or who offer more
services than we do.
Some of our competitors are current cellular providers and joint ventures of
current and potential wireless communications service providers and have
financial resources and customer bases greater than ours. Some of our
competitors have more established infrastructures, marketing programs and brand
names. In addition, some of our competitors may be able to offer coverage in
areas not served by our PCS network or, because of their calling volumes or
their affiliations with, or ownership of, wireless providers, may be able to
offer roaming rates that are lower than ours. PCS operators will likely compete
with us in providing some or all of the services available through the Sprint
PCS network and may provide services that we do not. Additionally, we expect
that some of the existing cellular providers, who have been operational for a
number of years and have significantly greater financial and technical
resources and customer bases than we do, will continue to upgrade their systems
to provide digital wireless communication services competitive with Sprint PCS.
Our ability to compete effectively with other providers in our service area
will depend on a number of factors, including the continued success of CDMA
technology in providing better call quality and clarity as compared to analog
and digital cellular systems, our competitive pricing with various options
suiting individual subscribers calling needs and the continued expansion and
improvement of the Sprint PCS nationwide network, customer care system and
handset options.
We compete with companies that use other communications technologies,
including enhanced specialized mobile radio, or ESMR, and domestic and global
mobile satellite service. In addition, we expect that in the future providers
of wireless communications services will compete more directly with providers
of traditional landline telephone services, energy companies, utility companies
and cable operators who expand their services to offer communications services.
We will compete also with paging and dispatch companies in our markets.
Potential users of PCS systems may find their
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communications needs satisfied by other current and developing technologies.
One or two-way paging or beeper services that feature voice messaging and data
display as well as tone-only service may be adequate for potential subscribers
who do not need to speak to the caller.
Our ability to compete successfully will depend, in part, upon our ability
to anticipate and respond to various competitive factors affecting the
industry, including the introduction of new services and technology, changes to
consumer preferences, demographic trends, economic conditions and competitors'
pricing strategies, all of which could adversely affect our profitability. In
addition, the future level of demand for wireless communications services is
uncertain.
Changes in technology and customer demands could adversely affect us.
Three technological standards are being used by PCS providers in the United
States: IS-136 TDMA, CDMA and GSM. Although all three standards are digital
transmission technologies and thus share certain basic characteristics and
contrasts to analog transmission technology, they are not compatible or
interchangeable with each other.
Sprint PCS has chosen CDMA technology as the digital technology standard for
its systems. Accordingly, we and the other Sprint PCS affiliates will use CDMA
technology as well. If another technology becomes the preferred industry
standard, we may be at a competitive disadvantage compared to systems using
other technologies. If Sprint PCS needs to change its technology, we will need
to change ours as well, which will be costly and time consuming. We may not be
able to purchase and install the equipment necessary to allow for migration to
a new or different technology or to do so at an acceptable cost. If we cannot
do so, we may not be able to compete with other systems.
Our agreement with Sprint PCS precludes us from upgrading our cellular
network from analog to digital. If cellular equipment manufacturers cease
making analog cellular equipment, it could impair our ability to service our
existing cellular subscribers and attract new ones.
If the Sprint PCS network is not built out on a nationwide basis, we may not be
able to provide our customers with the traveling services they demand.
Sprint PCS currently intends to cover a significant portion of the
population of the United States, Puerto Rico and the U.S. Virgin Islands with
its CDMA-based system and those of its other affiliates, but it will take some
time, and be subject to some risk, until the entire planned area has been built
out with CDMA systems. Our agreement with Sprint PCS provides that our
customers will be able to travel on other Sprint PCS systems (including those
of other Sprint PCS affiliates), and customers of those other systems will be
able to travel on our systems. Although some other PCS competitors have
selected CDMA technology, others have chosen GSM or TDMA. Some digital cellular
systems use CDMA technology, but on different frequencies from PCS, and no
analog cellular systems use CDMA.
If one of our customers seeks to travel in an area where a CDMA-based PCS
system is not yet operational, the customer will need to use a dual-mode
handset (to travel on a PCS system that does not use CDMA) or a dual-band/dual-
mode handset (to travel on a non-CDMA cellular system).
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Generally, such handsets are more costly than single-band/single-mode handsets.
Moreover, the Sprint PCS network does not allow for call hand-off between the
Sprint PCS network (including the areas built by its affiliates) and another
wireless network, which requires a customer to end a call in progress and
initiate a new call when entering an area not served by the Sprint PCS network.
In addition, the quality of the service provided by another network may not be
equal to what the Sprint PCS network affords, and our customers may not be able
to use any of the advanced features such as voicemail notification.
Year 2000 issues could cause interruption or failure of our computer systems.
We use a significant number of computer systems and software programs in our
operations, including applications used in support of our PCS network equipment
and various administrative functions. Because many computers and computer
applications define dates by the last two digits of the year, "00" may not be
properly identified as the year 2000. This error could result in
miscalculations or system errors. Although we believe that our computer systems
and software applications contain source codes that are able to interpret
appropriately dates after December 31, 1999, our failure to make or obtain
necessary modifications to our systems and software could result in systems
interruptions or failures that could impair our business.
We have completed an inventory of our computer systems, network elements,
software applications, products and other business systems. We are assessing
the impact of the Year 2000 on items identified through this inventory process
and are modifying and replacing items as needed for Year 2000 compliance. We
are using both internal and external resources to identify, correct or
reprogram, and test our systems for Year 2000 compliance. We believe that we
have prepared these critical systems for the Year 2000. In addition, we are
contacting third parties with whom we conduct business to receive the
appropriate warranties and assurances that those third parties are or will be
Year 2000 compliant. We cannot assure that full compliance will be achieved as
we and such third parties have planned or that we will receive warranties and
assurances from such third parties. We rely on third party vendors for a
significant number of our important operating and computer system functions and
therefore are highly dependent on such third party vendors for the remediation
of network elements, computer systems, software applications and other business
systems. In addition, we use publicly available services that are acquired
without contract, such as global positioning system timing signals, that may be
subject to Year 2000 issues. While we believe these systems will be Year 2000
compliant, we have no contractual or other right to compel compliance. Based
upon our evaluations to date, we believe that the total cost of modifications
and conversions of our systems will not be material, but we cannot assure that
such cost could not become material.
Our geographical proximity to the Gulf Coast may cause us to face service
interruptions associated with inclement weather conditions.
Much of our service area is on or near the Gulf Coast and could face damage
from inclement weather conditions, including hurricanes and excessive rain.
Even though we believe our insurance coverage is adequate, we may face service
interruptions for indefinite periods if a major hurricane strikes one or more
of our Gulf Coast markets.
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Risks Related to the Industry
We are subject to broad and evolving government regulation.
The licensing, construction, operation, acquisition, sale and
interconnection arrangements of wireless telecommunications systems are
regulated to varying degrees by the FCC and, depending on the jurisdiction,
state and local regulatory agencies. In addition, the FCC, in conjunction with
the Federal Aviation Administration, referred to as the FAA, regulates the
marking and lighting of towers, including those used in wireless communications
networks. To the extent that we conduct operations as a competitive local
exchange carrier, we will be subject to further regulation by state authorities
and by the FCC. Our ability to conduct our business is dependent, in part, on
our compliance with the rules and regulations of these governing bodies.
Changes in regulation could impair our financial condition and operating
results. Regulation of the wireless telecommunications industry is continually
evolving and constantly changing. There are a number of issues on which
regulation has been considered or adopted, such as providing enhanced emergency
911 service, making wireless services more available to the hearing-impaired,
allowing subscribers to take their telephone numbers with them when they change
carriers, facilitating interception of wireless calls by law enforcement
authorities, and others. As new regulations are promulgated on these and other
subjects, we may be required to modify our business plans or operations to
comply with such regulations. Furthermore, the Telecommunications Act of 1996
mandated significant changes in existing regulation of the telecommunications
industry to promote competitive development of new service offerings, to expand
public availability of telecommunications services and to streamline regulation
of the industry. The continued implementation of these mandates by the FCC and
state authorities, and the rulings of the courts interpreting them, will
involve numerous changes in established rules and policies, some of which could
materially increase the cost of providing service.
The loss of any of our FCC licenses would impair our business and operating
results.
The FCC licenses that we own and that Sprint PCS owns to provide PCS
services are critical to our business. These licenses each have a term of ten
years and may be renewed upon expiration of their respective terms for a period
of ten years. The FCC may revoke any of the licenses at any time "for cause,"
which includes the failure to comply with the terms of the licenses, the
failure to remain qualified under applicable FCC rules to hold the licenses,
the commission of certain violations of FCC regulations and malfeasance and
other misconduct. We cannot ensure that our licenses or Sprint PCS's licenses
will be renewed upon expiration of their terms, or that our licenses or Sprint
PCS's licenses will not be modified in a way that impairs our operations. The
loss or nonrenewal of any license, or an action that threatens the loss of any
license, would impair our business and our operating results. Additionally, the
threat of nonrenewal or loss of any of our licenses or Sprint PCS's licenses
could diminish the market value of the Notes.
The Sprint PCS agreements reflect an affiliation that the parties believe
meets the FCC requirements for licensee control of licensed spectrum.
Management agreements have been used by FCC licensees to construct and operate
communications systems. If the FCC were to determine that our agreements with
Sprint PCS need to be modified to increase the level of licensee control, we
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have agreed with Sprint PCS to use our best efforts to modify the agreements as
necessary to cause the agreements (as modified) to comply with applicable law
and to preserve to the extent possible the economic arrangements set forth in
the agreements. If the agreements cannot be modified, they may be terminated
pursuant to their terms.
Our ongoing operations may also require permits, licenses and other
authorizations from regulatory authorities not currently held by Sprint PCS or
us. None of these licenses can be transferred to another party without the
approval of the regulatory authority that issued them. These regulatory
authorities may not grant such authorizations and approvals in a timely manner,
if at all.
Network buildout requirements. All PCS licenses, including both our own
licenses and those licenses owned by Sprint PCS which we manage, are subject to
the FCC's buildout regulations. These regulations require companies that have
acquired licenses to provide wireless communications services to meet certain
minimum requirements regarding the construction of their networks. For example,
licensees of 30 MHz Blocks (such as the A-Block, B-Block, and C-Block) are
required to offer a signal level that provides adequate service to at least
one-third of the population in their licensed area within five years of receipt
of the license, and to at least two-thirds of such population within ten years
of receipt of the license. Licensees of 10 MHz Blocks (such as the D-Block, E-
Block, and F-Block) are required to offer a signal level that provides adequate
service to at least one-quarter of the population in their licensed area within
five years of receipt of the license, or to show substantial service in the
licensed area within five years of receipt of the license. Even though we have
developed a buildout plan that meets all such FCC requirements, we may be
unable to meet our buildout schedule. If we fail to comply with these
requirements, the FCC could reclaim those portions of our market area that are
not being served, impose fines on us, or, in extreme cases, revoke the related
licenses. Moreover, the population distribution of many of Sprint PCS's
licensed areas is such that even if we comply with our buildout schedule but
Sprint PCS does not buildout a sufficient portion of the licenses within the
required time, the FCC requirements will not be met and the FCC could impose
the sanctions described above.
Foreign ownership limitations. The Communications Act of 1934 prohibits more
than 20% of any licensee's equity being owned of record or voted by non-United
States citizens or their representatives, a foreign government or its
representative, or any corporation organized under the laws of a foreign
country. In addition, the FCC may decline to allow a licensee to be indirectly
controlled by another entity more than 25% of the equity of which is owned of
record or voted by foreign interests, although the FCC presumes that up to 100%
ownership by citizens of countries that have entered into the World Trade
Organization's basic accord on telecommunications will be in the public
interest. If foreign ownership exceeds the permitted level, the FCC may revoke
PCS licenses or require an ownership restructuring. We believe that we comply
with these limitations.
F-Block license requirements. The FCC imposes additional requirements on
holders of its F-Block licenses, such as us. For example, participants in the
F-Block auctions must satisfy certain requirements to qualify as an
"entrepreneur," as defined by the FCC. Then, during the first five years after
a grant of an F-Block license, the licensee can transfer the license only to
another "entrepreneur" eligible to own F-Block licenses. To determine whether
an applicant or licensee meets the qualifications for "entrepreneur" status,
the FCC combines the gross revenues and assets of the applicant or licensee and
the applicants or licensee's "financial affiliates," which can include
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entities involved with the applicant or licensee as a result of common
investments, contractual relations, joint venture agreements, voting trusts,
stock ownership, ownership of stock options or convertible securities,
agreements to merge or familial relationships.
We intend to maintain our qualifications to hold our F-block licenses,
structuring any debt and equity offerings in a manner intended to ensure
compliance with the applicable FCC rules, including the restrictions on
ownership and transfer. We have relied on the representations of our investors
to determine our compliance with the FCC's rules applicable to F-Block
licenses. However, we cannot be certain that we or our investors will continue
to satisfy these requirements during the term of any PCS license granted or
transferred to our licensed subsidiaries or that we will be able to implement
successfully any mechanisms designed to ensure compliance with FCC rules. If we
do not comply with FCC rules, the FCC could fine us, revoke our PCS licenses or
require a restructuring of our equity. Any of these events could impair our
business and financing.
The future prospects of the PCS industry remain uncertain.
PCS systems have limited operating history in the United States, and we
cannot assure that the operation of these systems in our markets will become
profitable. In addition, we cannot estimate with any degree of certainty the
potential demand for PCS in our markets or competitive pricing pressures. As a
result, the future prospects of the PCS industry, including our prospects,
remain uncertain.
The wireless telecommunications industry is experiencing significant
technological change, as evidenced by the increasing pace of digital upgrades
in existing analog wireless systems, ongoing improvements in the capacity and
quality of digital technology, shorter development cycles for new products and
enhancements and changes in consumer requirements and preferences. To remain
competitive, we must develop or gain access to new technologies to increase
product performance and functionality and to increase cost-effectiveness. Given
the emerging nature of the PCS industry, alternative technological and service
advancements could materialize in the future, prove viable and render our
technology obsolete. The development of alternative technologies could
negatively impact our business and operating results.
Subscriber turnover is greater in the PCS industry than in the cellular
industry.
The PCS industry has experienced a higher rate of PCS subscriber turnover,
or churn, than cellular industry averages. The rate of PCS subscriber churn may
be the result of several factors, including network coverage and reliability
issues (blocked calls, dropped calls, and handset problems), non-use of phones,
change of employment, affordability, customer care concerns and other
competitive factors.
We have implemented and plan to implement additional strategies to address
PCS subscriber churn, including expanding network coverage, improving network
reliability, marketing customized service and pricing plans to meet
subscribers' specific calling needs and increasing the number of customer care
representatives. We cannot assure that such strategies will be successful.
Price competition, including roaming fees, and other competitive factors could
also increase our PCS subscriber churn. A high rate of PCS subscriber churn
could negatively impact the competitive position and results of operations of
our PCS services.
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Radio frequency emissions may pose health concerns.
Media reports have suggested that some radio frequency emissions from
wireless handsets may be linked to various health concerns, including cancer,
and may interfere with various electronic medical devices, including hearing
aids and pacemakers. These concerns may discourage the use of wireless handsets
or expose us to potential litigation.
Risks Related to the Notes
We may not be able to satisfy our obligations owed to you if change of control
events occur.
Upon specific kinds of change of control events, we will be required to
offer to repurchase all outstanding Notes. It is possible, however, that we
will not have sufficient funds at the time of the change of control to make the
required repurchase of Notes or that restrictions in our credit facilities will
not allow such repurchases out of our assets and funds. Specific kinds of
important corporate events, such as leveraged recapitalizations that would
increase the level of our indebtedness, would not constitute a change of
control under the indenture governing the Notes.
Federal and state statutes allow courts, under specific circumstances, to void
or modify the Notes and the guarantees of the Notes.
Under the federal bankruptcy law and comparable provisions of state
fraudulent transfer laws, a guarantee could be voided, or claims in respect of
a guarantee could be subordinated to all other debts of that guarantor, if,
among other things, the guarantor, at the time it incurred the indebtedness
evidenced by its guarantee:
. received less than reasonably equivalent value or fair consideration for
the incurrence of such guarantee;
. was insolvent or rendered insolvent by reason of such incurrence;
. was engaged in a business or transaction for which the guarantors
remaining assets constituted unreasonably small capital; or
. intended to incur, or believed that it would incur, debts beyond its
ability to pay such debts as they mature.
In addition, any payment by that guarantor pursuant to its guarantee could
be voided and required to be returned to the guarantor or to a fund for the
benefit of the creditors of the guarantor.
The measures of insolvency for purposes of these fraudulent transfer laws
will vary depending upon the law applied in any proceeding to determine whether
a fraudulent transfer has occurred. Generally, however, a guarantor would be
considered insolvent if:
. the sum of its debts, including contingent liabilities, were greater than
the fair saleable value of all of its assets;
. the present fair saleable value of its assets were less than the amount
that would be required to pay its probable liability on its existing
debts, including contingent liabilities, as they become absolute and
mature; or
. it could not pay its debts as they become due.
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Based on historical financial information, recent operating history and
other factors, we believe that each guarantor, after giving effect to its
guarantee of the Notes, will not be insolvent, will not have unreasonably small
capital for the business in which it is engaged and will not have incurred
debts beyond its ability to pay such debts as they mature. We cannot assure
you, however, what standard a court would apply in making such determinations
or that a court would agree with our conclusions in this regard.
You may face tax and bankruptcy law concerns.
The Notes will be issued at a substantial discount from their principal
amount at maturity. Although cash interest will not accrue on the Notes prior
to November 1, 2004 and there will be no periodic payments of cash interest on
the Notes prior to May 1, 2005, original issue discount (the difference between
the aggregate principal amount at maturity and the issue price of the Notes)
will accrue from the issue date of the Notes. Consequently, you, as a holder of
Notes, generally will be required to include amounts in gross income for United
States federal income tax purposes in advance of your receipt of the cash
payments to which the income is attributable. These amounts in the aggregate
will be equal to the difference between the stated redemption price at maturity
(inclusive of stated interest on the Notes) and the issue price of the Notes.
If a bankruptcy case is commenced by or against us under the United States
Bankruptcy Code after the issuance of the Notes, your claim as a holder of the
Notes may be limited to an amount equal to the sum of the initial offering
price and that portion of the original issue discount that is not deemed to
constitute unmeasured interest for purposes of the Bankruptcy Code. Any
original issue discount that was not amortized as of the date of any such
bankruptcy filing could constitute unmeasured interest. To the extent that the
Bankruptcy Code differs from the Internal Revenue Code in determining the
method of amortization of original issue discount, you may realize taxable gain
or loss upon payment of your claim in bankruptcy.
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THE EXCHANGE OFFER
Purpose and Effect of the Exchange Offer
We sold the existing notes on October 29, 1999, to Donaldson, Lufkin &
Jenrette Securities Corporation, First Union Securities, Inc. and BNY Capital
Markets, Inc. pursuant to a purchase agreement. These initial purchasers then
sold the existing notes to qualified institutional buyers in reliance on
exemptions from registration provided by Rule 144A and Regulation S under the
Securities Act. As a condition to the purchase of the existing notes by the
initial purchasers, we and our Subsidiary Guarantors entered into a
registration rights agreement with the initial purchasers, which requires,
among other things, that promptly following the sale of the existing notes, we
and our Subsidiary Guarantors:
. file with the SEC a registration statement related to the exchange notes;
. use our commercially reasonable efforts to cause the registration
statement to become effective under the Securities Act;
. offer to the holders of the existing notes the opportunity to exchange
their existing notes for a like principal amount of exchange notes upon
the effectiveness of the registration statement; and
. use reasonably commercial efforts to issue the exchange notes on the
earliest practicable date and, in any event, within 30 business days of
the effectiveness of the registration statement.
If we fail to satisfy our registration and exchange obligations under the
registration rights agreement, we will be required to pay liquidated damages in
an amount equal to $.05 per week per $1,000 principal amount of existing notes.
The liquidated damages will be increased by $.05 per week per $1,000 principal
amount of exiting notes, up to a maximum amount of $.50 per week per $1,000
principal amount of existing notes, for each 90-day period during which the
exchange notes are not issued.
A copy of the registration rights agreement has been filed as an exhibit to
the registration statement of which this prospectus is a part.
The exchange notes will be issued in a transaction registered under the
Securities Act and the transfer restrictions and registration rights relating
to the existing notes do not apply to the exchange notes. If you fail to
exchange your existing notes in the exchange offer, you will be subject to
risks described under the heading "Risk Factors--Risks Related to the Exchange
Offer."
The exchange offer is not being made to, nor will we accept tenders for
exchange from, holders of existing notes in any jurisdiction in which the
exchange offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction. Each holder of existing notes
that wishes to exchange existing notes for exchange notes is required to make
the representations in the letter of transmittal accompanying this prospectus.
Resale of the Exchange Notes
Under existing interpretations of the staff of the SEC contained in several
no-action letters to third parties, the exchange notes would in general be
freely transferable after the exchange offer without further registration under
the Securities Act. However, any holder of existing notes who is
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our "affiliate" or who intends to participate in the exchange offer for the
purpose of distributing the exchange notes or any broker-dealer who purchased
existing notes from us (like the initial purchasers of the existing notes) to
resell under Rule 144A or any other available exemption under the Securities
Act:
. will not be permitted to rely on the interpretation of the staff of the
SEC,
. will not be permitted to tender its existing 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 transfer of the Notes
unless such sale or transfer is made pursuant to an exemption from such
requirements.
If you own existing notes, you should not be our affiliate or a person who
intends to participate in a distribution of the exchange notes because you have
represented to us, as a condition to purchasing existing notes, that you are
not our affiliate and that you do not intend to participate in a distribution
of the exchange notes. Nevertheless, we have pointed out the limitations that
apply to our affiliates and persons who intend to participate in a distribution
of the exchange notes because they are the same limitations that apply to
initial purchasers of existing notes who purchased existing notes from us to
resell under Rule 144A or another available exemption under the Securities Act.
By executing, or otherwise becoming bound by, the letter of transmittal,
you will represent that:
. you are not our "affiliate,"
. any exchange notes to be received by you were acquired in the ordinary
course of your business, and
. you have no arrangement with any person to participate in a distribution,
within the meaning of the Securities Act, of the exchange notes.
In addition, in connection with any resales of exchange notes, any broker-
dealer participating in the exchange offer who acquired notes for its own
account as a result of market-making or other trading activities must deliver a
prospectus meeting the requirements of the Securities Act. The letter of
transmittal states that a broker-dealer that acknowledges that it will, and
does, deliver a prospectus meeting the requirements of the Securities Act will
not be deemed to have admitted that it is an "underwriter" within the meaning
of the Securities Act. The SEC has taken the position that these broker-dealers
may fulfill their prospectus delivery requirements with respect to the exchange
notes, other than a resale of an unsold allotment from the original sale of the
existing notes, with this prospectus. Under the registration rights agreement,
we are required to allow these broker-dealers and other persons, if any,
subject to similar prospectus delivery requirements to use this prospectus as
it may be amended or supplemented from time to time, in connection with the
resale of such exchange notes.
We do not intend to seek our own no-action letter, and there is no assurance
that the staff of the SEC would make a similar determination regarding the
exchange notes as it has in these no-action letters to third parties.
Following the closing of the exchange offer, holders of existing notes not
tendered will not have any further registration rights except in limited
circumstances requiring the filing of a shelf
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registration statement, and the existing notes will continue to be subject to
restrictions on transfer. Accordingly, the liquidity of the market for the
existing notes could be impaired.
Terms of the Exchange Offer; Period for Tendering Existing Notes
This prospectus and the accompanying letter of transmittal contain the terms
and conditions of the exchange offer. Upon the terms and subject to the
conditions included in this prospectus and in the letter of transmittal, which
together constitute the exchange offer, we will accept for exchange existing
notes which are properly tendered on or prior to the expiration date, unless
you have withdrawn them as permitted below:
. when you tender to us existing notes as provided below, our acceptance of
the existing notes will constitute a binding agreement between you and us
upon the terms and subject to the conditions in this prospectus and in
the accompanying letter of transmittal.
. you may tender some or all of your existing notes in denominations of
$1,000 principal amount or any integral multiple of $1,000. For each
$1,000 principal amount of existing notes properly tendered to us
pursuant to the exchange offer, we will issue you $1,000 principal amount
of exchange notes. The exchange notes, like the existing notes, will
accrete in value at a rate of 13 3/8% per annum until November 1, 2004,
compounded semi-annually. At that time, interest will begin to accrue and
will be payable semi-annually on May 1 and November 1 of each year,
commencing on May 1, 2005. No additional interest will be paid, and no
additional accretion will occur, on existing notes tendered and accepted
for exchange.
. we have agreed to use commercially reasonably efforts to cause the
registration statement of which this prospectus is a part to be effective
continuously during, and to keep the exchange offer open for, a period of
not less than 20 business days (or longer if required by applicable law)
from the effective date of the registration statement, which is
approximately the same as the date of this prospectus. We are sending
this prospectus, together with the letter of transmittal, on or about the
date of this prospectus to all of the registered holders of existing
notes at their addresses on the list maintained by the trustee with
respect to existing notes.
. the exchange offer expires at 5:00 p.m., New York City time, on ,
2000. We, in our sole discretion, may extend the period of time for which
the exchange offer is open. The term "expiration date" means ,
2000 or, if extended by us, the latest time and date to which the
exchange offer is extended.
. as of the date of this prospectus, $400,000,000 in aggregate principal
amount of the existing notes were outstanding. The exchange offer is not
conditioned upon any minimum principal amount of existing notes being
tendered.
. our obligation to accept existing notes for exchange pursuant to the
exchange offer is subject to conditions that we describe under the
heading "--Certain Conditions to the Exchange Offer."
. we expressly reserve the right, at any time, to extend the period of time
during which the exchange offer is open, and thereby delay acceptance of
any existing notes, by giving oral or written notice of such extension to
the exchange agent and notice of such extension to the holders as
described below. During any such extension, all existing notes previously
tendered will remain subject to the exchange offer and may be accepted
for exchange by us. Any
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existing notes not accepted for exchange for any reason will be returned
without expense to the tendering holder thereof as promptly as
practicable after the expiration or termination of the exchange offer.
. we expressly reserve the right to amend or terminate the exchange offer,
and not to accept for exchange any existing notes that we have not yet
accepted for exchange, upon the occurrence of any of the conditions of
the exchange offer specified below under the heading "--Certain
Conditions to the Exchange Offer."
. we (directly or through DTC) will give oral or written notice of any
extension, amendment, termination or non-acceptance described above to
holders of the existing notes as promptly as practicable. If we extend
the expiration date, we will give notice by means of a press release or
other public announcement no later than 9:00 a.m., New York City time, on
the business day after the previously scheduled expiration date. Without
limiting the manner in which we may choose to make any public
announcement and subject to applicable law, we will have no obligation to
publish, advertise or otherwise communicate any such public announcement
other than by issuing a release to the Dow Jones News Service.
. neither holders nor beneficial owners of existing notes have appraisal or
dissenters' rights in connection with the exchange offer.
. existing notes which are not tendered for exchange or are tendered but
not accepted in connection with the exchange offer will remain
outstanding and be entitled to the benefits of the indenture, but will
not be entitled to any further registration or exchange rights under the
registration rights agreement.
. we intend to conduct the exchange offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the SEC
thereunder, including Rule 14e-1 to the extent applicable. Rule 14e-1
describes unlawful tender practices under the Exchange Act and requires
us, among other things:
. to hold our exchange offer open for at least 20 business days;
. to give 10 days notice of any change in the terms of the exchange
offer; and
. to issue a press release in the event of an extension of the exchange
offer.
. by executing, or otherwise becoming bound by, the letter of transmittal,
you will be making representations to us.
The form and terms of the exchange notes will be substantially identical to
the form and terms of the existing notes except that:
. the exchange notes will be issued in a transaction registered under the
Securities Act;
. the exchange notes will not be subject to transfer restrictions; and
. provisions relating to the payment of liquidated damages will be
eliminated.
The exchange notes will evidence the same debt as the existing notes. The
exchange notes will be issued under and entitled to the benefits of the
indenture.
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Neither we nor our Board of Directors makes any recommendation to holders or
beneficial owners of existing notes whether to tender or refrain from tendering
all or any portion of their existing notes under the exchange offer. Moreover,
no one has been authorized to make any recommendation of this type. Holders and
beneficial owners of existing notes must make their own decision whether to
tender in the exchange offer and, if so, the amount of existing notes to tender
after reading this prospectus and the letter of transmittal and consulting with
their advisors, if any, based on their own financial positions and
requirements.
You are advised that we may extend the exchange offer in the event that some
portion of the existing notes have not been tendered on a timely basis. We may
elect to do this to give holders of existing notes the ability to participate
in the exchange offer and to avoid the significant reduction in liquidity they
might experience by holding an unexchanged note.
Important rules concerning the exchange offer.
You should note that:
. we will determine all questions as to the validity, form, eligibility,
including time of receipt, and acceptance of existing notes tendered for
exchange in our sole discretion, which determination shall be final and
binding.
. we reserve the absolute right to reject any and all tenders of any
particular existing notes not properly tendered or to not accept any
particular existing notes which acceptance might, in our judgment or the
judgment of our counsel, be unlawful.
. we reserve also the absolute right to waive any defects or irregularities
or conditions of the exchange offer as to any particular existing notes
either before or after the expiration date, including the right to waive
the ineligibility of any holder who seeks to tender existing notes in the
exchange offer. Unless we agree to waive any defect or irregularity in
connection with the tender of existing notes for exchange, such waiver
must be cured within such reasonable period of time as we shall
determine.
. our interpretation of the terms and conditions of the exchange offer as
to any particular existing notes either before or after the expiration
date, including the letter of transmittal and the instructions thereto,
shall be final and binding on all parties.
. neither we, the exchange agent nor any other person shall be under any
duty to give notification of any defect or irregularity with respect to
any tender of existing notes for exchange, nor shall any of us incur any
liability for failure to give such notification.
Procedures for Tendering Existing Notes
What to submit and how.
If you, as the registered holder of an existing note, wish to tender your
existing notes for exchange pursuant to the exchange offer, you must transmit a
properly completed and duly executed
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letter of transmittal, including all other documents required by such letter of
transmittal, to State Street Bank and Trust Company at one of the addresses set
forth below under "--Exchange Agent" on or prior to the expiration date.
In addition,
. certificates for such existing notes must be received by the exchange
agent along with the letter of transmittal,
OR
. a timely book-entry confirmation of such existing notes, if such
procedure is available, into the exchange agent's account at DTC pursuant
to the procedure for book-entry transfer described below, must be
received by the exchange agent prior to the expiration date,
OR
. you must comply with the guaranteed delivery procedures described below.
The method of delivery of existing notes, letters of transmittal and all
other required documents is at your election and risk. If delivery is by mail,
we recommend that you use registered mail, properly insured, with return
receipt requested. In all cases, sufficient time should be allowed to assure
timely delivery. No letters of transmittal or existing notes should be sent to
us.
If you are the registered holder of existing notes that you hold for a
beneficial owner other than yourself, you should, upon receipt of this
prospectus, seek instructions from the beneficial owner whether the beneficial
owner would like for you to tender in the exchange offer any or all of the
existing notes that you hold for the account of the beneficial owner. We have
included a form of letter to a beneficial owner in the letter of transmittal
accompanying this prospectus.
How to sign your letter of transmittal and other documents.
Signatures on a letter of transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the existing notes surrendered for exchange
pursuant thereto are tendered:
. by a registered holder of the existing notes who has not completed the
box entitled "Special Issuance Instructions" or "Special Delivery
Instructions" on the letter of transmittal, or
. for the account of an Eligible Institution (as defined below).
If signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, are required to be guaranteed, such guarantees must be by:
. a member of or participant in the Securities Transfer Agents Medallion
Program or the New York Stock Exchange Medallion Signature Program, or
. an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act (an "Eligible Institution"), which includes a
bank; a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer; a credit union; a national
securities exchange, registered securities association or clearing
agency; and specified savings associations, as each is defined in Rule
17Ad-15.
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If existing notes are registered in the name of a person other than the
person signing the letter of transmittal, the existing notes surrendered for
exchange must be endorsed by, or be accompanied by, a written instrument or
instruments of transfer or exchange, in satisfactory form as determined by us
in our sole discretion, duly executed by the registered holder with the
signature thereon guaranteed by an Eligible Institution.
If the letter of transmittal is signed by a person or persons other than the
registered holder or registered holders of existing notes, such existing notes
must be endorsed or accompanied by appropriate powers of attorney, in either
case signed exactly as the name or names of the registered holder or registered
holders that appear on the existing notes.
If the letter of transmittal or any existing notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by us,
proper evidence satisfactory to us of the person's authority to so act must be
submitted.
Acceptance of Existing Notes for Exchange; Delivery of Exchange Notes
Upon satisfaction or waiver of all of the conditions to the exchange offer,
we will accept, promptly after the expiration date, all existing notes properly
tendered and will issue the exchange notes promptly after acceptance of the
existing notes, subject to the discussion under the heading "--Certain
Conditions to the Exchange Offer." For purposes of the exchange offer, we shall
be deemed to have accepted properly tendered existing notes for exchange when,
as and if we have given oral or written notice thereof to the exchange agent.
In all cases, we will only issue exchange notes in exchange for existing
notes that are accepted for exchange after timely receipt by the exchange agent
of:
EITHER:
. certificates for such existing notes, or
. a timely book-entry confirmation of the transfer of such existing notes
into the exchange agent's account at DTC pursuant to the book-entry
transfer procedures described below;
AND
. a properly completed and duly executed letter of transmittal and all
other required documents.
If we do not accept any tendered existing notes for any reason included in
the terms and conditions of the exchange offer or if you submit certificates
representing existing notes in a greater principal amount than you wish to
exchange, we will return such unaccepted or non-exchanged existing notes
without expense to the tendering holder or, in the case of existing notes
tendered by book-entry transfer into the exchange agent's account at DTC
pursuant to the book-entry transfer procedures described below, such non-
exchanged existing notes will be credited to an account maintained with DTC as
promptly as practicable after the expiration or termination of the exchange
offer.
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Book-Entry Transfer
The exchange agent will make a request to establish an account in its name
with respect to the existing notes at DTC for purposes of the exchange offer
promptly after the date of this prospectus. Any financial institution that is a
participant in DTC's systems may make book-entry delivery of existing notes by
causing DTC to transfer such existing notes into the exchange agent's account
in accordance with DTC's Automated Tender Offer Program procedures for
transfer. However, the exchange for the existing notes so tendered will only be
made after timely confirmation of such book-entry transfer of existing notes
into the exchange agent's account, and timely receipt by the exchange agent of
an agent's message (as defined in the next sentence) and any other documents
required by the letter of transmittal. The term "agent's message" means a
message, transmitted by DTC and received by the exchange agent and forming a
part of a book-entry confirmation, which states that DTC has received an
express acknowledgment from a participant tendering existing notes that are the
subject of such book-entry confirmation that such participant has received and
agrees to be bound by the terms of the letter of transmittal, and that we may
enforce such agreement against such participant. Although delivery of existing
notes may be effected through book-entry transfer into the exchange agent's
account at DTC, the letter of transmittal, or facsimile thereof, properly
completed and duly executed, with any required signature guarantees and any
other required documents, must in any case be delivered to and received by the
exchange agent at one of its addresses set forth under the heading "--Exchange
Agent" on or prior to the expiration date, or the guaranteed delivery procedure
set forth below must be complied with.
Delivery of documents to DTC in accordance with its procedures does not
constitute delivery to the exchange agent.
Guaranteed Delivery Procedures
If you are a registered holder of existing notes and you want to tender such
existing notes but your existing notes are not immediately available, or time
will not permit your existing notes or other required documents to reach the
exchange agent before the expiration date, or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if
. the tender is made through an Eligible Institution,
. prior to the expiration date, the exchange agent receives from such
Eligible Institution a properly completed and duly executed letter of
transmittal, or a facsimile thereof, and notice of guaranteed delivery,
substantially in the form provided by us by facsimile transmission, mail
or hand delivery, stating:
. the name and address of the holder of existing notes,
. the amount of existing notes tendered, and
. that the tender is being made by delivering such notice and
guaranteeing that within five New York Stock Exchange trading days
after the date of execution of the notice of guaranteed delivery, the
certificates of all physically tendered existing notes, in proper form
for transfer, or a book-entry confirmation, as the case may be, and
any other documents required by the letter of transmittal will be
deposited by that Eligible Institution with the exchange agent; and
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. the certificates for all physically tendered existing notes, in proper
form for transfer, or a book-entry confirmation, as the case may be, and
all other documents required by the letter of transmittal, are received
by the exchange agent within five New York Stock Exchange trading days
after the date of execution of the notice of guaranteed delivery.
Withdrawal Rights
You can withdraw your tender of existing notes at any time prior to the
expiration date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the exchange agent at one of the addresses listed below under
the heading "--Exchange Agent." Any such notice of withdrawal must specify:
. the name of the person having tendered the existing notes to be
withdrawn,
. the existing notes to be withdrawn, including the principal amount of
such existing notes,
. if certificates for existing notes have been delivered to the exchange
agent, the name in which such existing notes are registered, if different
from that of the person tendering the existing notes to be withdrawn,
. if certificates for existing notes have been delivered or otherwise
identified to the exchange agent, the serial numbers of the particular
certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless you are an
Eligible Institution, and
. if existing notes have been tendered pursuant to the procedure for book-
entry transfer described above, the name and number of the account at DTC
to be credited with the withdrawn existing notes. Any notice of
withdrawal must otherwise comply with the procedures of such facility.
Please note that all questions as to the validity, form and eligibility,
including time of receipt, of such notices of withdrawal will be determined by
us, and our determination shall be final and binding on all parties. Any
existing notes so withdrawn will be deemed not to have been validly tendered
for exchange for purposes of the exchange offer.
If you have properly withdrawn existing notes and wish to re-tender them,
you may do so by following one of the procedures described under the heading
"--Procedures for Tendering Existing Notes" above at any time on or prior to
the expiration date.
Certain Conditions to the Exchange Offer
Notwithstanding any other provisions of the exchange offer, we will not be
required to accept for exchange, or to issue exchange notes in exchange for,
any existing notes and may terminate or amend the exchange offer, if at any
time before the acceptance of such existing notes for exchange or the exchange
of the exchange notes for such existing notes, such acceptance or issuance
would violate applicable law or any interpretation of the staff of the SEC.
The foregoing condition is for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to such condition. Our failure at
any time to exercise the foregoing rights
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shall not be deemed a waiver by us of any such right and each such right shall
be deemed an ongoing right which may be asserted at any time and from time to
time.
In addition, we will not accept for exchange any existing notes tendered,
and no exchange notes will be issued in exchange for any such existing notes,
if at such time any stop order shall be threatened or in effect with respect to
the exchange offer or the qualification of the indenture under the Trust
Indenture Act of 1939.
Exchange Agent
State Street Bank and Trust Company has been appointed as the exchange agent
for the exchange offer. All executed letters of transmittal should be directed
to the exchange agent at one of the addresses 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:
Deliver To:
By Overnight Courier or Hand By Registered or Certified
Delivery: Mail:
State Street Bank and Trust Company State Street Bank and Trust
Corporate Trust Department Company
2 Avenue de Lafayette Corporate Trust Department
Corporate Trust Window, Fifth Floor P.O. Box 778
Boston, Massachusetts 02111-1724 Boston, Massachusetts 02102-
Attn: Kellie Mullen 0078
Attn: Kellie Mullen
Telephone: (617) 664-5587
Facsimile: (617) 662-1452 Telephone: (617) 664-5587
Attn: Kellie Mullen Facsimile: (617) 662-1452
Attn: Kellie Mullen
Delivery to an address other than as listed above or transmission of
instructions via facsimile other than as listed above does not constitute a
valid delivery.
Fees and Expenses
The principal solicitation is being made by mail; however, additional
solicitation may be made by telegraph, telephone or facsimile transmission or
in person by our officers, regular employees and affiliates. We will not pay
any additional compensation to any such officers and employees who engage in
soliciting tenders. We will not make any payment to brokers, dealers or others
soliciting acceptances of the exchange offer. We will, however, pay all
expenses incident to our performance of and compliance with the registration
rights agreement, including all registration and filing fees and expenses, all
fees and expenses of compliance with securities laws, all printing expenses,
all fees and expenses of our legal counsel and independent accountants and
certain other expenses. In addition, we have agreed to reimburse the initial
purchasers of the existing notes and holders who are tendering existing notes
and/or selling or reselling existing notes or exchange notes pursuant to the
discussion under the heading "Plan of Distribution" for the reasonable fees and
disbursements of not more than one counsel.
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Transfer Taxes
Holders who tender their existing notes for exchange will not be obligated
to pay any transfer taxes in connection therewith, except that holders who
instruct us to register exchange notes in the name of, or request that existing
notes not tendered 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 thereon.
Accounting Treatment
The exchange notes will be recorded at the same carrying value as the
existing notes as reflected in our accounting records on the date of the
exchange. Accordingly, no gain or loss for accounting purposes will be
recognized by us upon the closing of the exchange offer. We will amortize the
expenses of the exchange offer over the term of the exchange notes.
U.S. Federal Tax Considerations
Because the economic terms of the exchange notes and the existing notes are
identical, your exchange of existing notes for exchange notes under the
exchange offer will not constitute a taxable exchange of the existing notes. As
a result:
. you will not recognize taxable gain or loss when you receive exchange
notes in exchange for existing notes;
. your holding period in the exchange notes will include your holding
period in the existing notes; and
. your basis in the exchange notes will equal your basis in the existing
notes.
You should read the discussion under the heading "Certain U.S. Federal Tax
Considerations" before deciding to exchange your existing notes for exchange
notes.
Participation in the Exchange Offer; Untendered Notes
Participation in the exchange offer is voluntary. Holders and beneficial
owners of the existing notes are urged to consult their financial and tax
advisors in making their own decisions on what action to take.
As a result of the making of, and upon acceptance for exchange of all
existing notes tendered under the terms of, this exchange offer, we will have
fulfilled a covenant contained in the terms of the registration rights
agreement. Holders of the existing notes who do not tender their existing notes
in the exchange offer will continue to hold the existing notes and will be
entitled to all the rights, and subject to the limitations applicable to the
existing notes, under the indenture, except for any rights under the
registration rights agreement that by their term terminate or cease to have
further effect as a result of the making of this exchange offer. All untendered
existing notes will continue to be subject to the restrictions on transfer
described in the indenture. To the extent that existing notes are tendered and
accepted in the exchange offer, the trading market, if any, for untendered
existing notes
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could be impaired. This is because there will probably be many fewer remaining
existing notes outstanding following the exchange, thereby significantly
reducing the liquidity of the untendered notes.
We may in the future seek to acquire untendered existing notes in the open
market or through privately negotiated transactions or subsequent exchange
offers or otherwise. We intend to make any acquisitions of existing notes
following the applicable requirements of the Exchange Act, and the rules and
regulations of the SEC under the Exchange Act, including Rule 14e-1, to the
extent applicable. We have no present plan to acquire any existing notes that
are not tendered in the exchange offer or to file a registration statement to
permit resales of any existing notes that are not tendered in the exchange
offer, but we may be required, under certain circumstances in accordance with
the registration rights agreement, to file a registration statement to permit
resales of existing notes that are not permitted to be tendered in the exchange
offer.
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USE OF PROCEEDS
The combined net proceeds from our financings were approximately $378.5
million after deducting the discount payable to the initial purchasers of the
existing notes and the estimated offering fees and expenses of the existing
notes. We intend to use the net proceeds of our financings together with our
existing cash balance of $17.0 million:
. to fund the buildout of our PCS operations and fund anticipated
operating losses in the estimated initial amount of $294.7 million.
. to repay $95.4 million of our existing credit facilities at US Unwired
and LA Unwired, which mature on varying dates between June 30, 2005 and
September 30, 2007 and which bear interest at our option at floating
rates tied to the London Interbank Offering Rate, the U.S. Treasury
Securities rate or the prime rate; and
. for other general corporate purposes.
We will not receive any cash from the issuance of the exchange notes. In
consideration for issuing the exchange notes as contemplated in this
prospectus, we will receive in exchange existing notes in like principal
amount. The existing notes surrendered in exchange for exchange notes will be
retired and canceled and cannot be reissued. Issuance of the exchange notes
will not result in a change in our amount of outstanding debt.
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CAPITALIZATION
In the table below, we provide as of September 30, 1999, (1) the actual cash
and capitalization of US Unwired and (2) the cash and capitalization of US
Unwired as adjusted based on the assumption that the offering of the Notes and
the preferred stock investment by The 1818 Fund had been completed on September
30, 1999. You should read this table in conjunction with our consolidated
financial statements and related notes, all of which are included elsewhere in
this prospectus.
<TABLE>
<CAPTION>
As of September
30, 1999
-----------------
As
Actual Adjusted
-------- --------
(In thousands)
<S> <C> <C>
Cash and cash equivalents.................................... $ 16,966 $170,123
======== ========
Debt, including current maturities:
New US Unwired Senior Credit Facilities.................... $ -- $ --
Existing US Unwired Senior Credit Facilities............... 28,500 --
Existing LA Unwired Senior Credit Facilities............... 66,890 --
Notes...................................................... -- 209,224
Other debt(/1/)............................................ 9,844 9,844
-------- --------
Total debt............................................... 105,234 219,068
-------- --------
Mandatory redeemable convertible preferred stock............. -- 50,000
--------
Stockholders' equity:
Common stock............................................... 113 113
Additional paid-in capital................................. 1,835 1,835
Retained earnings.......................................... 41,129 39,653
-------- --------
Total stockholders' equity............................... 43,077 41,601
-------- --------
Total capitalization..................................... $148,311 $310,669
======== ========
</TABLE>
- --------
(/1/) Of the balance shown, $9.3 million comprises non-recourse obligations to
US Unwired.
46
<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
In the table below, we provide our selected historical financial data based
on our audited consolidated financial statements for each of the five years in
the period ended December 31, 1998 and our unaudited consolidated financial
statements for the nine-month periods ended September 30, 1998 and 1999. You
should read this selected historical financial data along with our consolidated
financial statements and the related notes and the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," all of which are included elsewhere in this prospectus.
In reading the information in this table, you should be aware that results
for otherwise comparable periods are not directly comparable because:
. in July 1998, we sold all of our cellular assets related to our
Mississippi, Alabama and Kansas markets, including our majority interest
in Mississippi 34 Cellular Corporation;
. in August 1998, we ended our practice of reselling Meretel's PCS service
when we sold our wholesale PCS subscribers to Meretel; and
. the results for LA Unwired and LEC Unwired are consolidated with those of
US Unwired for the nine months ended September 30, 1999 due to US
Unwired's increased equity ownership in both companies in the first nine
months of 1999, but results are presented on the equity method for the
nine months ended September 30, 1998.
<TABLE>
<CAPTION>
Nine Months
Year Ended December 31, Ended September 30,
------------------------------------------------- ----------------------
1994 1995 1996 1997 1998(/1/)(/2/) 1998 1999(/3/)
------- ------- -------- -------- -------------- --------- ------------
Statement of Operations
Data: (In thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues.......... $22,553 $39,252 $ 61,893 $ 74,668 $71,711 $ 58,923 $ 45,561
Net income (loss)....... 1,750 2,603 3,854 (1,509) 28,921 33,013 (9,773)
Other Financial Data:
Ratio of earnings to
fixed charges(/4/)..... 4.5 2.0 1.9 -- 8.8 N/A --
<CAPTION>
At December 31, At September 30,
------------------------------------------------- ----------------------
1994 1995 1996 1997 1998(/2/) 1998 1999
------- ------- -------- -------- -------------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance Sheet Data: (In thousands)
Total assets............ $35,640 $78,754 $132,328 $142,133 $89,914 $ 110,421 $ 167,701
Long-term debt,
including current
maturities............. 13,686 52,051 95,901 100,066 29,067 29,079 105,234
</TABLE>
- --------
(1) In July 1998, in anticipation of the Sprint PCS buildout, US Unwired sold
all of its cellular assets related to its Mississippi, Alabama and Kansas
markets, along with its majority ownership interest in Mississippi 34
Cellular Corporation, for $161.5 million. This transaction resulted in a
gain of approximately $57.4 million which is included in net income (loss).
(2) In June 1998, Meretel entered into an agreement with the FCC to surrender
its current licenses in exchange for extinguishment of all outstanding debt
and related accrued interest due to the FCC. Meretel surrendered its PCS
licenses because it entered into an agreement with Sprint PCS to use Sprint
PCS's licenses in the service areas in which Meretel operates. This
transaction resulted in a loss of $3.5 million, and our partnership share
of that loss, which is approximately $850,000, is included in net income
(loss).
47
<PAGE>
(3) In the first nine months of 1999, US Unwired made a series of capital
contributions to LA Unwired and LEC Unwired which increased its ownership
percentage in LA Unwired to 71% and in LEC Unwired to 53%. As a result, the
operating results for the nine months ended September 30, 1999 include the
operations of LA Unwired and LEC Unwired on a consolidated basis.
(4) For purposes of calculating the ratio of earnings to fixed charges,
earnings represent income before income taxes, plus the equity in loss of
affiliates, plus fixed charges. Earnings are reduced by the equity in loss
of affiliates related to Meretel because US Unwired guarantees a portion of
Meretel's debt. Fixed charges consist of interest expense on all
indebtedness plus the interest portion of rental expense, which US Unwired
estimates to be representative of an interest factor, and amortization of
debt issuance costs. Earnings were insufficient to cover fixed charges by
approximately $2.0 million for the year ended December 31, 1997, and by
approximately $23.7 million for the nine months ended September 30, 1999.
48
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with our
consolidated financial statements and the related notes, all of which are
included elsewhere in this prospectus . The discussion contains forward-looking
statements that involve some risk and uncertainties. Our actual results could
differ materially from the results anticipated in these forward-looking
statements as a result of factors including, but not limited to, those under
Risk Factors and elsewhere in this prospectus.
Overview
We have the largest population coverage and the most subscribers of any
affiliate of Sprint PCS and intend to be a leading provider of wireless PCS
services throughout the Gulf States region. We have entered into management
agreements with Sprint PCS whereby we became a Sprint PCS affiliate with the
exclusive right to provide 100% digital, 100% PCS services in our service area
under the Sprint(R) and Sprint PCS(R) brand names. Sprint and MCI WorldCom
announced on October 5, 1999 that the boards of directors of both companies
have approved a definitive merger agreement whereby the two companies would
merge to form a new company called WorldCom. The merger is subject to various
conditions, including the approvals of the shareholders of both companies, the
Federal Communications Commission, the Justice Department, various state
government bodies and foreign antitrust authorities. We do not expect the
merger to have a negative impact on our affiliation with Sprint or its
successor if the merger is completed.
Our service area includes 38 contiguous markets with an aggregate resident
population of approximately 9.9 million and covers portions of eastern Texas,
southern Oklahoma, significant portions of Louisiana, Mississippi and Alabama,
southern Arkansas, the Florida panhandle and southern Tennessee. We believe
that our service area is important to Sprint PCS's strategy of providing a
nationwide, seamless PCS network, as our service area is contiguous with Sprint
PCS's recently launched markets of Houston, Dallas, Little Rock, New Orleans,
Birmingham, Tallahassee and Memphis. We estimate that Sprint PCS paid over $100
million for the PCS licenses in our service area (including additional expenses
for microwave clearing). In addition, we are purchasing our network and
subscriber equipment under Sprint PCS's vendor contracts at Sprint PCS's volume
discounts. Our agreements with Sprint PCS enable us to provide PCS services to
subscribers through an exclusive distribution agreement with Radio Shack and
other agreements with national retailers such as Circuit City, Office Depot,
Dillard's, Sam's Wholesale Club, Office Max and Best Buy.
Our management agreements with Sprint PCS require total collected revenue
sharing of 8% to Sprint PCS and 92% to US Unwired, except for amounts collected
with respect to taxes. US Unwired retains 100% of revenues from non-US Unwired
Sprint PCS customers traveling in our service area, sales of handsets and
accessories and proceeds from sales not in the ordinary course of business. In
addition, we retain 100% of revenues from services provided outside the scope
of the management agreements with Sprint PCS.
We are currently offering PCS service in nine markets covering an aggregate
population of 3.0 million (assuming completion of the Meretel transaction
described below). These markets are
49
<PAGE>
Beaumont, Longview-Marshall, Texarkana and Tyler, Texas, and Alexandria, Houma,
Lake Charles, Monroe and Shreveport, Louisiana. As of September 30, 1999, we
had approximately 33,000 subscribers within these nine markets (assuming
completion of the Meretel transaction described below). This phase of our
buildout represents 218 constructed and co-located towers. In addition, we have
begun radio frequency design, network design and cell site engineering in the
remaining markets to be built out. We expect to complete network construction
of our markets and be providing PCS service (with 55% to 75% population
coverage in a majority of our markets) to a licensed population of
approximately 3.4 million by December 1999, to a licensed population of
approximately 8.4 million by December 2000 and to our entire service area
licensed population of approximately 9.9 million by June 2001. Thereafter, we
will continue buildout coverage as needed.
Beginning in 1987, we acquired 14 cellular rural markets and one cellular
metropolitan market located in Louisiana, Mississippi, Alabama and Kansas. In
July 1998, we sold our cellular markets in Mississippi, Alabama and Kansas for
a total of $161.5 million. We retained the Lake Charles, Louisiana cellular
market and had approximately 61,000 cellular subscribers and 24,000 paging
subscribers as of September 30, 1999.
In 1995, US Unwired formed Meretel Communications Limited Partnership, a
Louisiana partnership in commendum, with Fort Bend Telephone Company, Inc.,
EATELCORP, Inc., Meretel Wireless, Inc., XIT Leasing, Inc. and Wireless
Management Corporation to bid for, develop and operate PCS licenses in
specified markets. Under the initial partnership agreement, Meretel's general
partner, Wireless Management Corporation, owned 2%; US Unwired, Fort Bend, and
EATEL each owned 24 1/3%; XIT owned 5%; and Meretel Wireless owned 20%. Meretel
was the successful bidder in the FCC auction and was awarded PCS licenses for
the Baton Rouge, Lafayette and Hammond, Louisiana and Beaumont and Lufkin,
Texas markets. US Unwired and EATEL jointly managed Meretel from inception
through the completion of the buildout of the Beaumont, Lafayette and Baton
Rouge markets in November 1997. The Hammond and Lufkin markets were scheduled
for buildout at a later date. After completing buildout of the first three
markets, Meretel sold wholesale wireless minutes to US Unwired and EATEL, both
of which resold the minutes to the general public. On June 8, 1998, Meretel
returned the PCS licenses for the five markets described above to the FCC under
an amnesty program promoted by the FCC. Meretel simultaneously executed a
management agreement with Sprint PCS for Meretel to manage Sprint PCS's
spectrum in the five markets in which Meretel formerly owned PCS licenses. On
August 1, 1998, we sold our wholesale PCS subscriber base in the Beaumont,
Lafayette and Baton Rouge markets to Meretel to enable Meretel to operate as a
retailer of PCS services. At the same time, Meretel contracted with US Unwired
to manage Meretel's retail operations including sales, customer care and back
end services for Meretel. EATEL continued to buy wholesale wireless minutes
from Meretel. The owners of Meretel have agreed to restructure the partnership.
Under the new agreement, Meretel will transfer ownership of the Beaumont-Port
Arthur and Lufkin-Nacogdoches markets to Texas Unwired, a general partnership
of which US Unwired owns 80% and is the managing partner. As part of the new
agreement, we will transfer to Meretel the Biloxi, Mississippi market, and
EATEL will sell its wholesale PCS subscriber base to Meretel. After the
transactions are completed, we will retain an approximately 13.5% interest in
Meretel, which will continue to manage the Lafayette, Hammond, Baton Rouge and
Biloxi markets for Sprint PCS. We are terminating our present management
agreement with Meretel.
50
<PAGE>
As of September 30, 1999, we held a 71% ownership interest in LA Unwired.
Since September 30, 1999, we have continued to make capital contributions to LA
Unwired, and we plan to make additional contributions from our financings to
increase our ownership interest in LA Unwired to 95%.
We recently changed our corporate structure. Previously, US Unwired was our
operating cellular company, and LA Unwired and LEC Unwired were its
subsidiaries. In late September 1999, we formed a holding company named US
Unwired, and all of the stockholders of old US Unwired became stockholders of
the new holding company. This was effected by an exchange of all of the issued
and outstanding capital stock of old US Unwired, the operating cellular
company, for an equal number of shares of new US Unwired, the holding company.
Old US Unwired was renamed Unwired Telecom and became a wholly owned subsidiary
of new US Unwired. Unwired Telecom is in the process of making a stock dividend
to US Unwired of all of its ownership interest in each of LA Unwired and LEC
Unwired, thereby making LA Unwired and LEC Unwired subsidiaries of the holding
company.
Results of Operations
Nine months ended September 30, 1999 compared to nine months ended September
30, 1998.
The results from the nine months ended September 30, 1999 are not directly
comparable to the results for the nine months ended September 30, 1998 because:
. in July 1998, we sold all of our cellular assets related to our
Mississippi, Alabama and Kansas markets and our majority interest in
Mississippi 34 Cellular Corporation. Accordingly, the results for the
nine months ended September 30, 1998 include the operating results of the
sold assets, but the results for the nine months ended September 30, 1999
do not;
. in August 1998, we ended our practice of reselling Meretel's PCS service
when we sold our wholesale PCS subscribers to Meretel. Thus, the results
for the nine months ended September 30, 1998 include PCS reseller
activity, but the results for the nine months ended September 30, 1999 do
not; and
. results for LA Unwired and LEC Unwired are consolidated with those of US
Unwired for the nine months ended September 30, 1999 due to US Unwired's
increased equity ownership in both companies in the first nine months of
1999, but results are presented on the equity method for the nine months
ended September 30, 1998.
We had approximately 60,500 cellular subscribers at September 30, 1999 as
compared to approximately 62,800 at September 30, 1998. Our Louisiana cellular
market had 2,300 fewer subscribers at September 30, 1999 as compared to
September 30, 1998. In addition to our cellular operations, we had
approximately 23,400 PCS subscribers at September 30, 1999 as compared to
approximately 600 at September 30, 1998. We launched our PCS operations in
September 1998.
51
<PAGE>
Revenues
<TABLE>
<CAPTION>
Nine Months
Ended
September 30,
---------------
1998 1999
------- -------
(In thousands)
<S> <C> <C>
Subscriber revenues....................................... $39,920 $32,671
Roaming revenues.......................................... 10,210 7,553
Merchandise sales......................................... 3,463 3,670
Other revenues............................................ 5,330 1,667
------- -------
Total revenues.......................................... $58,923 $45,561
</TABLE>
Subscriber revenues were $32.7 million for the nine months ended September
30, 1999 as compared to $39.9 million for the nine months ended September 30,
1998. This decrease of $7.2 million was primarily the result of our 1998 sale
of selected cellular markets, which had generated subscriber revenues of $13.5
million for the nine months ended September 30, 1998, and the loss of
subscriber revenues related to the conclusion of our PCS reseller activity of
$2.1 million. Additionally, subscriber revenue relating to our Louisiana
cellular properties decreased $1.7 million. Offsetting the decreased subscriber
revenues from our Louisiana cellular properties, the sale of the cellular
properties and the conclusion of PCS reseller activity was the consolidation of
LA Unwired, which generated $6.5 million in subscriber revenues, and LEC
Unwired, which generated $3.6 million in subscriber revenues.
Roaming revenues were $7.6 million for the nine months ended September 30,
1999 as compared to $10.2 million for the nine months ended September 30, 1998.
This decrease of $2.6 million was primarily the result of our 1998 sale of
selected cellular markets, which had generated roaming revenues of $5.3 million
for the nine months ended September 30, 1998. This decrease was offset by the
consolidation of LA Unwired roaming revenues of $2.4 million for the nine
months ended September 30, 1999 and an increase in roaming revenues in our
Louisiana cellular markets of $291,000.
Merchandise sales were $3.7 million for the nine months ended September 30,
1999 as compared to $3.5 million for the nine months ended September 30, 1998.
This increase of $200,000 primarily resulted from the consolidation of LA
Unwired's merchandise sales, which totaled $2.7 million for the nine months
ended September 30, 1999. Offsetting the increase from the consolidation of LA
Unwired's merchandise sales was the conclusion of our PCS reseller activity,
which had generated merchandise sales of $1.6 million for the nine months ended
September 30, 1998, and the sale of selected cellular markets, which had
generated merchandise sales of $500,000 for the nine months ended September 30,
1998. We incurred also a decrease of $400,000 in merchandise sales relating to
our Louisiana cellular properties for the nine months ended September 30, 1999.
Other revenues were $1.7 million for the nine months ended September 30,
1999 as compared to $5.3 million for the nine months ended September 30, 1998.
This decrease of $3.6 million was primarily the result of the conclusion of our
PCS reseller activity, which had generated $2.2 million of other revenues for
the nine months ended September 30, 1998. The majority of other revenues from
our PCS reseller activities in 1998 reflected marketing subsidies paid to US
Unwired by our affiliate, Meretel. The remaining decrease primarily relates to
management fees charged to LA Unwired and LEC Unwired for the nine months ended
September 30, 1998 for which similar management fees for the nine months ended
September 30, 1999 were eliminated in consolidation.
52
<PAGE>
Operating Expenses
Cost of service was $15.8 million for the nine months ended September 30,
1999 as compared to $15.2 million for the nine months ended September 30, 1998.
The increase in cost of service of $600,000 was primarily a result of the
consolidation of LA Unwired and LEC Unwired. Cost of service for the nine
months ended September 30, 1999 was $6.0 million for LA Unwired and $2.5
million for LEC Unwired. This increase was offset by our 1998 sale of selected
cellular markets, the conclusion of our PCS reseller activity and a decrease of
$0.3 million in cost of service in our Louisiana cellular markets. Cost of
service for the nine months ended September 30, 1998 was $6.2 million for the
selected cellular markets sold and $1.5 million for our PCS reseller activity.
Merchandise cost of sales was $7.6 million for the nine months ended
September 30, 1999 as compared to $9.1 million for the nine months ended
September 30, 1998, representing a decrease of $1.5 million. The decrease in
merchandise cost of sales was primarily a result of our 1998 sale of selected
cellular markets and the conclusion of our PCS reseller activity. Merchandise
cost of sales for the nine months ended September 30, 1998 was $4.2 million for
our PCS reseller activities and $1.5 million for the selected cellular markets
sold. Also, merchandise cost of sales related to our Louisiana cellular markets
decreased $1.4 million. This decrease was offset primarily by the consolidation
of the merchandise cost of sales for LA Unwired of $5.6 million for the nine
months ended September 30, 1999.
General and administrative costs were $16.1 million for the nine months
ended September 30, 1999 as compared to $12.4 million for the nine months ended
September 30, 1998. This increase of $3.7 million was primarily the result of
the consolidation of LEC Unwired, which reported total general and
administrative expenses of $3.1 million for the nine months ended September 30,
1999, and LA Unwired, which reported general and administrative expenses of
$2.3 million for the nine months ended September 30, 1999. Additionally,
corporate general and administrative costs increased by $2.3 million. This
increase was offset by our 1998 sale of selected cellular markets and
conclusion of our PCS reseller activity. General and administrative costs for
the nine months ended September 30, 1998 were $2.4 million for the selected
cellular markets sold and $1.6 million for our PCS reseller activities.
Sales and marketing expenses were $9.5 million for the nine months ended
September 30, 1999 as compared to $9.3 million for the nine months ended
September 30, 1998. The increase in sales and marketing expenses of $200,000
was primarily the result of the consolidation of the sales and marketing
expenses of $4.5 million for LA Unwired and $1.7 million for LEC Unwired for
the nine months ended September 30, 1999 and an increase of $800,000 in our
Louisiana cellular markets. This increase was offset by our 1998 sale of
selected cellular markets and the conclusion of our PCS reseller activity.
Sales and marketing expenses for the nine months ended September 30, 1998 were
$3.2 million for the selected cellular markets sold and $3.6 million for our
PCS reseller activities.
Depreciation and amortization was $14.9 million for the nine months ended
September 30, 1999 as compared to $8.1 million for the nine months ended
September 30, 1998, representing an increase of $6.8 million. This increase was
primarily the result of LA Unwired and LEC Unwired being consolidated for the
nine months ended September 30, 1999 and an increase in our Louisiana cellular
markets of $1.5 million. Depreciation and amortization for the nine months
ended September 30, 1999 was $9.1 million for LA Unwired and $1.4 million for
LEC Unwired. This increase was offset
53
<PAGE>
by the depreciation and amortization for the nine months ended September 30,
1998 for the selected cellular markets sold of $5.2 million.
Operating Income/(Loss)
Total operating loss was $18.2 million for the nine months ended September
30, 1999 as compared to operating income of $4.9 million for the nine months
ended September 30, 1998. This decrease of $23.1 million was primarily the
result of the reduction of income associated with our 1998 sale of selected
cellular markets of $800,000; losses of $15.9 million associated with the
start-up of LA Unwired; losses of $5.1 million associated with the start-up of
LEC Unwired; and a decrease in operating income of $6.3 million related to our
Louisiana cellular markets. These decreases were offset by the conclusion of
our PCS reseller activity which resulted in operating losses of $5.0 million
for the nine months ended September 30, 1998.
Other Income/(Expense)
<TABLE>
<CAPTION>
Nine Months
Ended
September 30,
----------------
1998 1999
------- -------
(In thousands)
<S> <C> <C>
Interest expense...................................... $(5,484) $(5,691)
Interest income....................................... 780 1,396
Gain on sale of markets............................... 57,364 --
Gain on sale of PCS reseller customer base to
affiliate............................................ 2,285 --
------- -------
Total other income/(expense).......................... $54,945 $(4,295)
</TABLE>
Interest expense was $5.7 million for the nine months ended September 30,
1999 as compared to $5.5 million for the nine months ended September 30, 1998.
Our outstanding debt was $105.2 million at September 30, 1999 as compared to
$29.1 million at September 30, 1998. The increase in debt of $76.1 million was
largely the result of the inclusion of existing debt of $66.9 million relating
to LA Unwired and $9.3 million relating to LEC Unwired. Interest income was
$1.4 million for the nine months ended September 30, 1999 as compared to
$800,000 for the nine months ended September 30, 1998. This increase of
$600,000 was the result of our investment of a portion of the proceeds from our
1998 sale of selected cellular markets into interest bearing accounts.
Gain on sale of markets totaled $57.4 million for the nine months ended
September 30, 1998. This was attributable to our 1998 sale of selected cellular
markets. Gross proceeds allocated to us from the sale totaled $161.5 million.
The gain on the sale of PCS reseller customer base to affiliate totaled $2.3
million for the nine months ended September 30, 1998. This was the result of
our conclusion of PCS reseller activity in August 1998 and our sale of certain
PCS subscribers to Meretel.
Minority interest in losses of subsidiaries
Minority interest in losses from subsidiaries was $8.8 million for the nine
months ended September 30, 1999 as compared to $0 for the nine months ended
September 30, 1998. The increase in minority interest in losses of subsidiaries
results from the consolidation of LA Unwired and LEC Unwired for the nine
months ended September 30, 1999 and represents the portion of the losses from
LA Unwired and LEC Unwired allocable to minority shareholders of these
subsidiaries.
54
<PAGE>
Equity in losses of affiliates
Equity in losses from affiliates was $800,000 for the nine months ended
September 30, 1999 as compared to $6.6 million for the nine months ended
September 30, 1998. The decrease in the equity in loss of affiliates is
primarily due to the consolidation of LA Unwired and LEC Unwired for the nine
months ended September 30, 1999 versus reporting the operating results for
these companies under the equity method of accounting for the nine months ended
September 30, 1998.
Net Income/(Loss)
Net loss was $9.8 million for the nine months ended September 30, 1999 as
compared to net income of $33.0 million for the nine months ended September 30,
1998. This decrease in net income of $42.8 million was primarily the result of
the gain from the sale of the selected cellular markets in 1998.
EBITDA
Earnings before interest, taxes, depreciation and amortization, or EBITDA,
was $(3.4) million for the nine months ended September 30, 1999 as compared to
$12.9 million for the nine months ended September 30, 1998. The decrease of
$16.3 million was primarily the result of the consolidation of LA Unwired and
LEC Unwired, which resulted in a reduction of $10.5 million, the decrease of
EBITDA resulting from the sale of the selected cellular markets of $6.2
million; and the decrease in EBITDA of $4.5 million related to our Louisiana
cellular markets offset by the conclusion of the PCS reseller activity which
resulted in an increase of $4.9 million in EBITDA.
EBITDA consists of operating income before depreciation and amortization.
Although EBITDA is not calculated in accordance with generally accepted
accounting principles, we believe that EBITDA is widely used as a measure of
operating performance. Nevertheless, EBITDA should not be considered in
isolation or as a substitute for operating income, cash flows from operating
activities, or any other measure for determining our operating performance or
liquidity that is calculated in accordance with generally accepted accounting
principles. EBITDA is not necessarily indicative of amounts that may be
available for reinvestment in our business or other discretionary uses. In
addition, all companies do not calculate EBITDA in the same manner; therefore,
this measure may not be comparable to similarly titled measures reported by
other companies.
1998 compared to 1997.
The results from 1998 are not directly comparable to the results from 1997
because:
. the 1997 financial information includes 12 months of operating results
from the assets related to our selected cellular markets that we sold in
July 1998, and the 1998 financial information reflects only six months of
operations for those assets along with the gain from the sale of those
assets; and
. the 1998 financial information includes the results of seven months of
PCS reseller activity, and the 1997 financial information includes the
results of only three months of PCS reseller activity.
55
<PAGE>
Revenues
<TABLE>
<CAPTION>
Twelve Months
Ended
December 31,
---------------
1997 1998
------- -------
(In thousands)
<S> <C> <C>
Subscriber revenues....................................... $53,255 $48,723
Roaming revenues.......................................... 16,079 11,914
Merchandise sales......................................... 2,685 3,915
Other revenues............................................ 2,649 7,159
------- -------
Total revenues............................................ $74,668 $71,711
</TABLE>
Subscriber revenues were $48.7 million for 1998 as compared to $53.3 million
for 1997. The primary reason for this decrease of $4.6 million was our 1998
sale of selected cellular markets. Subscriber revenues for the selected
cellular markets in 1997 was $24.2 million as compared to $13.7 million in
1998, resulting in a decrease of $10.5 million. Offsetting the reduction in
revenues from the sale of selected cellular markets was the increase in
subscriber revenues from our Louisiana cellular markets of $4.0 million and
$1.9 million from our PCS reseller activity.
Roaming revenues were $11.9 million for 1998 as compared to $16.1 million
for 1997. This decrease of $4.2 million was primarily a result of our 1998 sale
of selected cellular markets. Roaming revenues for the selected cellular
markets sold were $10.2 in 1997 million as compared to $5.6 million for 1998,
resulting in a decrease of $4.6 million. Our Louisiana cellular markets had
roaming revenues of $6.3 million for 1998 as compared to $5.8 million for 1997,
representing an increase of $500,000.
Merchandise sales were $3.9 million for 1998 as compared to $2.7 million for
1997. This increase of $1.2 million was primarily the result of an increase of
11,000 in gross additional subscribers from PCS reseller activity resulting in
an increase of $1.2 million in merchandise sales.
Other revenues were $7.2 million for 1998 as compared to $2.6 million for
1997. This increase of $4.6 million was primarily the result of an increase in
management fee revenue of $3.1 million and incentive revenue of $1.0 million
from Meretel for our gross additions of 2,900 PCS reseller subscribers.
Operating Expenses
Cost of service was $18.6 million for 1998 as compared to $20.1 million for
1997. This decrease of $1.5 million was mainly attributable to our 1998 sale of
selected cellular markets, which generated cost of service of $6.7 million for
1998 as compared to $9.7 million for 1997, resulting in a decrease of $3.0
million. An increase of $1.3 million in PCS reseller cost of service and an
increase of $200,000 in our Louisiana cellular markets' cost of service offset
this decrease.
Merchandise cost of sales was $10.8 million for 1998 as compared to $8.9
million for 1997. This increase of $1.9 million was primarily the result of our
gross additional subscribers of 11,000 from our PCS reseller activity,
resulting in an increase of $3.3 million in merchandise cost of sales. We
incurred an additional increase of $400,000 in merchandise cost of sales
relating to our Louisiana cellular markets. This increase was offset by a
decrease of $1.8 million related to our 1998 sale of selected cellular markets.
56
<PAGE>
General and administrative expenses were $17.2 million for 1998 as compared
to $12.7 million for 1997. This increase of $4.5 was attributable to additional
employee costs, despite our having sold the selected cellular markets, as the
majority of our employees were redeployed to manage the expansion of our PCS
activity through LA Unwired and Meretel and to establish our data and CLEC
activities through LEC Unwired. US Unwired manages these subsidiaries, employs
the majority of personnel for these operations and charges a management fee to
these subsidiaries for these management services.
Sales and marketing expenses were $10.9 million for 1998 as compared to
$10.9 million for 1997.
Depreciation and amortization was $9.8 million for 1998 as compared to $12.5
million for 1997. This decrease of $2.7 million was primarily the result of our
1998 sale of depreciable assets related to the selected cellular markets.
Depreciation and amortization for the selected cellular markets was $9.8
million in 1997 as compared to $5.6 million in 1998, resulting in a decrease of
$4.2 million. An increase of $1.5 million in depreciation and amortization of
our Louisiana cellular markets offset this decrease.
Operating Income
Operating income was $4.5 million for 1998 as compared to $9.6 million for
1997. The decrease of $5.1 million was primarily the result of an increase in
losses resulting from our PCS reseller activity of $4.4 million and $4.0
million related to our 1998 sale of selected cellular markets. These decreases
were offset by an increase of $3.3 million in operating income related to our
Louisiana cellular markets.
Other Income/Expense
<TABLE>
<CAPTION>
Twelve Months Ended
December 31,
--------------------
1997 1998
--------- ---------
(In thousands)
<S> <C> <C>
Interest expense.................................. $ (8,580) $ (6,157)
Interest income................................... 1,690 1,778
Other costs....................................... (1,082) --
Losses on sale of assets.......................... -- (114)
Gain on sale of markets........................... -- 57,364
Gain on sale of PCS reseller customer base to
affiliate........................................ -- 2,285
--------- ---------
Total other income/(expense)...................... $ (7,972) $ 55,156
</TABLE>
Interest expense was $6.2 million for 1998 as compared to $8.6 million for
1997. This decrease of $2.4 million was the result of our application of a
portion of the proceeds from our 1998 sale of selected cellular markets to our
outstanding debt obligations. Total long-term debt decreased from $100.1
million at December 31, 1997 to $29.1 million at December 31, 1998.
Interest income was $1.8 million for 1998 as compared to $1.7 million for
1997. Interest income for 1998 was primarily generated from our investment of
proceeds from our 1998 sale of selected cellular markets in interest bearing
accounts.
Other costs totaled $1.1 million in 1997 for US Unwired's preparation for an
initial public offering that was canceled due to unfavorable market conditions.
57
<PAGE>
Gain on sale of markets totaled $57.4 million for 1998. This was
attributable to our 1998 sale of selected cellular markets. Gross proceeds
allocated to us from the sale totaled $161.5 million.
The gain on the sale of PCS reseller customer base to affiliate totaled $2.3
million for 1998. This was the result of our conclusion of PCS reseller
activity in August 1998 and our sale of certain PCS subscribers to Meretel.
Minority interest in losses of subsidiaries
Minority interest in losses of subsidiaries was $0 for 1998 as compared to
$134,000 for 1997. The 1997 amount relates to the portion of the losses from
Mississippi 34 Cellular Corporation allocable to the minority shareholders of
that corporation. No minority interest in subsidiary is reflected in 1998 due
to the sale of Mississippi 34 Cellular Corporation in July 1998.
Equity in losses of affiliates
Equity in losses of affiliates was $13.0 million for 1998 as compared to
$3.1 million for 1997 resulting in an increase of $9.9 million. US Unwired's
proportionate share of Meretel's losses increased from $3.5 million for 1997 to
$7.2 million for 1998. In their first year of operations in 1998, LA Unwired
contributed losses of $4.7 million, and LEC Unwired contributed losses of $1.2
million. Neither LA Unwired nor LEC Unwired reported any losses in 1997 due to
their commencement of operations in 1998.
Net Income/(Loss)
Net income was $28.9 million for 1998 as compared to a net loss of $1.5
million for 1997. This significant increase of $30.4 million was largely the
result of a one-time gain of $57.4 million from our 1998 sale of selected
cellular markets. This increase was offset by an increase in income tax
expenses of $17.6 million primarily resulting from the gain on sale of selected
cellular markets.
EBITDA
EBITDA was $14.3 million for 1998 as compared to $22.0 million for 1997.
This decrease of $7.7 million was primarily the result of losses of $8.1
million related to our 1998 sale of selected cellular markets and of $4.4
million related to our PCS reseller activity. An increase in EBITDA of $4.8
million related to our Louisiana cellular markets offset the decrease.
1997 compared to 1996.
Revenues
<TABLE>
<CAPTION>
Twelve Months Ended
December 31,
-------------------
1996 1997
--------- ---------
(In thousands)
<S> <C> <C>
Subscriber revenues................................... $ 45,572 $ 53,255
Roaming revenues...................................... 13,727 16,079
Merchandise sales..................................... 1,885 2,685
Other revenues........................................ 709 2,649
--------- ---------
Total revenues........................................ $ 61,893 $ 74,668
</TABLE>
Subscriber revenues were $53.3 million for 1997 as compared to $45.6 million
for 1996. This increase of $7.7 million was primarily the result of
approximately 22,400 net additions in our cellular markets.
58
<PAGE>
Roaming revenues were $16.1 million for 1997 as compared to $13.7 million
for 1996. This increase of $2.4 million was primarily the result of our 1996
purchase of the Alabama cellular market. The Alabama market had $2.4 million of
roaming revenues for the partial year of 1996.
Merchandise sales were $2.7 million for 1997 as compared to $1.9 million for
1996. This increase of $800,000 was attributable to an increase in 1997 in
gross additional cellular subscribers of 6,400 and gross additional PCS
reseller subscribers of 2,900.
Other revenues were $2.6 million for 1997 as compared to $709,000 for 1996.
This increase of $1.9 million was primarily the result of management fees
charged to Meretel in 1997 of $1.1 million and a commission paid to US Unwired
from Meretel of $1.2 million for the gross additions of 2,900 PCS reseller
subscribers.
Operating Expenses
Cost of service was $20.1 million for 1997 as compared to $16.5 million for
1996. This increase of $3.6 million was primarily the result of 22,400 net
additions in our cellular markets. Our purchase of the Alabama cellular markets
in 1996 accounted for $1.4 million of the increase in cost of service.
Merchandise cost of sales was $8.9 million for 1997 as compared to $5.4
million for 1996. This increase of $3.5 million was the result of an increase
of 6,400 in gross additional cellular subscribers and 2,900 in gross additional
PCS reseller subscribers.
General and administrative expenses were $12.7 million for 1997 as compared
to $10.6 million for 1996. This increase of $2.1 million was primarily due to
the growth of the subscriber base through the addition of the Alabama cellular
markets and our PCS reseller activity.
Sales and marketing expenses were $10.9 million for 1997 as compared to $8.1
million for 1996, representing an increase of $2.8 million. The purchase of the
Alabama markets accounted for $809,000, and the PCS reseller activity accounted
for $1.0 million of the increase. The remaining increase of $1.0 million was
attributable to our other cellular markets.
Depreciation and amortization expenses were $12.5 million for 1997 as
compared to $9.2 million for 1996, representing an increase of $3.3 million.
The purchase of the Alabama markets accounted for $1.4 million of the increase,
and $1.9 million of the increase was related to our Kansas, Mississippi and
Louisiana cellular markets.
Operating Income
Operating income was $9.6 million for 1997 as compared to $12.2 million for
1996. This decrease of $2.6 million was the result of increased depreciation
and amortization expenses and increased losses from our PCS reseller
activities.
Other Income/(Expense)
<TABLE>
<CAPTION>
Twelve Months Ended
December 31,
--------------------
1996 1997
--------- ---------
(In thousands)
<S> <C> <C>
Interest expense................................... $ (6,539) $ (8,580)
Interest income.................................... 317 1,690
Other cost......................................... -- (1,082)
Loss on sale of assets............................. (9) --
--------- ---------
Total other income/(expense)....................... $ (6,231) $ (7,972)
</TABLE>
59
<PAGE>
Interest expense was $8.6 million for 1997 as compared to $6.5 million for
1996. This increase of $2.1 million was primarily the result of our incurring
additional debt of $43 million to purchase the Alabama cellular markets.
Interest income was $1.7 million for 1997 as compared to $317,000 for 1996.
The increase primarily resulted from an increase in patronage dividends as a
result of the increased borrowings.
Minority interest in losses of subsidiaries
Minority interest in losses of subsidiary was $134,000 for 1997 as compared
to $308,000 for 1996. This decrease of $174,000 is attributable to the portion
of the losses from Mississippi 34 Cellular Corporation allocable to the
minority shareholders of that corporation.
Equity in income/(losses) of affiliate
Equity in income/(losses) of affiliate was $(3.1) million for 1997 as
compared to income of $35,000 for 1996. The increase in losses of $3.1 million
was primarily the result of US Unwired's proportionate share of losses by
Meretel increasing from $38,000 for 1996 to $3.5 million for 1997.
Net Income/(Loss)
Net loss was $1.5 million for 1997 as compared to net income of $3.9 million
for 1996. This decrease of $5.4 million was the result of increased
depreciation and amortization, resulting primarily from the acquisition of the
Alabama cellular markets and increased interest expense.
EBITDA
EBITDA was $22.0 million for 1997 as compared to $21.3 million for 1996.
This increase of $0.7 million resulted primarily from our 1996 purchase of the
Alabama cellular market and internal cellular subscriber growth.
Liquidity and Capital Resources
The buildout of our PCS network and the marketing and distribution of our
products and services will require substantial capital. Assuming substantial
completion of our network buildout with coverage of 55% to 75% of the
population in a majority of markets in our service area by June 2001, we
currently estimate our capital requirements, including capital expenditures,
working capital, debt service requirements and anticipated operating losses for
the period from July 1999 through December 2001 to be approximately $294.7
million. Costs associated with the network buildout include switches, base
stations, towers and antennae, radio frequency engineering, cell site
acquisition and construction and microwave relocation. The actual funds
required to buildout our PCS network may vary materially from these estimates,
and funds could be required in the event of significant departures from the
current business plan if unforeseen delays, cost overruns, unanticipated
expenses, regulatory expenses, engineering design changes and other
technological risks occur.
Historically, we have funded our working capital requirements, acquisitions,
capital expenditures and debt service through bank financing and retained
earnings from on-going operations and the one-time gain from our 1998 sale of
selected cellular markets.
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<PAGE>
We have $130.0 million available under our new credit facility to fund the
buildout of our PCS network and anticipated operating losses.
Contemporaneously with the issuance of the existing notes, we issued $50
million of Series A preferred stock to The 1818 Fund. The preferred stock is
convertible into our common stock, subject to certain conditions, at a price of
$26.55 per share, representing 13.8% of the common equity of US Unwired,
assuming the exercise of options granted to management to purchase 500,000
shares of the common equity. The holders of the preferred stock have certain
dividend conversion, registration and voting rights.
We believe that the proceeds from our financings and internally generated
cash will provide sufficient funds to buildout our network as planned, cover
anticipated operating losses and meet our debt service requirements through
December 2001.
On September 30, 1999, US Unwired had an aggregate amount of $28.5 million
outstanding under a credit facility with certain lenders. This credit facility
was entered into on August 15, 1997 and matures on June 30, 2005.
On September 30, 1999, LA Unwired had an aggregate amount of $66.9 million
outstanding under a credit facility with certain lenders. This credit facility
was entered into on June 23, 1999 and provides for an $80.0 million reducing
revolving credit facility, which matures on September 30, 2007 and a $50.0
million delay draw term loan, which matures on September 30, 2007.
On September 30, 1999, LEC Unwired had an aggregate amount of $9.3 million
outstanding under two senior credit facilities with a certain lender. These
credit facilities were entered into on July 22, 1998. The first credit facility
is a $15.0 million senior facility with a three year drawdown period and five
year amortization. The second facility is a $3.0 million subordinated facility
with a three year drawdown period and five year amortization. Both facilities
mature on July 1, 2006.
As of September 30, 1999, we had additional borrowing capacity under our
credit arrangements of $15.6 million.
Net cash used in operating activities totaled $14.7 million for 1998,
consisting primarily of net income of $28.9 million, adjustments for
depreciation and amortization of $9.8 million, deferred tax expense of $4.6
million, equity in loss of affiliates of $13.0 million, gain on sale of assets
of $59.5 million and changes in operating assets and liabilities of $(11.9)
million. Net cash provided by operating activities for 1997 totaled $12.0
million and for 1996 totaled $10.6 million.
Net cash provided by investing activities totaled $113.2 million for 1998.
Net cash provided by investing activities consisted primarily of the $154.9
million in proceeds that we received from our 1998 sale of selected cellular
markets. Netted against these cash proceeds were property and equipment
purchases totaling $20.6 million, investments in unconsolidated affiliates of
$15.4 million and an additional investment in Mississippi 34 Cellular
Corporation of $6.5 million prior to its sale in 1998. Net cash used in
investing activities totaled $17.6 million for 1997 and $52.5 million for 1996.
Net cash used in financing activities totaled $71.0 million for 1998. The
net cash used in financing activities resulted from principal payments of
$100.7 million on long-term debt from a portion of the proceeds of our 1998
sale of selected cellular markets and additional borrowings of
61
<PAGE>
$29.7 million. Net cash provided by financing activities totaled $3.9 million
for 1997 and $43.4 million for 1996.
Seasonality
Consistent with the wireless communications industry in general, we have
historically experienced significant subscriber growth during the fourth
quarter. Accordingly, during such quarter we experience greater losses on
merchandise sales and increases in sales and marketing expenses. We have
historically experienced highest usage and revenue per subscriber during the
summer months. We expect these trends to continue.
Impact of Year 2000 Issue on Our Operations and Financial Condition
Many currently installed computer systems and software applications are
encoded to accept only two digit entries in the year entry of the date code
field. Beginning in the year 2000, these codes will need to accept four digit
year entries to distinguish 21st century dates from the 20th century dates.
Because many computers and computer applications define dates by the last two
digits of the year, "00" may not be properly identified as the year 2000. That
inability could cause the failure of those computers or applications or in the
generation of business and financial information. The Year 2000 problem could
potentially affect us due to our own systems and due to the systems of third
parties with whom we conduct business. For purposes of this discussion, systems
means information technology systems, or IT systems, which are systems that
deal with business and financial information, and non-information technology
systems, or non-IT systems, such as microcontrollers, which are embedded in
machinery and equipment and control or affect their function.
We have implemented a Year 2000 program to ensure that our computer systems
and applications, including our systems to provide services to our customers
and our internal systems, will function properly after 1999. Our Year 2000
compliance team, which consists of representatives from each of our
departments, completed an inventory of our IT and non-IT systems in each
department and determined what systems were not Year 2000 compliant. We are
modifying and replacing those non-compliant items identified through this
inventory process, and we are using both internal and external resources to
identify, correct, reprogram and test our IT and non-IT systems for Year 2000
compliance. We believe that we have prepared these systems for the Year 2000.
In addition, we are contacting third parties with whom we conduct business
to receive the appropriate warranties and assurances that those third parties
are or will be Year 2000 compliant. We cannot assure that full compliance will
be achieved as we and such third parties have planned or that we will receive
warranties and assurances from such third parties. We rely on third party
vendors for a significant number of our important operating and computer system
functions and therefore are highly dependent on such third party vendors for
the remediation of network elements, computer systems, software applications
and other business systems. In addition, we use publicly available services
that are acquired without contract, such as global positioning system timing
signals, that may be subject to Year 2000 issues. While we believe these
systems will be Year 2000 compliant, we have no contractual or other right to
compel compliance.
We have not yet incurred any monetary costs to modify our existing systems
or to convert to new systems. We have, however, expended internal hours
addressing and remedying our Year 2000
62
<PAGE>
issues. We expect to incur costs to make our switches Year 2000 compliant, but
we do not expect these costs to exceed $1.0 million.
We believe that our most significant exposure from Year 2000 issues lies in
the compliance of our switches. Our operations depend on the functioning of our
switches. The failure of our switches to function would materially impair our
operations and financial condition. Even though we have no information that
causes us to expect a failure of our switches to function, we cannot assure
that such a failure will not occur. We do not believe that we can develop
adequate contingency plans for any prolonged disruption caused by the failure
of our switches to function.
We routinely receive inquiries from our suppliers and customers as to our
state of readiness for the Year 2000 problem, just as we seek similar
information from others. We believe, and therefore respond, that our systems
will be ready. We could incur liability to persons to whom we respond if our
response turns out to be incorrect and those persons are damaged. We do not
expect this liability, if any, to be significant, but we cannot assure that it
will not be. We are not insured against this type of loss and, even if we were
not ultimately held liable, we could be subjected to significant costs for
defense. In addition, we cannot possibly verify all of the information that we
have gathered or will gather about the systems of third parties, and we cannot
compel third parties to respond at all. We cannot predict the extent to which
our financial condition and operations could be affected if third persons are
not prepared for the Year 2000 on a timely basis.
We believe that we have allocated adequate resources for our Year 2000
issues and expect to complete our Year 2000 compliance program successfully and
on a timely basis. We cannot assure, however, that this will be the case.
Quantitative and Qualitative Disclosure about Market Risk
We are not exposed to fluctuations in currency exchange rates, as all of our
services are invoiced in U.S. dollars. We are exposed to the impact of interest
rate changes on our short-term cash investments, consisting of U.S. Treasury
obligations and other investments in respect of institutions with the highest
credit ratings, all of which have maturities of three months or less. These
short-term investments carry a degree of interest rate risk. We believe that
the impact of a 1% increase or decline in current average investment rates
would not have a material impact on our investment income.
We use interest rate swaps to hedge the effects of fluctuations in interest
rates on our credit facilities. These transactions meet the requirements for
hedge accounting, including designation and correlation. These interest rate
swaps are managed in accordance with our policies and procedures. We do not
enter into these transactions for trading purposes. The resulting gains or
losses, measured by quoted market prices, are accounted for as part of the
transactions being hedged, except that losses not expected to be recovered upon
the completion of hedged transactions are expensed. Gains or losses associated
with interest rate swaps are computed as the difference between the interest
expense per the amount hedged using the fixed rate compared to a floating rate
over the term of the swap agreement. Considering the amount of outstanding
indebtedness at December 31, 1998, a 1% change in interest rates would cause a
change in interest expense of approximately $291,000 for the year ended
December 31, 1998.
Inflation
We believe that inflation has not impaired, and will not impair, our results
of operations.
63
<PAGE>
THE WIRELESS COMMUNICATIONS INDUSTRY
Wireless communications systems use a variety of radio frequencies to
transmit voice and data. Broadly defined, the wireless communications industry
includes one-way radio applications, such as paging or beeper services, and
two-way radio applications, such as cellular, PCS and enhanced specialized
mobile radio networks. Historically, each application has been licensed and
operates in a distinct radio frequency block.
In the wireless communications industry, there are two principal services
licensed by the FCC for transmitting two-way, real time voice and data signals:
cellular and PCS. Cellular, which uses the 800 MHz frequency block, is the
predominant form of wireless voice communications service utilized by
subscribers today. Cellular systems are predominantly analog-based systems,
although digital technology has been introduced in most metropolitan markets.
Analog-based systems send signals in which the transmitted signal resembles the
input signal; in digital systems the input signal is coded into a binary form
before the signal is transmitted.
In 1993, the FCC allocated the 1900 MHz frequency block of the radio
spectrum for the provision of a new wireless personal communications service,
commonly known as PCS. PCS differs from traditional analog cellular telephone
service principally in that PCS systems operate at a higher frequency and
employ advanced digital technology. Digital systems convert voice or data
signals into a stream of digits that permit a single radio channel to carry
multiple simultaneous transmissions. Digital systems also achieve greater
frequency reuse than analog systems resulting in greater capacity than analog
systems. This enhanced capacity, along with enhancements in digital protocols,
allows digital-based wireless technologies (whether using PCS or cellular
frequencies) to offer new and enhanced services and more robust data
transmission such as greater clarity, better security, facsimile, electronic
mail and connecting notebook computers with computer/data networks.
Cellular service was first introduced in the United States in 1983. As of
December 31, 1998, according to the Cellular Telecommunications Industry
Association, known as CTIA, there were 69.2 million wireless subscribers in the
United States, representing an overall wireless penetration rate of 25.5% and a
subscriber growth rate of 25.1% from December 31, 1997.
The following table sets forth certain statistics for the domestic wireless
telephone industry as a whole:
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1993 1994 1995 1996 1997 1998
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Total service revenues (in
billions).................... $ 10.9 $ 14.2 $ 19.1 $ 23.6 $ 27.5 $ 33.1
Ending wireless subscribers
(in millions)................ 16.0 24.1 33.8 44.0 55.3 69.2
Subscriber growth............. 45.1% 50.8% 40.0% 30.4% 25.6% 25.1%
Average monthly revenue per
subscriber/(1)/.............. $67.13 $59.08 $54.91 $50.61 $46.11 $44.35
Average monthly revenue per
subscriber/(2)/.............. $58.74 $51.48 $47.59 $44.66 $41.12 $39.66
Ending penetration............ 6.2% 9.2% 12.8% 16.5% 20.6% 25.5%
</TABLE>
- --------
Source: Cellular Telecommunications Industry Association; U.S. Census Bureau.
(1) Including roaming revenues.
(2) Excluding roaming revenues.
64
<PAGE>
Paul Kagan Associates, Inc., an independent media and telecommunications
association, estimates that the number of wireless users will increase to
approximately 151 million by 2002 and 198 million by 2005. This growth is
driven largely by a substantial projected increase in PCS users, who are
forecast to account for approximately 34% of total users in 2002 and 43% in
2005, representing a significant increase over the approximately 10% of total
wireless customers using PCS as of the end of 1998. Paul Kagan Associates, Inc.
projects that total wireless industry penetration, defined as the number of
wireless subscribers nationwide divided by total United States population, will
grow to an estimated 53% in 2002 and 68% in 2005.
We believe that a significant portion of the predicted growth in the
consumer market for wireless telecommunications will result from anticipated
declines in costs of service, increased functional versatility and increased
awareness of the productivity, convenience and privacy benefits associated with
the services offered by PCS providers. Additionally, we believe that the rapid
growth of notebook computers and personal digital assistants, combined with
emerging software applications for delivery of electronic mail, fax and
database searching, will contribute to the growing demand for wireless service.
We believe that our markets are well positioned to benefit from the growth
predicted for the wireless industry as forecast by the CTIA. We believe that
our markets and other markets similar to ours will experience the fastest
growth in subscriber additions due to the relatively low wireless penetration
currently.
The following chart illustrates the annual growth in wireless subscribers
and total industry revenues during the periods indicated:
[Chart appears here]
65
<PAGE>
Wireless communications systems, whether PCS or cellular, are divided into
multiple geographic areas, known as cells. In both PCS and cellular systems,
each cell contains a transmitter, a receiver and signaling equipment, together
referred to as the cell site. The cell site is connected by microwave or
landline telephone lines to a switch that uses computers to control the
operation of the cellular or PCS communications system for the entire service
area. The system controls the transfer of calls from cell to cell as a
subscriber's handset travels, coordinates calls to and from handsets, allocates
calls among the cells within the system and connects calls to the local
landline telephone system or to a long distance carrier. Wireless
communications providers establish interconnection agreements with local
exchange carriers and interexchange carriers, thereby integrating their system
with the existing landline communications system. Because the signal strength
of a transmission between a handset and a cell site declines as the handset
moves away from the cell site, the switching office and the cell site monitor
the signal strength of calls in progress. When the signal strength of a call
declines to a predetermined level, the switching office may "hand off" the call
to another cell site where the signal strength is stronger.
Wireless digital signal transmission is accomplished through the use of
various forms of frequency management technology, or air interface protocols.
The FCC has not mandated a universal air interface protocol for PCS systems.
PCS systems operate under one of three principal air interface protocols: CDMA,
TDMA and GSM. TDMA and GSM are both time division multiple access systems but
are incompatible with each other and with CDMA. CDMA is a code division
multiple access system and is incompatible with both GSM and TDMA. Accordingly,
a subscriber of a system that utilizes CDMA technology is unable to use a CDMA
handset when traveling in an area not served by CDMA-based PCS operators,
unless the customer carries a dual band/dual-mode handset that permits the
customer to use the analog cellular system in that area. The same issue would
apply to users of TDMA or GSM systems.
66
<PAGE>
BUSINESS
General
We have the largest population coverage and most subscribers of any
affiliate of Sprint PCS, the fastest growing wireless company in the
United States. We intend to be a leading provider of wireless PCS service
throughout the Gulf States region by marketing our services under the Sprint
PCS name. Sprint and MCI WorldCom announced on October 5, 1999 that the boards
of directors of both companies have approved a definitive merger agreement
whereby the two companies would merge to form a new company called WorldCom.
The merger is subject to various conditions, including the approvals of the
shareholders of both companies, the Federal Communications Commission, the
Justice Department, various state government bodies and foreign antitrust
authorities. We do not expect the merger to have a negative impact on our
affiliation with Sprint or its successor if the merger is completed.
Our service area covers eastern Texas, southern Oklahoma, southern Arkansas,
significant portions of Louisiana, Alabama and Mississippi, the Florida
panhandle and southern Tennessee, and is contiguous with Sprint PCS's recently
launched markets of Houston, Dallas, Little Rock, New Orleans, Birmingham,
Tallahassee and Memphis. We are constructing a 100% digital, 100% wireless PCS
network that, when complete, will include a service area covering a population
of approximately 9.9 million. As of September 30, 1999, we had built out our
network in nine markets covering a population of approximately 3.0 million and
were providing wireless PCS service to approximately 33,000 subscribers
(assuming completion of the Meretel transaction described in the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations"). We intend to complete the construction of our network
by June 2001. After the completion of this financing, our buildout plan will be
fully funded.
Under a long-term management agreement with Sprint PCS, we have the
exclusive right to offer Sprint PCS products and services, on spectrum licensed
to Sprint PCS, throughout our entire service area under the Sprint(R) and
Sprint PCS(R) brand names. Our exclusive relationship with Sprint PCS allows us
to take advantage of the strength and reputation of Sprint PCS's national
brand. We believe that the benefits of our affiliation with Sprint PCS in our
service area include:
. strong brand recognition and national marketing campaigns;
. exclusive Sprint PCS traveling partner;
. access to Sprint PCS products and services;
. availability of Sprint PCS "Free and Clear" one-rate pricing plans;
. nationwide coverage;
. established direct and indirect distribution channels;
. volume-driven vendor discounts;
. access to Sprint PCS engineering and network design;
. reduced startup costs;
. long-term management agreement; and
. availability of technology and service advances developed by Sprint PCS.
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We manage our operations to perform to the high standards of service and
technical quality by which Sprint PCS is known and on which Sprint PCS has
built the fastest growing wireless company in the United States.
Cellular and Paging Services
In addition to our wireless PCS service, we provided cellular and paging
service in Lake Charles, Leesville, Jennings, Sulphur and Cameron, Louisiana
through our subsidiary, Unwired Telecom. At September 30, 1999, we had
approximately 61,000 cellular subscribers and approximately 24,000 paging
subscribers. Our Louisiana cellular and paging business had $39.8 million in
revenues for the 12 months ended September 30, 1999.
CLEC Services
Through our subsidiary, LEC Unwired, LLC, we are building a state-of-the-art
facilities-based CLEC company offering digital subscriber lines, internet,
data, local telephone service, long distance and web hosting services. CLEC
refers to the business of providing local telephone and data services in
competition with the incumbent local service provider. Our strategy is to be
the first or second to offer to business and residential customers integrated
voice, internet and digital subscriber line services, primarily in second or
third tier markets in the Gulf States region. LEC Unwired's network consists of
circuit-based Lucent switches to handle voice traffic and multiple vendors to
offer digital subscriber line and internet services. Additionally, LEC Unwired
is physically co-locating with the incumbent local exchange service provider to
use the incumbent's unbundled network elements to provide service to LEC
Unwired's customers. To date, seven physical co-locations have been completed
and 13 are in process. LEC Unwired currently offers local service in three
markets and dedicated dial-up service in seven markets.
As of the third quarter of 1999, LEC Unwired had recruited an experienced
core group of CLEC/internet professionals, deployed facilities-based service
and had in place the necessary operational support systems to scale operations
rapidly. LEC Unwired has been selected by Cisco Systems, Inc. to be a Cisco
Powered Network Partner(R) and is actively working with Cisco's jump start
marketing group to launch internet related service throughout the region. LEC
Unwired commenced commercial operations in March 1998. LEC Unwired reported
revenues of approximately $570,000 for the year ended December 31, 1998 and
approximately $3.6 million for the nine months ended September 30, 1999. Our
CLEC services are marketed under the name US Unwired.
We are currently in the process of exploring strategic alternatives for LEC
Unwired which could include a merger, sale or other disposition of our interest
in LEC Unwired. If we do not dispose of our interest in LEC Unwired, we may
need to seek a waiver of certain provisions in the indenture to permit LEC
Unwired to acquire additional financing. As of September 30, 1999, we owned 53%
of LEC Unwired and our affiliate, Cameron Communications Corporation, owned 47%
of LEC Unwired.
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Sprint PCS
Sprint is a diversified telecommunications service provider whose principal
activities include long distance service, local service, wireless telephone
products and services, product distribution and directory publishing activities
and other telecommunication activities, investments and alliances. Sprint PCS,
a group of subsidiaries of Sprint, operates the only 100% digital, 100% PCS
wireless network in the United States and holds licenses to provide service
nationwide on PCS frequencies. The Sprint PCS network uses the same CDMA
technology nationwide.
Sprint, through an affiliate, launched the first commercial PCS service in
the United States in November 1995. Since then, Sprint PCS has experienced
rapid subscriber growth, providing service to nearly 4.7 million customers as
of September 30, 1999. In the fourth quarter of 1998, Sprint PCS added
approximately 836,000 new subscribers, representing the largest single quarter
of customer growth ever recorded by a wireless provider in the United States.
In the first three quarters of 1999, Sprint PCS added approximately 2.1 million
new wireless subscribers, including 20,000 subscribers in Hawaii acquired from
PrimeCo Personal Communications. As of September 30, 1999, Sprint PCS, together
with its affiliated companies, operated PCS systems within the United States
and its territories covering approximately 180 million people in more than 280
metropolitan markets. The chart below illustrates Sprint PCS's subscriber
growth from the beginning of 1997 to the end of the third quarter of 1999.
[Graph appears here]
Sprint PCS currently provides nationwide service through:
. operation of its own digital network;
. strategic affiliations with other companies, primarily in and around
smaller metropolitan areas;
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. roaming on analog cellular networks of other providers using dual-
band/dual-mode handsets; and
. roaming on digital PCS networks of other CDMA-based providers.
Sprint PCS has adopted a strategy to extend rapidly its 100% digital, 100%
PCS network by entering into agreements with independent wireless companies,
such as US Unwired, to construct and manage Sprint PCS markets and market
Sprint PCS services. Through these affiliations, Sprint PCS services will be
available in key cities contiguous to current and future Sprint PCS markets.
Our service area connects to Sprint PCS markets including Houston, Dallas,
Little Rock, New Orleans, Memphis, Tallahassee and Birmingham and is the
largest service area of all of the Sprint PCS affiliates in the United States
and its territories. The buildout of our service area will extend Sprint PCS's
coverage in the Gulf States region and is important to Sprint PCS's nationwide
strategy.
Our Affiliation with Sprint PCS
As an affiliate of Sprint PCS, we have entered into management agreements
with Sprint PCS under which we will have the exclusive right to market Sprint
PCS products and services in our service area on spectrum for which Sprint PCS
acquired licenses from the Federal Communications Commission in 1994 and 1996.
These agreements govern our relationship with Sprint PCS, stipulate
construction and performance guidelines and are structured with the following
principal points:
. each agreement has a term of 50 years with an initial period of 20 years
and three automatic, successive 10-year renewal periods;
. each agreement requires total collected revenue sharing of 8% to Sprint
PCS and 92% to US Unwired, except that US Unwired retains 100% of
revenues from non-US Unwired Sprint PCS customers traveling in our
service area, extraordinary income and equipment sales; and
. each agreement contains various put and call options regarding both the
sale of our PCS business and network and/or the purchase of the Sprint
PCS licenses upon termination or breach of contract by either us or
Sprint PCS.
We believe that our service area is important to Sprint PCS's plan to have
a 100% digital, 100% PCS network with nationwide coverage. To date, Sprint PCS
has made considerable investments in the licenses covering our service area.
We estimate that Sprint PCS paid over $100 million to acquire the PCS licenses
in our service area and to clear the licensed markets for microwave radio
frequency service.
Benefits of Our Affiliation with Sprint PCS
Our exclusive relationship with Sprint PCS provides us with many
operational and business advantages, including:
Exclusive access to Sprint PCS products and services. We are the exclusive
provider of Sprint PCS's 100% digital, 100% PCS products and services in our
service area. We have the right to market Sprint PCS products and services in
our service area and provide these products and services under the Sprint(R)
and Sprint PCS(R) brand names.
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Strong brand recognition and national advertising support. We expect to
benefit from the strength and reputation of the Sprint(R) and Sprint PCS(R)
brands. In our local markets, we have the royalty-free use of the Sprint(R) and
Sprint PCS(R) brands and logos, and we benefit from Sprint PCS's national
advertising campaigns and developed marketing programs at no additional cost.
Sprint PCS "Free and Clear" one-rate pricing plans. We offer to our
customers the same strategic free long distance, free traveling on the Sprint
PCS network and accompanying promotional campaigns, including handset and
accessory promotions, that Sprint PCS offers to all of its customers throughout
the United States.
Established distribution channels. We have access to all the national
distribution channels used by Sprint PCS. These channels include:
. major national third party retailers such as Radio Shack, Office Depot,
Circuit City, Dillard's, Sam's Wholesale Club, Office Max and Best Buy;
. Sprint PCS's national inbound telemarketing sales program;
. Sprint PCS's Business-to-Business and national accounts sales programs;
and
. Sprint PCS's electronic commerce sales platform.
Nationwide coverage. We operate our PCS network seamlessly with the Sprint
PCS network. This provides our customers with the ability to place calls in any
Sprint PCS service area throughout the United States without incurring charges
for traveling on Sprint PCS's network or, under certain pricing plans,
incurring long distance charges.
Exclusive traveling partner to Sprint PCS. We are the exclusive provider of
traveling services for all non-US Unwired Sprint PCS customers in our service
area and benefit from the increased traffic created by other Sprint PCS
customers who travel in our service area.
Sprint PCS engineering and network design. In markets where we utilize
spectrum owned by Sprint PCS, Sprint PCS provides the engineering services
required for microwave clearance and handles all of the design, planning and
relocation of any radio cell sites.
Economies of scale of a nationwide network. We have access to network and
subscriber equipment under Sprint PCS's vendor contracts that provide for
volume discounts. These discounts will reduce the overall capital required to
build our PCS network and will lower the cost of subscriber equipment.
Reduced startup costs. We estimate that Sprint PCS spent over $100 million
to purchase a substantial portion of the licenses covering our service area and
for microwave clearing. As a Sprint PCS affiliate, we did not have to acquire
most of the licenses, and this reduced our start-up costs.
Availability of technology and service advances developed by Sprint
PCS. Sprint PCS's extensive research and development effort produces ongoing
benefits through both new technological products as well as enhanced service
features. We have immediate access to any developments produced by Sprint PCS
for use over the nationwide PCS network.
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Our Competitive Strengths
In addition to the advantages provided by our strategic affiliation with
Sprint PCS, we have the following competitive strengths:
Extensive territorial reach. With a population of approximately 9.9 million
in our service area, we cover a significant percentage of the population in the
Gulf States region (which includes Louisiana, Mississippi, Alabama, eastern
Texas, and the Florida panhandle), southern Tennessee, southern Arkansas and
southern Oklahoma. Our service area possesses characteristics that are
favorable to wireless communications, which include:
. extensive highway miles and commuter zones;
. high commuter activity;
. concentration of major industries;
. major regional tourist destinations; and
. a large number of higher education institutions.
Existing corporate infrastructure. We retained most of our corporate staff
following the sale of our non-Louisiana cellular assets to assist in the
buildout of our Sprint PCS network. Accordingly, we have internal capabilities
to handle billing, customer care, accounting, treasury and legal services in
our markets where we currently offer PCS service and a substantial majority of
our new markets. We believe that providing these functions ourselves is more
cost-effective than outsourcing them to third parties. In a limited number of
markets, however, Sprint PCS will provide us on a contract basis with selected
back office functions such as billing and customer care.
Cash flow from cellular and paging operations. Our cellular and paging
operations provide a significant source of funding for the buildout of our PCS
network. Our internally-generated cash flow reduces our need to access outside
capital to fund our business plan.
Significant number of owned licenses. In addition to the licenses provided
to us through our agreements with Sprint PCS, we own thirteen 10 MHz PCS
licenses and three 25 MHz cellular licenses within our service area and nine 10
MHz PCS licenses outside our service area. Combining the Sprint PCS licenses
with our own licenses, we have access to 40 MHz of bandwidth in many of our
markets. We believe that this access positions us well for the possible future
introduction of wireless internet and data transmission service.
High-quality customer care. We are committed to building strong customer
relationships by providing high-quality customer care. We serve our customers
from our state-of-the-art call center facility in Lake Charles, Louisiana. Our
customer care representatives are accessible from any of our handsets at no
charge to the customer. Additionally, we are staffing each of our retail
outlets with full-time customer care representatives to interface directly with
the customers concerning billing and service issues. Our web-based services
include online account information that allows customers to check billing or
otherwise manage their accounts.
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Our Business Strategy
Our principal business strategy is to become the leading provider of
wireless PCS services in each market in our service area. We intend to achieve
this goal by offering high-capacity, high-quality, advanced communications on
our 100% digital, 100% PCS wireless network. We believe the following elements
of our business strategy will distinguish our wireless service offerings from
those of our competitors and will enable us to compete successfully in the
wireless communications marketplace:
Leverage relationship with Sprint PCS. We intend to capitalize on the
benefits from our relationship with Sprint PCS:
. strong brand recognition and national marketing campaigns;
. exclusive Sprint PCS traveling partner;
. access to Sprint PCS products and services;
. availability of Sprint PCS "Free and Clear" one-rate pricing plans;
. nationwide coverage;
. established direct and indirect distribution channels;
. volume-driven vendor discounts;
. access to Sprint PCS engineering and network design;
. reduced startup costs;
. long-term management agreement; and
. availability of technology and service advances developed by Sprint PCS.
Execute integrated marketing plan. Our marketing approach leverages Sprint
PCS's nationwide presence and brand name. We emphasize the improved quality,
enhanced features and favorable pricing of Sprint PCS service. In addition, we
leverage the clout of the Sprint PCS organization through Sprint PCS's:
. household name recognition;
. dynamic national advertising campaigns;
. reputation for providing high-end quality product and service;
. organized national accounts sales force;
. e-commerce website; and
. pre-negotiated contracts with national retail chain outlets.
On the local level, we offer a complementary strategy through:
. multi-media marketing efforts, including point-of-sale, print, television
and radio campaigns for our own co-branded US Unwired(R) and Sprint
PCS(R) retail outlets;
. our network of approximately 270 independent agent representatives; and
. direct mail efforts and our website, www.usunwired.com.
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Execute high-quality buildout plan. We are constructing a state-of-the-art,
high quality 100% PCS network utilizing 100% digital technology.
. Our network design has a high density of cell sites which, together with
the use of digital PCS technology, allow our system to handle higher
traffic demand than cellular operators, thereby allowing us to offer
lower per-minute rates.
. Our network design allows extensive use of micro- and mini-cell sites to
service expensive, difficult to reach locations and coverage gaps within
our wireless network.
. We will maintain low construction costs for our network by planning to
co-locate on existing towers as our primary strategy and developing our
radio frequency design around this strategy.
Our Service Area
Our Sprint PCS service area contains 38 contiguous markets encompassing over
153,000 square miles with a population of approximately 9.9 million. Our
service area is the largest in the United States by measure of population for
all of the Sprint PCS territories assigned to affiliates.
Our service area covers eastern Texas, southern Oklahoma, southern Arkansas,
significant portions of Louisiana, Alabama and Mississippi, the Florida
panhandle and southern Tennessee, and is contiguous with Sprint PCS's recently
launched markets of Houston, Dallas, Little Rock, New Orleans, Birmingham,
Tallahassee and Memphis. Our network buildout will link these existing Sprint
PCS markets, and we will be the exclusive provider of Sprint PCS products and
services in the markets connecting these major cities.
We believe that our service area contains many regional characteristics that
are positive for wireless communication, including the following:
Extensive highway miles and commuter zones. Our service area includes high
traffic corridors traversed by major interstate highways. Overall, our
footprint covers 4,509 total highway miles, of which 2,073 are interstate.
High commuter activity. Our high commuter activity is reflected in the
millions of vehicle miles traveled with over 24% of the average commute time
taking greater than 30 minutes.
Concentration of major industries. The Gulf States region is home to many
large businesses in the oil and gas, gaming and agriculture industries. These
businesses comprise the primary economic infrastructure of the region and
provide the majority of business travelers who visit our service area.
Major regional tourist destinations. According to major tourist publication
guides, the Gulf Coast region is a major tourist and vacation destination. The
Gulf Coast beaches in Mississippi, Alabama and Florida draw millions of
visitors annually. Our service area contains many historical sites, and the
numerous casino gaming establishments in our service area are major travel
destinations. The Mississippi casino market alone is ranked as the largest
casino market in the United States between Las Vegas and Atlantic City.
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Large number of higher education institutions. There are 86 colleges and
universities located in and around our service area, including the University
of Alabama, the University of Southern Mississippi, Mississippi State
University and Louisiana State University. The undergraduate and graduate
student population of these institutions exceeds 415,000.
The following table sets forth some key information about our PCS markets
(population in thousands):
<TABLE>
<CAPTION>
Basic Total Expected Sprint Spectrum Total
Trading Market % Population Online Spectrum (Owned Spectrum
Market(/1/) Area # Population(/1/) Owned(/2/) Owned Date (Managed MHz) MHz) (MHz)
----------- ------- ---------- ---------- ---------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Anniston, AL..................... 17 164.0 100% 164.0 Mar-00 30 -- 30
Chilton Area Counties,
AL(/3/)(/4/)................... 459 242.5 100 242.5 Dec-00 30 -- 30
Decatur, AL...................... 108 142.8 100 142.8 Dec-00 30 -- 30
Florence, AL..................... 146 183.5 100 183.5 Dec-00 30 -- 30
Gadsen, AL....................... 158 183.5 100 183.5 Dec-00 30 -- 30
Huntsville, AL................... 198 496.4 100 496.4 Dec-00 30 -- 30
Mobile, AL....................... 302 653.9 100 653.9 Jun-00 30 -- 30
Montgomery, AL................... 305 475.3 100 475.3 Mar-00 30 -- 30
Selma, AL........................ 415 74.1 100 74.1 Sep-00 30 -- 30
Tuscaloosa, AL................... 450 253.1 100 253.1 Sep-00 30 10 40
El Dorado, AR.................... 125 103.1 100 103.1 Jun-01 30 10 40
Hot Springs, AR.................. 193 133.4 100 133.4 Jun-00 30 -- 30
Nevada Area Counties,
AR(/3/)(/5/)................... 257 57.1 100 57.1 Jun-00 30 -- 30
Pine Bluff, AR................... 348 147.5 100 147.5 Jun-01 30 10 40
Fort Walton Beach, FL............ 154 216.5 100 216.5 Sep-00 30 -- 30
Jackson Area County, FL(/3/)..... 439 50.5 100 50.5 Mar-00 10 -- 10
Panama City, FL.................. 340 202.6 100 202.6 Sep-00 10 -- 10
Pensacola, FL.................... 343 414.2 100 414.2 Jun-00 30 -- 30
Alexandria, LA................... 9 264.8 100 264.8 Online 30 10 40
Houma, LA........................ 195 271.8 100 271.8 Online 30 -- 30
Lake Charles, LA................. 238 278.5 100 278.5 Online 10 10 20
Monroe, LA....................... 304 330.7 100 330.7 Online 30 10 40
Shreveport, LA................... 419 592.7 100 592.7 Online 30 10 40
Columbus, MS..................... 94 171.0 100 171.0 Jun-01 10 10 20
Greenville, MS................... 175 210.5 100 210.5 Jun-01 10 -- 10
Grenada Area Counties,
MS(/3/)(/6/)................... 290 62.1 100 62.1 Mar-01 10 -- 10
Hattiesburg, MS.................. 186 181.0 100 181.0 Dec-00 30 -- 30
Jackson, MS...................... 210 657.8 100 657.8 Sep-00 10 -- 10
Laurel, MS....................... 246 81.3 100 81.3 Jun-01 30 -- 30
McComb, MS....................... 269 110.1 100 110.1 Jun-01 30 -- 30
Meridian, MS..................... 292 205.9 100 205.9 Jun-01 10 -- 10
Natchez, MS...................... 315 71.8 100 71.8 Jun-01 10 10 20
Tupelo, MS....................... 449 312.5 100 312.5 Mar-01 10 10 20
Vicksburg, MS.................... 455 61.7 100 61.7 Jun-01 10 -- 10
Maury Area Counties,
TN(/3/)(/7/).................... 314 101.0 100 101.0 Dec-00 30 -- 30
Longview, TX..................... 260 317.8 100 317.8 Online 30 10 40
Paris, TX........................ 341 92.6 100 92.6 Jun-01 30 10 40
Texarkana, TX.................... 443 265.8 100 265.8 Online 30 10 40
Tyler, TX........................ 452 303.9 100 303.9 Online 30 -- 30
Beaumont, TX..................... 34 459.1 80 367.3 Online 10 -- 10
Lufkin, TX....................... 265 157.5 80 126.0 Dec-99 10 -- 10
-------- -------
Subtotal....................... 9,755.9 9,632.6
Minority Interests:
Baton Rouge, LA................. 32 676.1 14 94.7 Online 30 -- 30
Hammond, LA..................... 180 106.3 14 14.9 Dec-99 30 -- 30
Lafayette, LA................... 236 532.1 14 74.5 Online 30 -- 30
Biloxi, MS...................... 42 399.0 14 55.9 Dec-99 30 -- 30
-------- -------
Subtotal....................... 1,713.5 240.0
Total........................ 11,469.4 9,872.6
======== =======
</TABLE>
- -------
(1) Source: Paul Kagan Associates, Inc., 1999 PCS Atlas and Databook.
(2) Our 100% ownership represents 95% ownership by LA Unwired and 5% ownership
by our affiliate, Cameron Communications Corporation.
(3) County based information.
(4) Includes Chilton, Cullman, Talladega, Coosa and Tallapoosa Counties.
(5) Includes Nevada, Clark, Dallas, and Grant Counties.
(6) Includes Grenada, Yalobusha, Tallahatchie and Montgomery Counties.
(7) Includes Maury and Giles Counties.
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The following table sets forth some information about our cellular markets
(population in thousands):
<TABLE>
<CAPTION>
Metropolitan Total Spectrum
or Rural Market % Population Online (Owned
Market Service Area # Population (1) Owned Owned Date MHz)
------ -------------- -------------- ----- ---------- ------ --------
<S> <C> <C> <C> <C> <C> <C>
Beauregard, LA.......... RSA 5 B-1 147.0 100% 147.0 Online 25
De Soto, LA............. RSA 3 B-1 54.0 100% 54.0 Online 25
Lake Charles, LA........ MSA 197 179.9 100% 179.9 Online 25
Chambers, TX............ RSA 21 23.3 25% 5.8 Online 25
----- -----
Total................... 404.2 386.7
===== =====
</TABLE>
- --------
(/1/Source:)Paul Kagan Associates, Inc., Cellular Telephone Atlas 1998.
Network Buildout Plan
As of September 30, 1999, we had launched our PCS service in the following
nine markets covering an aggregate population of approximately 3.0 million:
Alexandria, Houma, Lake Charles, Monroe and Shreveport, Louisiana and Beaumont,
Longview-Marshall, Texarkana and Tyler, Texas. When we complete our network
buildout, we expect to cover 55% to 75% of the population in a majority of
markets in our service area.
We expect that the combined proceeds of our financings will be sufficient to
meet our funding requirements of $294.7 million to complete construction of our
network buildout plan and to fund anticipated operating losses for the period
from July 1999 through December 2001. We anticipate that we will complete
network construction of our markets and will be providing PCS service to a
licensed population of approximately 3.4 million by December 1999, to a
licensed population of approximately 8.4 million by December 2000, and to our
entire service area, covering a licensed population of approximately 9.9
million, by June 2001.
In our network construction, we are focusing initially on the concentrated
population and business centers of the major metropolitan areas in our service
area and the adjoining interstate highways. We intend next to buildout the
smaller markets surrounding the existing built out areas and will continue to
buildout interstate and state highways. We intend to launch service only after
a significant portion of the planned buildout for a given major city has been
completed. In addition, prior to launching service, we will perform extensive
field testing to ensure comprehensive and reliable coverage within a particular
market. We are providing the overall project and construction management of the
design, site acquisition, installation and testing of our PCS transmission
system.
Initial radio frequency design. Lucent Technologies, Inc. and the
engineering firm of 3Ngineering, L.L.C. are performing the initial radio
frequency design for our network. Lucent or 3Ngineering determines the required
number of cell sites to operate our network and identifies the general
geographic areas for proposed cell site locations. The initial radio frequency
design has been completed for all of our markets that are expected to be
completed by December 2000, and 30% of the design has been completed for our
markets that are expected to be completed by June 2001.
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Site identification, acquisition and construction. For those sites that we
do not identify and acquire ourselves, we use Faulk and Foster to identify and
acquire the sites on which we will locate the towers, antennae and other
equipment necessary for the operation of our PCS system. After a general
geographic area for a cell site is identified, Faulk and Foster, or we, survey
potential sites to identify two potential tower sites within each geographic
location and evaluate them based on various engineering criteria and economic
desirability.
We obtain cell sites in three ways: (1) co-location, (2) construction of a
tower by an independent build-to-suit company, or (3) construction of a tower
by us. We prefer to co-locate with another wireless company by leasing space on
an existing tower or building. The advantages of co-location are lower
construction costs and the likelihood that any zoning difficulties have been
resolved. We believe that approximately 833 cell sites are needed to achieve
65% to 75% coverage of the population in our service area. Based on our work to
date, we expect that approximately 40% of our cell sites will be co-located on
existing sites, 10% will be built-to-suit by tower construction companies and
50% will be constructed by us.
Microwave relocation. Prior to the FCC's auction of PCS licenses in the
1850-1970 MHz frequency bandwidths, these frequencies were used by various
fixed microwave operators. The FCC has established procedures for PCS licensees
to relocate these existing microwave paths, generally at the PCS licensee's
expense. We have completed relocation of all microwave paths that currently use
bandwidth owned by us. Sprint PCS is assisting us in relocating the microwave
paths that use bandwidth owned by Sprint PCS and is analyzing these relocations
as we continue the buildout of our network. Including cost sharing for
relocations performed by other PCS licensees and considering cost sharing
reimbursements from other PCS licensees, we expect to spend a net total of less
than $20.0 million for microwave relocation expenses. We plan to complete the
microwave relocation for all paths that use Sprint PCS-owned spectrum prior to
our targeted buildout completion date.
Switching centers. To cover our service area population of approximately 9.9
million, we will use five switching centers located in our four markets of
Shreveport and Lake Charles, Louisiana, Jackson, Mississippi and Montgomery,
Alabama. The Shreveport location has been leased, and construction has been
completed. The Lake Charles, Jackson and Montgomery locations are expected to
be leased and built on a timely basis in conjunction with the scheduled launch
for the markets that are expected to be completed by June 2001. Each switching
center will serve several purposes, including, among other things, routing
calls, managing call handoff, managing access to landlines and providing access
to voice mail.
Interconnection. Our digital PCS network will connect to the landline
telephone system through local exchange carriers. Prior to entering the Sprint
PCS agreements, we entered into interconnection agreements with BellSouth.
Through our agreements with Sprint PCS, we have the opportunity to benefit from
Sprint PCS-negotiated interconnection agreements.
Long distance and back haul. We have entered into a long distance agreement
with our affiliate, Cameron Communications Corporation, which provides
preferred rates for long distance services; however, we also have the option to
purchase long distance services from Sprint PCS at favorable wholesale rates.
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Network communications equipment. Lucent will supply the radio base
stations, switches and other related PCS transmission equipment, software and
services necessary for our markets that are expected to be built out by
December 2000. Lucent has assigned a dedicated project management team to
assist us in the installation and testing of the transmission equipment. We are
currently entertaining competing bids for the provision of these products and
services for our markets that are expected to be completed by June 2001.
Network monitoring systems. Our network operations center in Lake Charles,
Louisiana will provide around-the-clock monitoring and maintenance of our
entire network, including the constant monitoring of all base stations,
switches and system quality (for blocked or dropped calls, call clarity and
evidence of tampering, cloning or fraud), the recording of network traffic and
the overseeing of interface among customer usage, data collected at switch
facilities and billing.
Services and Features
We offer established Sprint PCS products and services throughout our service
area. Our products and services are designed to mirror the service offerings of
Sprint PCS and to integrate seamlessly with the Sprint PCS nationwide network.
Our 100% digital, 100% PCS network has significant advantages over competing
digital networks.
Improved quality and technology. As the quality of digital wireless
telephony networks continues to approach that of wireline systems, increased
customer usage is expected. We believe that PCS providers will be first to be
able to offer mass market wireless applications in competition with switched
and direct access local telecommunications services.
100% digital wireless mobility. Our PCS network is part of the largest 100%
digital, 100% PCS network in the nation. We offer customers in our service area
enhanced voice clarity, advanced features, and simple, affordable Sprint PCS
"Free and Clear" pricing plans. These plans include long distance and wireless
airtime minutes for use throughout the Sprint PCS network at no additional
charge. Our basic wireless service includes voice mail, caller ID, enhanced
call waiting, three-way conferencing, call forwarding, distinctive ringing and
call blocking.
Nationwide service. Sprint PCS customers in our service area can use Sprint
PCS services throughout our markets and seamlessly throughout the Sprint PCS
nationwide network. Dual-band/dual-mode handsets allow analog roaming on
wireless networks where CDMA coverage is not available.
Caller ID, voicemail, message waiting indicator, short messaging,
paging. Caller ID enables users to choose which calls to accept and which to
send to voicemail, a feature that boosts customer willingness to leave the
phone on for incoming calls. Digital voicemail is available at a very cost
effective rate and allows for fewer missed calls. Digital handset displays with
message waiting indicators eliminate the need to "dial-in" to check voicemail
and permit the delivery of short messages similar to e-mail or alpha-numeric
paging.
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Advanced handsets. Our dual-band/dual-mode PCS handsets allow customers to
make and receive calls on both PCS and cellular frequency bands using both
digital and analog technology. These advanced handsets allow seamless roaming
on cellular networks where compatible PCS service is not offered, and they can
be equipped for a variety of enhanced features and applications.
Extended battery life. Our digital handsets are capable of operating in
sleep mode while powered on but not in use, thus improving efficiency and
extending battery life by an estimated five to six times of that of analog
handsets. We expect that this feature will increase usage, especially for
incoming calls, as the phone can be left on for longer periods.
Improved voice quality. Our technology offers significantly improved voice
quality, more powerful error correction, less susceptibility to call fading and
enhanced interference rejection, all of which result in fewer dropped calls.
Voice privacy. We use technology that provides secure voice transmissions
encoded into a digital format for greater privacy and fraud protection as a
result of the increased difficulty in decoding a call.
We believe that new features and services will be developed on the Sprint
PCS nationwide network to take advantage of CDMA technology. As a leading
wireless provider, Sprint PCS conducts ongoing research and development to
produce innovative services that give Sprint PCS a competitive advantage. We
offer a portfolio of products and services developed by Sprint PCS to
accommodate the growth in, and the unique requirements of, high speed data
traffic. We plan to provide, when available, a number of applications for
wireless data services including facsimile, internet access and point-of-sale
terminal connections.
Marketing Strategy
We use a two-tiered marketing approach that leverages Sprint PCS's
nationwide presence, brand name and proven strategies which have enabled Sprint
PCS to become a leading provider of PCS service in the United States and
simultaneously capitalizes on our regional focus, our history of providing
communications services and our ability to respond quickly and creatively to
changing customer needs.
Use of Sprint PCS's brand name and marketing. We capitalize on the marketing
opportunities derived from our Sprint PCS relationship, including exclusive use
of the Sprint(R) and Sprint PCS(R) logos in our service area, nationwide
coverage, favorable vendor contracts, long-term traveling arrangements with
prescribed pricing (including exclusive carrier status for Sprint PCS
affiliated traveling traffic), access to Sprint PCS's technological
developments, use of Sprint PCS's national marketing plan and an expansive home
calling area.
Pricing. Our use of the Sprint PCS pricing strategy offers customers in our
service area simplified, customer-friendly service plans with preferred options
and features. Under our agreements with Sprint PCS, we offer Sprint PCS's
consumer pricing plans, including the "Free and Clear" price plans. Sprint
PCS's consumer pricing plans typically offer service features such as
voicemail, enhanced caller ID, call waiting, three-way calling and low per-
minute rates. Lower per-minute rates relative to analog cellular services are
possible because the CDMA technology that we and Sprint
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PCS use has greater capacity, which enables us to market high-use customer
plans at significantly lower prices.
Sprint PCS's "Free and Clear" price plans offer a suite of simple and
affordable rate plans for every consumer and business customer. These plans
include large numbers of base minutes which can be used anywhere in the United
States that is part of Sprint PCS's 100% digital network and in areas covered
under Sprint PCS's numerous traveling agreements with other Sprint PCS
affiliates. These plans also include free long distance calling from anywhere
on Sprint PCS's nationwide network. All of Sprint PCS's current national plans:
. include minutes in any Sprint PCS market (with no traveling charges);
. are feature-rich and generally require no annual contracts and contain no
hidden charges;
. offer a wide selection of phones to meet the needs of consumers and
businesses; and
. provide the first incoming minute free.
Advertising. Our ability to benefit from the Sprint PCS name and reputation
allows us to achieve customer growth more efficiently than competitors with low
brand awareness. Sprint PCS has launched a national advertising campaign to
promote its products, and we benefit from this national advertising in our
service area at no additional cost to us. Sprint PCS also runs numerous
promotional campaigns which provide customers with benefits such as additional
features at the same rate or free ancillary services. We are able to purchase
promotional materials related to these programs from Sprint PCS at their cost.
In addition, Sprint PCS is a sponsor of numerous selective, broad-based
national, regional and local events. These sponsorships provide Sprint PCS with
brand name and product recognition in high profile events, provide a forum for
sales and promotional activities and enhance our promotional efforts in our
service area.
Prepaid Subscribers. US Unwired is a leading proponent of prepaid products
in the wireless industry. Industry experts believe that 70% of all new wireless
activations will be prepay by 2002. We have developed a proprietary real time
debit system that permits us to track minutes of use, replenish minutes and
extinguish minutes not used within 30 days.
Our prepaid services include a pre-packaged wireless handset, marketed under
the brand name Chatpak(TM), that is pre-activated and includes a pre-set number
of minutes. US Unwired has been able to capture substantial market share by
simplifying the phone activation process and allowing the subscriber to control
pre-set spending limits. A key component of any prepaid product is the
carrier's ability to encourage the subscriber to purchase minutes. We have
implemented three key strategies designed to promote high levels of prepaid
usage: handset pricing, airtime replenishment and dedicated customer care.
We believe that the handsets should be priced at a level that encourages the
subscriber to regard the handset as a reusable asset and not an impulse
purchase. We do not subsidize the phone sales to prepay subscribers to the same
extent as we do for sales to post-pay subscribers. We price prepaid minutes at
effectively the same rates as our post-pay plans.
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The subscriber may recharge the handset at hundreds of US Unwired's
convenient locations, including our stores, indirect retailers and vending
machines located in high traffic areas. Other options include inbound telesales
with credit card purchases of airtime through our customer care department or
our computerized interactive voice response unit. The dedicated customer care
team contacts each prepaid subscriber within 30 days following the purchase of
the handset to welcome the subscriber and to validate the subscriber's
knowledge of the handset and how to replenish airtime.
Finally, we have focused our efforts toward subscriber retention. We receive
weekly and monthly reports of prepay usage which allow us to turn our attention
to those subscribers who show less than normal usage patterns.
Regional focus and customer care. Our regional focus enables us to
supplement Sprint PCS's marketing strategies with our own strategies tailored
to each of our specific markets. This includes attracting local businesses to
enhance our distribution and drawing on our management team's local experience.
Our large local sales force executes our marketing strategy through our retail
stores and kiosks. Our outside sales force targets business sales.
Additionally, we are staffing our retail outlets with full-time customer care
representatives to interface directly with the customers concerning billing and
service issues.
We direct our media and promotional efforts at the community level by
advertising Sprint PCS's products and services through television, radio, print
advertisements, outdoor advertising, billing inserts and promotional displays
in our retail stores. We market our products and services under the name US
Unwired co-branded with the Sprint(R) and Sprint PCS(R) logos. Also, we sponsor
local and regional events. In addition, Sprint PCS's existing agreements with
national retailers provide us with access to over 250 national retail locations
in our service area.
In the area of pricing, we offer the business user substantial economic
savings on such features as:
. home regional roaming rates;
. free long distance throughout the contiguous United States;
. voicemail; and
. reduced rates for incoming calls.
In addition, we offer shared minute pools, which are available for businesses
and families who have multiple wireless users who want to share the base plan
of minutes.
We are committed to building strong customer relationships by providing
customer care that exceeds expectations. Our customer care representatives are
accessible from any of our handsets at no charge. Our web-based services
include online account specific information that allows customers to check
billing or otherwise manage their accounts.
Bundling and affinity marketing. We bundle our wireless communications
services with our other communications services, including discounted long
distance services, internet access and CLEC services.
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Sales and Distribution
We target a broad range of consumer and business markets through a multiple
channel sales and distribution plan. Our plan uses traditional cellular
channels, such as our own retail stores, mass merchandisers and other national
retail outlets, independent agents and an outside sales force, as well as
lower-cost channels such as direct marketing and a corporate website.
Retail stores. We currently have 14 retail stores and six kiosks in
operation and plan to open between 30 and 40 additional retail stores. Our
retail stores are located in the principal retail districts in each market.
Kiosks, which are located in Walmart stores, maximize our retail presence in
some of our markets and take advantage of high traffic areas. We make extensive
use of our stores and kiosks for the distribution and sale of our handsets and
services. Sales representatives in these stores and kiosks receive in-depth
training which allows them to explain PCS service in an informed manner. We
believe that these representatives will foster effective and enduring customer
relationships.
Independent agents. We have a network of over 270 independent agents which
create additional opportunities for local distribution. Most of these
businesses are family-owned consumer electronics dealers and wireless
telecommunication retailers.
Mass merchandisers and outlets. We complement our retail store and
independent agent strategies with mass market retail outlets. We are
negotiating distribution agreements based on Sprint PCS's arrangements with
national and regional mass merchandisers and consumer electronic retailers,
including Radio Shack, Office Depot, Circuit City, Dillard's, Sam's Wholesale
Club, Office Max and Best Buy. There are over 250 national retail outlet
locations where our customers can purchase our services. These distributors are
chosen based upon their ability to target customers in our service area. We
support their dedication of valuable floor space to wireless communications
products through a local team of retail merchandisers, attention-grabbing point
of sale materials and consumer appeal.
Outside sales force. We participate in Sprint PCS's national accounts
program, which targets Fortune 1000 companies. Under this program, when a
Sprint PCS representative reaches an agreement with the corporate headquarters
of a Fortune 1000 company, we service the offices of that corporation that are
located within our service area. We generate additional subscribers through
Sprint PCS's Business to Business Accounts Teams, which call on businesses of
all sizes below the Fortune 1000 tier. In addition, our own outside corporate
sales force targets businesses that are not covered by Sprint PCS's national
accounts program or its Business to Business Account Teams.
Inbound telemarketing. Sprint PCS provides inbound telemarketing sales when
customers call from our service area. As the exclusive provider of Sprint PCS
products and services in our market, we expect to use the national Sprint PCS
(800) 480-4PCS number campaigns that generate call-in leads. These leads are
then handled by a US Unwired retail outlet.
Electronic commerce. Sprint PCS launched an internet site in December 1998
which contains information on Sprint PCS products and services. A visitor to
Sprint PCS's internet site who is interested in purchasing a handset for postal
zip codes in our service area is referred to our toll free
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customer care telephone number for assistance. Customers in our service area
who will purchase products and services over the Sprint PCS internet site
become customers of our PCS network.
Direct marketing and website. In addition to Sprint PCS's efforts, we use
direct marketing efforts through direct mail and our own website. We are
developing these less expensive and more innovative sales channels to
complement the retail presence within our service area as the buildout
continues. Our website, www.usunwired.com, provides current information about
us, our markets and our product offerings and includes an online store. Our
web-based services include online account specific information that allows
customers to check billing or otherwise manage their accounts.
CDMA Technology
Sprint PCS's nationwide network and its affiliates' networks all use
digital CDMA technology. CDMA technology is fundamental to accomplishing our
business objective of providing high volume, high quality airtime at a lower
cost. We believe that CDMA provides important system performance benefits.
Voice quality. CDMA systems offer more powerful error correction, less
susceptibility to fading and reduced interference than analog systems. Using
enhanced voice coding techniques, CDMA systems achieve voice quality that is
comparable to the typical wireline telephone. This CDMA voice coding
technology also employs adaptive equalization which filters out distracting
background noise more effectively than existing wireline, analog cellular or
other digital PCS phones.
Greater capacity. CDMA technology allows a greater number of calls within
one allocated frequency and reuses the entire frequency spectrum in each cell.
CDMA systems are expected to provide capacity gains of up to seven to ten
times over the current analog system and up to three times greater than TDMA
and GSM systems. We believe that by the end of 1999 a new voice coding
technology will be available for CDMA networks and is expected to increase the
capacity of the system by approximately 40%. This new voice coding standard is
referred to as Enhanced Variable Rate Coding, or EVRC, and will allow the
network to support additional capacity while maintaining the high level of
voice quality associated with digital networks. We will utilize the EVRC
technology throughout our PCS network to increase capacity. Additional
capacity improvements are expected for CDMA networks over the next two years
as new third generation standards are approved and implemented that will allow
for high-speed data and an even greater increase in the voice traffic
capacity.
CDMA technology is designed to provide flexible, or soft, capacity that
permits a system operator temporarily to increase the number of telephone
calls that can be handled within a cell. When capacity limitations in analog,
TDMA and GSM systems are reached, additional callers in a given cell must be
given a busy signal. Using CDMA technology, the system operator can allow a
small degradation in voice quality to provide temporary increases in capacity.
This reduces blocked calls and increases the probability of a successful cell-
to-cell hand-off.
Soft hand-off. CDMA systems transfer calls throughout the network using a
technique referred to as a soft hand-off, which connects a mobile customer's
call with a new cell site while maintaining a connection with the cell site
currently in use. CDMA networks monitor the quality of the
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transmission received by both cell sites simultaneously to select a better
transmission path and to ensure that the network does not disconnect the call
in one cell until it is clearly established in a new one. As a result, fewer
calls are dropped compared to analog, TDMA and GSM networks, all of which use a
"hard hand-off" and disconnect the call from the current cell site as it
connects with a new one.
Integrated services. CDMA systems permit us to offer advanced features,
including voice mail, caller ID, enhanced call waiting, three-way conferencing,
call forwarding, paging and text-messaging.
Privacy and security. One of the benefits of CDMA technology is that it
combines a constantly changing coding scheme with a low power signal to enhance
security and privacy. Vendors are currently developing additional encryption
capabilities which will further enhance overall network security.
Simplified frequency planning. Frequency planning is the process used to
analyze and test alternative patterns of frequency use within a wireless
network to minimize interference and maximize capacity. Currently, cellular
service providers spend considerable money and time on frequency planning.
Because TDMA and GSM based systems have frequency reuse constraints similar to
present analog systems, frequency reuse planning for TDMA and GSM based systems
is expected to be comparable to planning for the current analog systems. With
CDMA technology, however, the same subset of allocated frequencies can be
reused in every cell, substantially reducing the need for costly frequency
reuse patterning and constant frequency plan management.
Longer battery life. Due to their greater efficiency in power consumption,
CDMA handsets can provide up to two days of standby time and four hours of talk
time availability. This generally exceeds the battery life of handsets using
alternative digital or analog technologies.
Competition
We will compete in our service area with the incumbent cellular providers
and new PCS providers. The cellular providers in our service area serve
different geographic segments of our service area, but no one cellular carrier
provides complete coverage throughout our service area. Some of these cellular
providers offer a digital product also, but typically covering only a small
segment of our service area. Of our PCS competitors, only PrimeCo, TeleCorp
PCS, Inc., Tritel PCS, Inc. and Alltel Corp. will provide service comparable to
ours in our service area. PrimeCo, like we do, uses CDMA technology. PrimeCo is
licensed to offer PCS services in all of our Louisiana and Texas markets but
has not indicated any intention to buildout a network in these markets.
TeleCorp is expected to be a competitive PCS provider in our Monroe, Louisiana
market and in our Arkansas markets. Tritel will compete with us in our
Mississippi and Alabama markets. TeleCorp and Tritel both employ TDMA
technology and are members of the AT&T wireless network. Alltel is a current
PCS provider in several of our markets. Our ability to compete effectively with
these other providers will depend on a number of factors, including the
continued success of CDMA technology in providing better call quality and
clarity as compared to analog and digital cellular systems, our competitive
pricing with various options suiting individual subscriber's calling needs and
the continued expansion and improvement of the Sprint PCS nationwide network,
customer care system and handset options.
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We will compete also with paging, ESMR and dispatch companies in our
markets. Potential users of PCS systems may find their communications needs
satisfied by other current and developing technologies. One or two-way paging
or beeper services that feature voice messaging and data display as well as
tone-only service may be adequate for potential subscribers who do not need to
speak to the caller.
In the future, we expect to face increased competition from entities
providing similar services using other communications technologies, including
satellite-based telecommunications and wireless cable systems. Although some of
these technologies and services are currently operational, others are being
developed or may be developed in the future.
We do not currently face competition from resellers on our facilities. A
reseller buys blocks of wireless telephone numbers and capacity from a licensed
carrier and resells service through its own distribution network to the public
but does not hold FCC licenses or own facilities. Thus, a reseller is both a
customer of a wireless licensee's services and also a competitor of that and
other licensees. We expect to continue to be subject to the FCC rule that
requires most cellular and PCS licensees to permit resale of carrier service.
Over the past several years the FCC has auctioned and will continue to
auction large amounts of wireless spectrum that could be used to compete with
PCS services. Based upon increased competition, we anticipate that market
prices for two-way wireless services generally will decline in the future. We
will compete to attract and retain subscribers principally on the basis of
services and features, the size and location of our service areas, network
coverage and reliability, customer care and pricing. Our ability to compete
successfully will also depend, in part, on our ability to anticipate and
respond to various competitive factors affecting the industry, including new
services that may be introduced, changes in consumer preferences, demographic
trends, economic conditions and discount pricing strategies by competitors.
Government Regulation
The FCC and, depending on the jurisdiction, state and local regulatory
agencies, regulate the licensing, construction, operation, acquisition and sale
of PCS and cellular systems in the United States. To the extent that we conduct
operations as a competitive local exchange carrier, we are subject to further
regulation by the FCC and state authorities.
Licensing of PCS systems. A broadband PCS system operates under a protected
geographic service area license granted by the FCC for a particular market on
one of six frequency blocks allocated for broadband PCS service. Narrowband PCS
is for non-voice applications such as paging and data service and is separately
licensed. The FCC has segmented the United States into PCS markets as follows:
51 large regions called major trading areas, or MTA's, which in turn are
composed of 493 smaller regions called basic trading areas, or BTA's. Two
licenses are awarded for each MTA and four for each BTA, so that generally six
licensees will be authorized to compete in each area. The two MTA licenses
authorize the use of 30 MHz of spectrum. One of the BTA licenses is for 30 MHz
of spectrum, and the other three are each for 10 MHz of spectrum. The FCC
permits licensees to split their licenses and assign a portion, on either a
geographic or frequency basis or both, to a third party.
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The FCC awards all PCS licenses by auction. Due to defaults in payment of
the bid price, many FCC licenses have been re-auctioned.
We hold certain F-Block PCS licenses, which we obtained from the FCC through
a competitive bidding process in which we were required to qualify as a
"designated entity." Our "designated entity" status may impose some limitations
on our ability to accept additional equity investments in the future.
All PCS licenses have a 10-year term and must thereafter be renewed. The FCC
will award a renewal expectancy to a PCS licensee that has provided substantial
service during its past license term and substantially complied with applicable
FCC rules and policies and the Communications Act of 1934. All PCS licensees
must satisfy coverage requirements. Licensees that fail to meet the coverage
requirements may be subject to a loss of service area that is not covered or
forfeiture of the license.
For a period of up to five years after the grant of a PCS license (subject
to extension), a PCS license will be required to share spectrum with existing
licensees that operate fixed microwave systems within its license area. To
secure a sufficient amount of unencumbered spectrum to operate our PCS systems
efficiently and with adequate population coverage, we are required to relocate
many of these incumbent licensees. In an effort to balance the competing
interests of existing microwave users and newly authorized PCS licensees, the
FCC has adopted (1) a transition plan to relocate such microwave operators to
other spectrum blocks and (2) a cost sharing plan so that if the relocation of
an incumbent benefits more than one PCS licensee, the benefitting PCS licensees
will share the cost of the relocation. Initially, this transition plan allowed
most microwave users to operate in the PCS spectrum for a two-year voluntary
negotiation period and an additional one-year mandatory negotiation period. For
public safety entities dedicating a majority of their system communications for
police, fire or emergency medical services operations, the voluntary
negotiation period is three years, with an additional two-year mandatory
negotiation period. The FCC has recently shortened the voluntary negotiation
period by one year (without lengthening the mandatory negotiation period) for
non-public safety PCS licensees in the C, D, E and F Blocks. Parties unable to
reach agreement within these time periods may refer the matter to the FCC for
resolution, but the incumbent microwave user is permitted to continue its
operations until final FCC resolution of the matter. The transition and cost
sharing plans expire on April 4, 2005, at which time remaining incumbents in
the PCS spectrum will be responsible for their costs to relocate to alternate
spectrum locations.
PCS systems are subject to certain FAA regulations governing the location,
lighting and construction of transmitter towers and antennae and may be subject
to regulation under the National Environmental Policy Act and the environmental
regulations of the FCC. State or local zoning and land use regulations also
apply to our activities.
The Communications Act of 1934 preempts state and local regulation of the
entry of, or the rates charged by, any provider of commercial mobile radio
service which includes PCS and cellular service, or any private mobile radio
service, and the FCC does not regulate such rates.
Licensing of cellular telephone systems. FCC regulations specify that two
cellular radio licenses are available for any given area within each of the
FCC-designated markets in the
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United States. Frequency B Block licenses were initially awarded to incumbent
landline local exchange carriers, and frequency A Block licenses were initially
awarded to non-incumbents. Apart from the different frequency blocks, there is
no technical difference between A Block and B Block cellular systems, and the
operational requirements imposed on each system are the same. The regulatory
distinction between the two types of systems concerns only an applicant's
eligibility to apply for an initial authorization.
The FCC awards all cellular licenses by auction. Auctions are to be held in
the future for several markets in which the initial selected applicant has been
disqualified. Cellular licenses are issued generally for a 10-year term
beginning on the date of the grant of the initial operating authority and are
renewable upon application to the FCC for periods of up to 10 years. The FCC
may revoke a license prior to the end of its term in extraordinary
circumstances, such as serious violations of FCC rules.
Near the conclusion of the license term, licensees must file applications
for renewal of licenses to obtain authority to operate for up to an additional
10-year term. Applications for license renewal may be denied if the FCC
determines that the grant of an application would not serve the public
interest. In addition, at license renewal time, other parties may file
competing applications for the authorization. In the event that qualified
competitors file applications for a licensee's market, the FCC may be required
to hold a hearing to determine whether the incumbent or the competitor will
receive the license. In 1993, the FCC adopted specific standards for cellular
renewals, concluding that it will award a renewal expectancy to a cellular
licensee that meets specified standards of past performance. If the existing
licensee receives a renewal expectancy, it is very likely that the existing
licensee's cellular license will be renewed without a full comparative hearing.
As with the PCS licenses, the FCC will award a renewal expectancy to a cellular
licensee that has provided substantial service during its past license term and
has substantially complied with applicable FCC rules and policies and the
Communications Act of 1934.
Cellular radio service providers also must satisfy a variety of FCC
requirements relating to technical and reporting matters, including the
coordination of proposed frequency usage with adjacent cellular users,
permittees and licensees to avoid interference between adjacent systems. In
addition, the height and power of base station transmitting facilities and the
type of signals that they emit must fall within specified parameters.
Additionally, the FCC regulates cellular service resale practices and the
terms under which ancillary services may be provided through cellular
facilities. As with the PCS systems, cellular systems are subject to FAA
regulations respecting the location, lighting and construction of cellular
transmitter towers and antennae and may be subject to regulation under the
National Environmental Policy Act and the environmental regulations of the FCC.
State or local zoning and land use regulations may also apply. We use landline
facilities to connect cell sites and to link them to the main switching office.
These landlines are separately licensed by the FCC and are subject to
regulation as to technical parameters and service.
Other regulatory requirements. The FCC imposes a variety of additional
regulatory requirements on all commercial mobile radio service, or CMRS,
operators, which include both PCS and cellular systems as well as certain SMR
systems. These requirements are subject to change
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through administrative and judicial proceedings, as well as new legislation,
and several of those described below are currently under reconsideration by
the FCC. Some of the more significant regulatory requirements include the
following:
. Resale. Most CMRS operators, including ourselves, may not restrict the
resale of their services so that resellers may use the facilities of the
CMRS operator to introduce a competitive service.
. Roaming. CMRS carriers must provide service to all qualified roamers,
subscribers of a compatible CMRS service in another geographic region.
. Number portability. CMRS carriers will be required to allow their
customers to take their phone numbers with them if they change to a
competitive service and must be able to deliver calls to ported numbers.
. Enhanced 911. CMRS carriers must be able to transmit 911 calls from any
qualified handset without credit check or validation, will be required to
provide 911 service from individuals with speech or hearing disabilities,
and are required to provide the location of the 911 caller, within an
increasingly narrow geographic tolerance over time.
. Wiretaps. CMRS carriers must provide law enforcement personnel with a
sufficient number of ports and technical assistance in connection with
the wiretaps on the CMRS network.
. Calling party pays. The FCC is considering mechanisms to permit CMRS
operators to charge the party initiating the call (even if not the CMRS
subscriber).
. Customer information. The FCC imposes restrictions, some of which were
recently struck down by a federal appeals court, on a CMRS carrier's use
of "Customer Proprietary Network Information," derived from a customer's
billing records and useful in connection with marketing additional
services.
. Interconnection. All telecommunications carriers, including CMRS
carriers, must interconnect directly or indirectly with other
telecommunications carriers. Both state and federal regulators have
jurisdiction over certain aspects of this interconnection, including
price and quality, although questions of jurisdiction and the content of
the regulations are still being litigated. In general, implementation of
interconnection since the enactment of the Telecommunications Act of 1996
has improved the price and terms on which CMRS carriers can obtain
interconnection from the local telephone companies.
. Universal service and other fees. The FCC imposes universal service
support fees on telecommunications carriers, including CMRS carriers,
which have been significant in magnitude. Other, lesser fees are imposed
by the FCC to support telecommunications relay service, number
portability, the cost of FCC regulation and other matters.
. Spectrum cap. Under the FCC's current rules specifying spectrum
aggregation limits affecting broadband PCS licenses, no entity may hold
attributable interests (generally defined as, (a) 20% or more of the
equity, (b) 40% or more of the equity, if held by a small business, rural
telephone company, or investment company, (c) a general partnership
interest, or (d) an officer or director position) in licenses for more
than 45 MHz of PCS, cellular and some specialized mobile radio, called
SMR, services in Metropolitan Statistical Areas and 55 MHz
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in Rural Service Areas where there is significant overlap in any
geographic area. Significant overlap will occur when at least ten percent
of the population of the PCS licensed service area is within the cellular
and/or SMR service area(s). We believe that we are in compliance with
these spectrum aggregation limits.
Transfers and assignments of PCS and cellular licenses. The Communications
Act of 1934 and FCC rules require the FCC's prior approval of the assignment
or transfer of control of a license for a PCS or cellular system. In addition,
the FCC has established transfer disclosure requirements that require
licensees who transfer control of or assign a PCS license with the first three
years of their license term to file associated contracts for sale, option
agreements, management agreements or other documents disclosing the total
consideration that the licensee would receive in return for the transfer or
assignment of its license. Non-controlling interests in an entity that holds
an FCC license generally may be bought or sold without FCC approval. Any
acquisition or sale by us of PCS or cellular interests may also require the
prior approval of the Federal Trade Commission and the Department of Justice,
if over a specified size, as well as state or local regulatory authorities
having competent jurisdiction.
Foreign ownership. The Communications Act of 1934 prohibits more than 20%
of any licensee's equity being owned of record or voted by non-United States
citizens or their representatives, a foreign government or its representative,
or any corporation organized under the laws of a foreign country. In addition,
the FCC may decline to allow a licensee to be indirectly controlled by another
entity more than 25% of the equity of which is owned of record or voted by
foreign interests, although the FCC presumes that up to 100% ownership by
citizens of countries that have entered into the World Trade Organization's
basic accord on telecommunications will be in the public interest. If foreign
ownership exceeds the permitted level, the FCC may revoke PCS licenses or
require an ownership restructuring. We believe that we comply with these
limitations.
Intellectual Property
The Sprint(R) and Sprint PCS(R) brand names and logos are service marks
owned by Sprint and registered with the United States Patent and Trademark
Office. Pursuant to license agreements with Sprint, we use, on a royalty free
basis and solely within our service area, the Sprint design logo and "diamond"
symbol and other service marks of Sprint, such as the phrases "The Clear
Alternative to Cellular" and "Clear Across the Nation," in connection with
marketing, offering and providing licensed services to subscribers. Our
license agreements with Sprint grant us the right and license to use some of
their licensed marks on permitted mobile phones. The license agreements
contain numerous restrictions with respect to the use and modification of
their licensed marks. We have the exclusive right to market Sprint PCS
products and services in our service area subject to Sprint PCS national
marketing programs.
Employees
As of September 30, 1999, we employed approximately 580 people. Our
employees are currently not represented by a union. A recent employee survey
conducted by an independent third party reported a high level of job
satisfaction for over 90% of the employees surveyed.
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Properties
We lease space for our switches in Lake Charles and Shreveport, Louisiana,
and for our corporate operations, network operators and customer care and data
center in Lake Charles, Louisiana. We presently own two store sites, and we
lease seven store sites in Louisiana and five in Texas. We own 96 cell sites in
Louisiana, and we lease an additional 39 cellular, PCS, paging and microwave
sites in Louisiana. In Texas and parts of Arkansas, we own 69 sites and lease
48.
We are currently negotiating the purchase of an 11-story, 115,300 square
foot office building in downtown Lake Charles to serve as our corporate
headquarters. Although negotiations have not been finalized, we anticipate
purchasing the facility for approximately $2.7 million. Even though we are in
the initial stages of evaluating the project, we expect that additional
expenditures at least equal to the purchase price will be incurred over several
years to upgrade and renovate the facility.
Legal Proceedings
We are from time to time involved in litigation that we believe ordinarily
accompanies the communications business. We do not believe that any of our
pending or threatened litigation will result in an outcome that would
materially impair our business.
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SPRINT PCS AGREEMENTS
Summary Overview of Sprint PCS Relationship and Agreements
We will have three management agreements with Sprint PCS. The first
management agreement, as amended, was entered into as of June 8, 1998, and
provides for LA Unwired to be the manager of the Sprint PCS business in the
service areas listed below. We own the PCS licenses for the Alexandria, Lake
Charles, Monroe and Shreveport, Louisiana and Longview-Marshall, Paris and
Texarkana, Texas service areas.
El Dorado-Magnolia-Camden, Arkansas Shreveport, Louisiana
Pine Bluff, Arkansas Longview-Marshall, Texas
Alexandria, Louisiana Paris, Texas
Houma-Thibodaux, Louisiana Texarkana, Texas
Lake Charles, Louisiana Tyler, Texas
Monroe, Louisiana
The second Sprint management agreement, as amended, was entered into as of
February 8, 1999, and gives LA Unwired the right to manage Sprint PCS services
in the following service areas:
Anniston, Alabama Pensacola, Florida
Birmingham, Alabama (Chilton, Tallahassee, Florida (Jackson county
Cullman, Talladega, Coosa and only)
Tallapoosa counties only) Columbus, Mississippi
Decatur, Alabama Greenville, Mississippi
Florence, Alabama Hattiesburg, Mississippi
Gadsen, Alabama Jackson, Mississippi
Huntsville, Alabama Laurel, Mississippi
Mobile, Alabama McComb, Mississippi
Montgomery, Alabama Memphis, Mississippi (Grenada,
Selma, Alabama Montgomery, Tallahatchie and
Tuscaloosa, Alabama Yalobusha counties only)
Hot Springs, Arkansas Meridian, Mississippi
Little Rock, Arkansas (Clark, Natchez, Mississippi
Dallas, Grant and Nevada counties Tupelo, Mississippi
only) Vicksburg, Mississippi
Fort Walton Beach, Florida Nashville, Tennessee (Maury and Giles
Panama City, Florida counties only)
As part of the Meretel transaction described in the section entitled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," an additional Sprint agreement will be entered into prior to the
end of 1999 that will give Texas Unwired, a Louisiana general partnership, the
right to manage Sprint PCS services in these additional service areas:
Beaumont-Port Arthur, Texas
Lufkin-Nacogdoches, Texas
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Our rights with respect to the areas under the 1998 Sprint agreement and all
of the areas under the 1999 Sprint agreements are subject to our obtaining
sufficient financing for the design, construction and management of the
additional service areas covered by these agreements. We currently have in
place financing for the primary service areas covered by the 1998 Sprint
agreement. The following service areas are currently operational: Alexandria,
Lake Charles, Monroe and Shreveport, Louisiana, and Beaumont-Port Arthur,
Longview-Marshall and Tyler, Texas.
The Sprint management agreements authorize us to be the manager of the
Sprint PCS network in the areas covered by the applicable Sprint management
agreement. Sprint PCS owns the PCS licenses for all of the service areas
covered by the Sprint management agreements (other than the Alexandria, Lake
Charles, Monroe and Shreveport, Louisiana and Longview-Marshall, Paris and
Texarkana, Texas service area licenses which we already own) and the right to
use the licenses is afforded to us pursuant to the management agreements.
We are required pursuant to the Sprint management agreements to (1)
construct and manage the service area networks in compliance with the licenses
and the terms of the Sprint management agreements, (2) distribute Sprint PCS
products and services and establish distribution areas in the service areas,
(3) conduct advertising and promotion activities in the service areas
(including mutual decisions to suspend advertising for reasonable periods of
time) and (4) manage the portion of the customer base of Sprint PCS that has an
area code and prefix assigned to the service area network.
Sprint PCS has the unlimited right to access the service area network for
Sprint PCS constructed by us under the agreements. Sprint PCS pays a management
fee to us to use the service area network for sales and marketing costs and for
management of those service areas where we do not use our licenses. In areas
where we use our own licenses, we pay Sprint a fee to be a Sprint PCS
affiliate.
Each Sprint management agreement contains program requirements established
by Sprint PCS that must be adhered to by us. These requirements are intended to
establish uniform and consistent program requirements to be used throughout the
nationwide Sprint PCS network. The program requirements include provisions
regarding the management of the service area network, our participation in
Sprint PCS distribution programs on a national and regional basis, cost sharing
and auditing in connection with distribution programs, handset logistics and
distribution, retail store guidelines, participation in Sprint PCS national
account programs, establishment of integrated networks with Sprint PCS in each
area serviced by us, roaming and inter-service area programs, adherence to
Sprint technical program requirements, customer service requirements regarding
matters related to customer care, invoice presentation, billing cycles,
management of fraud and receivables and disaster contingencies. We are required
to adhere to these various Sprint program requirements as such requirements may
be changed by Sprint PCS from time to time.
In addition to the Sprint PCS management agreements, we have entered into
trademark and service mark license agreements with Sprint Communications
Company, L.P. and trademark and service mark license agreements with Sprint
Spectrum L.P. We plan to enter into a Services Agreement pursuant to which
Sprint will provide us on a contract basis with selected back office functions
such as billing and customer care for a limited number of our markets.
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The material terms of our relationship and agreements with Sprint PCS are as
follows.
The Management Agreements
Under our management agreements with Sprint PCS, we have agreed to:
. construct and manage a network in our service area in compliance with our
and Sprint PCS's PCS licenses and the terms of the management agreement;
. distribute Sprint PCS products and services;
. use Sprint PCS's and our own distribution channels in our service area;
. conduct advertising and promotion activities in our service area; and
. manage that portion of Sprint PCS's customer base assigned to our service
area.
Sprint PCS will supervise our PCS network operations and has the right to
unconditional access to our PCS network.
Exclusivity. We have the exclusive right to manage or operate a PCS network
for Sprint PCS in our service area. Sprint PCS is prohibited from owning,
operating, building or managing another wireless mobility communications
network in our service area while our management agreements are in place.
Sprint PCS may make national sales to companies in our service area and, as
required by the FCC, may resell Sprint PCS products and services in our service
area. If Sprint PCS decides to expand the geographic size of our buildout,
Sprint PCS must provide us written notice of the proposed expansion. We have 90
days to determine whether we will buildout the proposed area. If we do not
exercise this right, Sprint PCS can buildout the proposed area or permit
another third party to do so.
Network buildout. The management agreements specify the terms of the Sprint
PCS affiliation, including the required network buildout plan. We have agreed
to cover a specified percentage of the population at coverage levels ranging
from 65% to 75% within each of the 38 markets which make up our service area by
specified dates ending on June 2001.
Products and services. The management agreements identify the products and
services that we can offer in our service area. These services include, but are
not limited to, Sprint PCS consumer and business products and services
available as of the date of the agreement, or as modified by Sprint PCS. We are
allowed to sell wireless products and services that are not Sprint PCS products
and services if those additional products and services do not cause
distribution channel conflicts or, in Sprint PCS's sole determination, consumer
confusion with Sprint PCS's products and services. We may cross-sell services
such as internet access, handsets, and prepaid phone cards with Sprint, Sprint
PCS and other Sprint PCS affiliates. If we decide to use third parties to
provide these services, we must give Sprint PCS an opportunity to provide the
services on the same terms and conditions. We cannot offer wireless local loop
services specifically designed for the competitive local exchange market in
areas where Sprint owns the local exchange carrier unless we name the Sprint-
owned local exchange carrier as the exclusive distributor or Sprint PCS
approves the terms and conditions.
We participate in the Sprint PCS sales programs for national sales to
customers and pay the expenses and receive the compensation from national
accounts located in our service area. We have
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entered into a long distance agreement with our affiliate, Cameron
Communications Corporation, which provides preferred rates for long distance
services; however, we also have the option to purchase long distance services
from Sprint PCS at favorable wholesale rates.
Service pricing, traveling and fees. We must offer Sprint PCS subscriber
pricing plans designated for regional or national offerings, including Sprint
PCS's "Free and Clear" plans. We are permitted to establish our own local price
plans for Sprint PCS's products and services only offered in our service area,
subject to Sprint PCS's approval. Our management agreements with Sprint PCS
require total collected revenue sharing of 8% to Sprint PCS and 92% to US
Unwired, except for amounts collected with respect to taxes. US Unwired retains
100% of revenues from non-US Unwired Sprint PCS customers traveling in our
service area, sales of handsets and accessories and proceeds from sales not in
the ordinary course of business. Although many Sprint PCS subscribers will
purchase a bundled pricing plan that allows traveling anywhere on the Sprint
PCS and affiliates' network without incremental traveling charges, we earn
roaming revenues from every minute that a "foreign" subscriber's call is
carried on our PCS network. We earn revenues from Sprint PCS based on an
established per minute rate for Sprint PCS's or its affiliates' subscribers
traveling in our service area. Similarly, we pay for every minute that our own
subscribers use the Sprint PCS nationwide network outside our service area. The
analog roaming rate onto a non-Sprint PCS provider's network is set under
Sprint PCS's third party roaming agreements.
Advertising and promotions. Sprint PCS is responsible for all national
advertising and promotion of Sprint PCS products and services. We are
responsible for advertising and promotion in our service area. Sprint PCS's
service area includes the urban markets around our service area. Sprint PCS
will pay for advertising in these markets. Given the proximity of those markets
to ours, we expect considerable overlap from Sprint PCS's advertising in
surrounding urban markets.
Program requirements. We will comply with Sprint PCS's program requirements
for technical standards, customer service standards, national and regional
distribution, national accounts programs and traveling and inter-service area
services. Sprint PCS can adjust the program requirements from time to time. We
have the right to appeal to Sprint PCS's management adjustments which could
cause an unreasonable increase in cost to us if the adjustment: (1) causes us
to incur a cost exceeding 5% of the sum of our equity plus our outstanding long
term debt, or (2) causes our operating expenses to increase by more than 10% on
a net present value basis. If Sprint PCS denies our appeal and we do not comply
with the program adjustment, Sprint PCS has the termination rights described
below.
Non-competition. We may not offer Sprint PCS products and services outside
our service area without the prior written approval of Sprint PCS. Within our
service area we may offer, market or promote telecommunications products and
services only under the Sprint PCS brands, our own brand, brands of related
parties of ours or other products and services approved under the management
agreements, except that no brand of a significant competitor of Sprint PCS or
its related parties may be used for those products and services. To the extent
we have or obtain licenses to provide PCS services outside our service area, we
may not use the spectrum to offer Sprint PCS products and services without
prior written consent from Sprint PCS.
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Inability to use non-Sprint PCS brand. We may not market, promote,
advertise, distribute, lease or sell any of the Sprint PCS products and
services on a non-branded, "private label" basis or under any brand, trademark
or trade name other than the Sprint PCS brand, except for sales to resellers or
as otherwise permitted under the trademark and service mark license agreements.
Termination of management agreements. The management agreements have initial
periods of 20 years with three automatic, successive 10-year renewal periods
which will lengthen each of the agreements to a total term of 50 years. The
management agreements can be terminated as a result of:
. termination of Sprint PCS's PCS licenses;
. an uncured breach under the management agreement;
. bankruptcy of a party to the management agreement;
. the management agreement not complying with any applicable law in any
material respect;
. the termination of either of the trademark and service mark license
agreements; or
. our failure to obtain the financing necessary for the buildout of our PCS
network and for our working capital needs. Sprint PCS has agreed that the
issuance of these Notes and the preferred stock investment by The 1818
Fund will meet the financing requirements of the management agreements.
The termination or non-renewal of the management agreement triggers
specified rights of ours and of Sprint PCS. If we have the right to terminate
the management agreement because of an event of termination caused by Sprint
PCS, generally we may:
. require Sprint PCS to purchase all of our operating assets used in
connection with our PCS network for an amount equal to at least 80% of
our Entire Business Value (as defined below);
. if Sprint PCS is the licensee for 20 MHz or more of the spectrum on the
date we terminate the management agreement, require Sprint PCS to assign
to us, subject to governmental approval, up to 10 MHz of licensed
spectrum for an amount equal to the greater of (1) the original cost to
Sprint PCS of the license plus any microwave relocation costs paid by
Sprint PCS or (2) 9% of our Entire Business Value; or
. sue Sprint PCS for damages, in limited cases, and thereby not terminate
the management agreement.
If Sprint PCS has the right to terminate the management agreement because of
an event of termination caused by us, generally Sprint PCS may:
. require us to sell our operating assets to Sprint PCS for an amount equal
to 72% of our Entire Business Value;
. require us to purchase, subject to governmental approval, the licensed
spectrum for an amount equal to the greater of (1) the original cost to
Sprint PCS of the license plus any microwave relocation costs paid by
Sprint PCS or (2) 10% of our Entire Business Value;
. take any action as Sprint PCS deems necessary to cure our breach of the
management agreement, including assuming responsibility for, and
operating, our PCS network; or
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. sue us for damages, in limited cases, and thereby not terminate the
management agreement.
Non-renewal of management agreements. If Sprint PCS gives us timely notice
that it does not intend to renew the management agreement, we may:
. require Sprint PCS to purchase all of our operating assets used in
connection with our PCS network for an amount equal to 80% of our Entire
Business Value; or
. if Sprint PCS is the licensee for 20 MHz or more of the spectrum on the
date we terminate the management agreement, require Sprint PCS to assign
to us, subject to governmental approval, up to 10 MHz of licensed
spectrum for an amount equal to the greater of (1) the original cost to
Sprint PCS of the license plus any microwave relocation costs paid by
Sprint PCS or (2) 10% of our Entire Business Value.
If we give Sprint PCS timely notice of non-renewal, or if we both give
notice of non-renewal, or if the management agreement can be terminated for
failure to comply with legal requirements or regulatory considerations, Sprint
PCS may:
. purchase all of our operating assets for an amount equal to 80% of our
Entire Business Value; or
. require us to purchase, subject to governmental approval, the licensed
spectrum for an amount equal to the greater of (1) the original cost to
Sprint PCS of the license plus any microwave relocation costs paid by
Sprint PCS or (2) 10% of our Entire Business Value.
If the Entire Business Value is to be determined, we and Sprint PCS will
each select one independent appraiser and the two appraisers will select a
third appraiser. The three appraisers will determine the Entire Business Value
on a going concern basis using the following assumptions:
. the Entire Business Value is based on the price a willing buyer would pay
a willing seller for the entire on-going business;
. then-current customary means of valuing a wireless telecommunications
business will be used;
. the business is conducted under the Sprint and Sprint PCS brands and the
Sprint PCS agreements;
. that we own the spectrum and frequencies presently owned by Sprint PCS
and subject to the Sprint PCS Agreements; and
. the valuation will not include any value for the business not directly
related to the Sprint PCS products and services.
In those service areas where we own the licenses, in the event of a
nonrenewal or a termination of a management agreement, we may be obligated to
allow Sprint PCS customers to travel in our service areas at favorable prices
and to allow Sprint PCS to sell certain of our products within the areas.
If the management agreement terminates for any reason other than a loss of
the license or regulatory considerations, and if Sprint PCS does not put or
sell the disaggregated licenses for such
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area to us, then Sprint PCS is obligated to purchase all of the operating
assets other than with respect to the Shreveport, Alexandria and Monroe service
areas.
The Trademark and Service Mark License Agreements
We have non-transferable, royalty-free licenses to use the Sprint and Sprint
PCS brand names and "diamond" symbol, and several other U.S. trademarks and
service marks such as "The Clear Alternative to Cellular" and "Clear Across the
Nation" on Sprint PCS products and services. We believe that the Sprint and
Sprint PCS brand names and symbols enjoy a very high degree of awareness,
providing us an immediate benefit in the market place. Our use of the licensed
marks is subject to our adherence to quality standards determined by Sprint and
Sprint PCS and use of the licensed marks in a manner which would not reflect
adversely on the image of quality symbolized by the licensed marks. We have
agreed to notify Sprint and Sprint PCS promptly of any infringement of any of
the licensed marks within our service area of which we become aware and to
provide assistance to Sprint and Sprint PCS in connection with Sprint's and
Sprint PCS's enforcement of their respective rights. We have agreed with Sprint
and Sprint PCS to indemnify each other for losses incurred in connection with a
material breach of the trademark license agreements. In addition, we have
agreed to indemnify Sprint and Sprint PCS from any loss suffered by reason of
our use of the licensed marks or marketing, promotion, advertisement,
distribution, lease or sale of any Sprint or Sprint PCS products and services
other than losses arising solely out of our use of the licensed marks in
compliance with certain guidelines.
Sprint and Sprint PCS can terminate the trademark and service mark license
agreements if we file for bankruptcy, materially breach the agreement or our
management agreement is terminated. We can terminate the trademark and service
mark license agreements upon Sprint's or Sprint PCS's abandonment of the
licensed marks, or if Sprint or Sprint PCS files for bankruptcy, or if the
management agreement is terminated.
Consent and Agreement for the Benefit of our Senior Lenders
Sprint PCS has entered into a consent and agreement, which we refer to as
the Lender Consent, with the lenders under our credit facilities, which will be
acknowledged by us, that modifies Sprint PCS's rights and remedies under our
Sprint PCS management agreements for the benefit of the lenders and vendor
guarantor under our credit facilities and any refinancing thereof. The
description below reflects the material terms of the Lender Consent.
The Lender Consent generally provides, among other things, the following:
. Sprint PCS's consent to the pledge of our subsidiary stock and grant of a
security interest in all our assets, including the Sprint PCS management
agreements;
. that the Sprint PCS management agreements generally may not be terminated
by Sprint PCS until our senior financing is satisfied in full pursuant to
the terms of the Lender Consent;
. a prohibition on competing Sprint PCS networks in our territory;
. for Sprint PCS to maintain 10 MHz of PCS spectrum in all our markets;
. for redirection of payments from Sprint PCS to our lenders under
specified circumstances;
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. for Sprint PCS and our lenders to provide to each other notices of
default;
. the ability to appoint an interim replacement manager, including Sprint
PCS, to operate our PCS network under the Sprint PCS management
agreements after an acceleration of our financing from our lenders or an
event of termination under the Sprint PCS management agreements;
. the ability of our lenders or Sprint PCS to assign the Sprint PCS
Agreements and sell our assets or stock to a qualified purchaser other
than a major competitor of Sprint PCS or Sprint;
. the ability to purchase spectrum from Sprint PCS and sell our assets or
stock to any qualified purchaser;
. the ability of Sprint PCS to purchase our assets or our debt; and
. the vendor guarantor will have a claim on assets following the payment of
the guarantee.
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MANAGEMENT
Executive Officers and Directors
The table below sets forth certain information regarding our directors and
executive officers.
<TABLE>
<CAPTION>
Name(1) Age Office
------- --- ------
<S> <C> <C>
William L. Henning,
Jr 46 Chairman, Chief Executive Officer and Director
Robert W. Piper 41 President, Chief Operating Officer and Director
Jerry E. Vaughn 54 Chief Financial Officer
Thomas G. Henning 40 Secretary, General Counsel and Director
William L. Henning, Sr. 76 Director
John A. Henning 44 Director
Lawrence C. Tucker(/1/) 56 Director
Jack J. Blanchard 39 Vice President of Marketing
Don A. Matz 41 Vice President of Information Technologies
Brenda S. McElveen 53 Vice President of Administration
Paul J. Clifton 45 Vice President of Research and Development
</TABLE>
- --------
(1) Mr. Tucker was designated as a director by The 1818 Fund, which is
entitled to designate one other individual to become a member of our board
of directors, but has not yet done so.
William L. Henning, Jr. presently serves as a director and Chief Executive
Officer of US Unwired, positions held since 1988. Prior to 1988, he was the
General Manager of US Unwired. He has been involved in the senior management
of Cameron Telephone Company and US Unwired since 1976. Senior management
positions at US Unwired have also included Chairman, President and Vice
President. He served as President of Mercury Information Technologies, Inc.,
which has owned and operated a cable television franchise, a voice mail
service and an internet access service for over five years. From 1991 to 1998,
he served as a director of First National Bank of Lake Charles.
Robert W. Piper has been the President and Chief Operating Officer of all
of our wireless businesses, including US Unwired, since 1995. He served as
Chief Financial Officer of US Unwired from 1994 to 1995 and as Vice President
and General Manager of US Unwired's long distance operations from 1987 to 1990
and of our wireless business (including US Unwired) from 1987 until 1994. He
joined US Unwired in 1985 as comptroller. He served on the Board of Directors
of Cellular Telecommunications Industry Association from 1992 to 1994 and from
1998 to 1999.
Jerry E. Vaughn has served as Chief Financial Officer of US Unwired since
June 7, 1999. He has over 20 years of diversified financial management
experience, the last 11 years of which were focused in the telecommunications
industry. From 1994 until he joined US Unwired, Mr. Vaughn was President of
NTFC Capital Corporation, a subsidiary of GE Capital. Prior to that time, he
was Treasurer of Northern Telecom Finance Corporation and Vice President of
Mellon Bank Corporation.
Thomas G. Henning, has been General Counsel of US Unwired and Cameron
Telephone Company since 1994. He is responsible for general corporate,
regulatory and other legal matters. Prior to becoming General Counsel, Mr.
Henning was a partner with the law firm of Stockwell, Sievert, Viccellio,
Clements and Shaddock, and remains of counsel to this firm. He has been an
officer and director of US Unwired since 1988.
William L. Henning, Sr. has been a US Unwired director since its
incorporation in 1967. He practiced law for ten years after graduating from
law school and has been involved in the
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telecommunications industry for over 45 years. He was an executive officer and
director of Cameron Telephone Company for over 40 years. He has also served as
director of the National Rural Telecom Association since 1973. He was President
of the Louisiana Telephone Association in 1955; and a director of the West
Calcasieu Port, Harbor and Terminal District from 1964 to 1978, of the
Calcasieu Parish Industrial Development Board from 1972 to 1986, of the United
States Telephone Association from 1982 to 1988 and of Calcasieu Marine National
Bank from 1985 to 1996; and a commissioner of the Chenault Industrial Airpark
Authority from 1986 to 1988.
John A. Henning has served as an officer and director of US Unwired and as a
director of Cameron State Bank since 1988. He served as President of the entity
that operated the Louisiana cellular cluster from 1987 to 1995. He was a
director of the Louisiana Telephone Association from 1984 to 1995 and its
President from 1993 to 1995.
Lawrence C. Tucker has been a General Partner of Brown Brothers Harriman &
Co. since 1979 and currently serves as a member of the Steering Committee of
the firm's partnership. He co-founded and has supervisory responsibility for
BBH & Co.'s private equity funds (The 1818 Funds) which have raised capital
commitments of $1.5 billion. He is a director of MCI WorldCom, Inc., the MCI
WorldCom Venture Fund, National Healthcare Corporation, Riverwood Holdings,
Inc., VAALCO Energy Inc., World Access, Inc. and National Equipment Services,
Inc.
Jack J. Blanchard has served as Vice President of Marketing for US Unwired
since January 1998 and before that served for at least five years as Sales
Manager and Director of Sales and Marketing. He is responsible for all
marketing and public relations efforts for cellular, PCS, paging, internet and
landline services. He had a leadership role in naming and developing our very
successful wireless prepaid program "Chat Pak." He has been instrumental in our
winning numerous advertising campaign awards such as CLIO's Best Overall
Campaign at the "One Awards" and first place in the television division at the
1998 Cellular Telecommunications Industry Association's EMA awards.
Don A. Matz has served as Vice President of Information Systems since
October 26, 1998. He is responsible for US Unwired's management information
system and support. Prior to joining US Unwired in 1998, he was employed for 18
years with Century Telephone Enterprises, Inc., a national telecommunications
company engaged in wireline and wireless activities. With Century Telephone, he
held various positions within Information Systems, the last seven years of
which were in director-level positions in Applications Development, Systems and
Networks, and Research and Development.
Brenda S. McElveen presently serves as Vice President of Administration of
US Unwired and is responsible for customer care, credit collections, customer
retention and employee training for cellular, paging, PCS, CLEC and internet
services. She joined US Unwired in 1984 as Office Manager.
Paul J. Clifton has served as Vice President of Research and Development
since 1998. From 1994 to 1998, he was Vice President for Engineering and
Technical Services. From 1988 to 1994, he served US Unwired in various
capacities such as manager of network systems and traffic manager.
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He was first hired by Cameron Telephone Company in 1980 and began to work for
US Unwired in 1988. In those capacities between 1980 and 1994, he was
responsible for design and implementation of projects associated with the
operation of cellular, paging, voicemail, central office, personal computer,
cable television and long distance operations.
William L. Henning, Jr., Thomas G. Henning and John A. Henning are brothers.
William L. Henning, Sr. is their father.
Board of Directors
Our board of directors is divided into three classes serving three-year
staggered terms each. The Class I directors are John A. Henning and Thomas G.
Henning, whose terms expire in 2001. The Class II directors are William L.
Henning, Sr. and Robert Piper, whose terms expire in 2002. The Class III
directors are William L. Henning, Jr. and Lawrence C. Tucker, whose terms
expire in 2000. Mr. Tucker was designated as a director by The 1818 Fund, which
is entitled to designate one other individual to become a member of our board
of directors whose term will expire in 2000, but has not yet done so.
We do not have a compensation committee, and the functions of such a
committee are performed by our board of directors. William L. Henning, Jr.,
Thomas G. Henning and Robert Piper, who are among our executive officers and
serve on our board of directors, participate in deliberations of our board of
directors concerning executive officer compensation.
Under our by-laws, the board of directors may establish an executive
committee which, if appointed, will consist of up to five members and will have
all powers of the board of directors when the board is not in session except
powers expressly reserved to other committees. A unanimous vote of the
executive committee would be required for that committee to authorize the
issuance and sale of any shares of capital stock or any indebtedness other than
trade indebtedness incurred in the ordinary course of our business and other
than indebtedness not in excess of $1.0 million.
No Employment Agreements
We have no employment agreements with any of our officers or employees, each
of whom may terminate his employment, or be terminated, at will. Persons
employed by us within the last five years have agreed to be subject to
restrictions on competing with us and our subsidiaries should the person's
employment with us terminate.
Director Compensation
Our directors are not paid fees for service in their capacity as directors.
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Executive Compensation
The following table sets forth the compensation earned by our executive
officers for 1996, 1997 and 1998.
<TABLE>
<CAPTION>
Annual Compensation(/1/)
------------------------
Bonus
-----------------
All Other
Name and Principal Position Year Salary Cash Stock Compensation(/1/)
--------------------------- ---- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
William L. Henning, Jr....... 1996 $ 45,750 $142,200 $ 45,000 $ --
Chairman & Chief Executive 1997 $102,750 $ 25,075 -- --
Officer 1998 $135,000 -- -- $950,000(/2/)
Robert W. Piper.............. 1996 $ 71,032 2,120 $ 45,000 $ --
President & Chief Operating 1997 $ 87,951 $ 10,000 -- --
Officer 1998 $105,750 $ 25,000 -- $500,000(/2/)
</TABLE>
- --------
(1) Does not include compensation from our affiliates, Cameron Communications
Corporation and Unibill, Inc.
(2) Consideration from third parties for non-competition agreements in
connection with the 1998 sale of selected cellular markets.
1999 Equity Incentive Plan
Our board of directors has adopted, and our stockholders have approved, the
US Unwired Inc. 1999 Equity Incentive Plan. Under the Equity Incentive Plan,
stock options and other equity-based awards may be granted to our and our
subsidiaries' directors, officers, selected employees and consultants. Our
board of directors administers the Equity Incentive Plan.
The board may grant stock options, stock appreciation rights and other
equity-based awards to eligible persons. In no event, however, may the board
grant awards relating to more than 2,300,000 shares of Class A common stock
pursuant to the Equity Incentive Plan. Shares subject to awards that expire or
are terminated or canceled prior to exercise or payment, or forfeited or
reacquired by us pursuant to rights reserved upon issuance, may be issued again
under the Equity Incentive Plan. Awards paid in cash are not counted against
the number of shares that may be issued under the Equity Incentive Plan.
Awards may be satisfied by the delivery of either authorized but unissued
Class A common stock or issued Class A common stock held as treasury shares.
The board may grant one or more types of awards in any combination to a
particular participant in a particular year. Subject to earlier termination by
our board of directors, the Equity Incentive Plan will remain in effect until
all awards have been satisfied in stock or in cash or terminated under the
terms of the Equity Incentive Plan and all restrictions imposed on stock in
connection with its issuance under the Equity Incentive Plan have lapsed.
Except in the case of an award of stock to a participant as additional
compensation for services to us or our subsidiaries, each award will be
confirmed by, and is subject to the terms of, an agreement executed by the
participant and us.
Following is a description of each type of award or grant that may be made
under the Equity Incentive Plan.
Stock options. Stock options may be incentive stock options that comply with
the requirements of Section 422 of the Internal Revenue Code or nonqualified
stock options that do not comply with
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Section 422 of the Internal Revenue Code. The board will determine the exercise
price and other terms and conditions of options.
The exercise price for an option may be paid in shares of Class A common
stock valued at their then fair market value if the shares have been held by
the optionee for at least six months. To the extent permitted by the board, the
exercise price for an option may be paid in shares of Class A common stock that
have not been held for six months, or in any other manner.
All incentive options must be granted by September 30, 2009 and, unless
sooner exercised, all incentive options expire no later than 10 years after the
date of grant. Incentive options may not be granted to any participant who, at
the time of the grant, would own (as determined by the Internal Revenue Code)
more than 10% of the total combined voting power of all classes of our stock or
of any of our subsidiaries.
Stock appreciation rights and limited stock appreciation rights. A stock
appreciation right is a right to receive, without payment to us, a number of
shares of stock, cash or a combination thereof, as determined by a formula. A
limited stock appreciation right is a right to receive, without payment to us,
cash in amount determined by a formula upon specified change in control events.
Stock appreciation rights may be granted in conjunction with all or any part of
a stock option or independently. Upon the exercise of a stock appreciation
right, the participant will be entitled to receive, for each share of Class A
common stock to which the exercised stock appreciation right relates, the
excess of the fair market value per share of Class A common stock on the date
of exercise over the grant price of the stock appreciation right. Stock
appreciation rights shall have such terms and conditions as may be established
by the board. Upon the exercise of a limited stock appreciation right, the
participant will be entitled to receive a cash payment, for each share of Class
A common stock to which the exercised limited stock appreciation right relates,
equal to excess of the defined change of control value over the grant price of
the limited stock appreciation right.
Other stock-based awards. The board has the authority under the Equity
Incentive Plan to make other awards that are valued in whole or in part by
reference to, or are payable in or otherwise based upon, shares of Class A
common stock, including awards valued by reference to our performance or the
performance of our subsidiaries. The board will determine the participants to
whom and the times at which these awards will be made, the number of shares of
Class A common stock to be awarded and all other terms and conditions of the
awards.
If, with respect to the Class A common stock, there is any recapitalization,
reclassification, stock dividend, stock split, combination of stock or other
similar change in stock, the number of shares of Class A common stock issuable
or issued under the Equity Incentive Plan, including stock subject to
restrictions, options or achievement of performance objectives, shall be
adjusted in proportion to the change in the number of outstanding shares of
Class A common stock. In the event of any of these adjustments, the board will
adjust, to the extent appropriate, the purchase price of any option, the
performance objectives of any award and the stock issuable pursuant to any
award to provide participants with the same relative rights before and after
the adjustment.
In the event of a defined change of control, all outstanding options,
including incentive options, stock appreciation rights and limited stock
appreciation rights granted pursuant to the Equity
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Incentive Plan will become fully exercisable, all restrictions or limitations
on any award under the Equity Incentive Plan will lapse, and all performance
criteria and other conditions relating to the payment of awards will be deemed
achieved or waived by us without further action.
The Equity Incentive Plan may be amended or terminated at any time by our
board of directors, except that no amendment may be made without stockholder
approval if such approval is necessary to comply with any tax or regulatory
requirement.
The Equity Incentive Plan is not subject to any provision of ERISA and is
not qualified under Section 401(a) of the Internal Revenue Code.
We have granted an aggregate of 1,090,000 options pursuant to our Equity
Incentive Plan, including 229,100 options to William L. Henning, Jr., 115,200
options to Robert W. Piper and 24,000 options to Jerry E. Vaughn.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Tax Free Restructuring
Cameron Communications Corporation, which is referred to as Cameron,
completed a restructuring plan pursuant to which the wireless communications
interests of Cameron were separated from its landline telephone business and
combined with the wireless communications interests of US Unwired. To
accomplish this restructuring, US Unwired entered into an Agreement and Plan of
Reorganization on September 19, 1996, and the following transactions occurred
on October 31, 1996:
. Cameron transferred to CCC Holding (Cameron's wholly owned subsidiary
formed to facilitate the restructuring) all of its assets and
liabilities, other than its 96% interest in Mercury Cellular Telephone
Company;
. Cameron "spun off" as a distribution to its stockholders under section
355 of the Internal Revenue Code all of the shares of CCC Holding;
. Cameron was merged into US Unwired, and the stockholders of Cameron
exchanged their shares of Cameron for shares of US Unwired common stock,
which, together with all other then outstanding shares of US Unwired
common stock, were reclassified as US Unwired Class B common stock; and
. CCC Holding was renamed Cameron Communications Corporation.
Pursuant to the Reorganization Agreement, Cameron is responsible for all
obligations and liabilities relating to the landline communications business,
and US Unwired is responsible for those relating to the wireless communications
business. Liabilities of a corporate nature, such as indemnification of
officers and directors and securities law liabilities relating to the issuance
of securities in connection with the restructuring, are allocated to Cameron if
the liability is attributable to Cameron as it existed prior to the
restructuring, and otherwise to US Unwired.
Corporate Restructuring
We recently changed our corporate structure. Previously, US Unwired was our
operating cellular company, and LA Unwired and LEC Unwired were its
subsidiaries. In late September 1999, we formed a holding company named US
Unwired, and all of the stockholders of old US Unwired became stockholders of
the new holding company. This was effected by an exchange of all of the issued
and outstanding capital stock of old US Unwired, the operating cellular
company, for an equal number of shares of new US Unwired, the holding company.
Old US Unwired was renamed Unwired Telecom and became a wholly owned subsidiary
of new US Unwired. Unwired Telecom is in the process of making a stock dividend
to US Unwired of all of its ownership interest in LA Unwired and LEC Unwired,
thereby making LA Unwired and LEC Unwired subsidiaries of the holding company.
Some of our FCC licenses, together with related indebtedness of $2.3 million
to the FCC, are currently held by our affiliate Command Connect, which is
equally owned by US Unwired and Cameron. In connection with our reorganization,
the PCS licenses currently owned by Command Connect, together with the
indebtedness to the FCC, will be transferred to LA Unwired and the LMDS
licenses currently owned by Command Connect will be transferred to LEC Unwired.
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Command Connect will thereafter be liquidated. We expect to complete these
transfers by December 1999.
Affiliate Transactions
General. For many years prior to the tax restructuring described above, US
Unwired, Cameron and their subsidiaries entered into contractual relationships
with one another and with other companies under common control. Some of those
transactions are summarized below. There have been additional transactions
which have included cost sharing arrangements among the companies and their
affiliates, sharing of services and salary expenses of personnel, including
officers of the companies, and inter-company sales of assets.
Bill processing procedures. Under agreements entered into in 1997 and 1998,
Unibill, Inc., a wholly owned subsidiary of Cameron, provides bill processing
and related services for us and Meretel. We believe that the terms of these
agreements are no less favorable to us than would be available from
unaffiliated third persons. The approximate aggregate amount paid to Unibill in
1996 was $1.6 million, in 1997 was $2.7 million, in 1998 was $2.9 million and
for the nine months ended September 30, 1999 was $2.0 million.
Property leases. In March 1998, US Unwired entered into an agreement with
Unibill to lease office, equipment and warehouse space for 60 months. We
believe that the terms of this lease are no less favorable to us than would be
available from unaffiliated third persons. US Unwired paid Unibill $173,500 in
1998 and $219,300 for the nine months ended September 30, 1999 to lease these
properties.
System management and construction services. On January 1, 1998, US Unwired
agreed to provide Meretel with construction and management services for its
systems. These services include reviewing and modifying system design,
obtaining governmental and regulatory approvals, preparing control point, base
station and business office sites, purchasing and installing switching and base
station equipment, negotiating interconnection to the local exchange switched
telephone network, and generally managing the operations of the system. In
return for these services, Meretel pays US Unwired a management fee of $94,500
per month and reimburses it for all of its expenses. As part of the Meretel
transaction described in the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations," these services will
be terminated. The approximate aggregate amounts paid to US Unwired for such
services, including expense reimbursements, were $624,000 in 1996, $1.4 million
in 1997, $4.5 million in 1998 and $1.5 million for the nine months ended
September 30, 1999. In 1997, Meretel agreed to pay US Unwired a commission for
each customer activated for Meretel. US Unwired received approximately $1.2
million in 1997 and $1.9 million in 1998 in commissions from Meretel.
Long distance services. US Unwired purchases long distance service from
Cameron and resells that service to US Unwired's customers. US Unwired pays
rates for this service that are comparable to rates at similar volumes charged
by Cameron to other customers. These rates are competitive with rates that US
Unwired would expect to pay for similar service from an unaffiliated third
party. US Unwired paid Cameron approximately $803,000 in 1996, $951,000 in
1997, $764,000 in 1998 and $794,600 for the nine months ended September 30,
1999 for long distance.
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Flight services. US Unwired uses, for a rate of $2.75 per air mile, a
Mitsubishi Diamond 1A aircraft owned and operated by Cameron. US Unwired paid
Cameron approximately $88,700 in 1996, $93,800 in 1997, $84,500 in 1998 and
$42,300 for the nine months ended September 30, 1999, for these flight
services. These rates are comparable to what US Unwired would be required to
pay to an unaffiliated third party for equivalent services.
Management and other services.
In 1999, LEC Unwired began providing US Unwired with voicemail services
which US Unwired uses and also resells to its cellular and digital subscribers
and entered into an agreement with Cameron to provide technical support at the
rate of $2,600 per month. We believe that the terms of these arrangements are
no less favorable to US Unwired than would be expected in comparable
arrangements with unaffiliated third persons.
On September 30, 1998, US Unwired purchased from Maas.net all of its
internet assets for approximately $620,000, the amount of its then current
outstanding liabilities, pursuant to a bankruptcy court order authorizing the
sale. Maas.net is a limited liability company owned 63% by MIT, a company in
which two of our directors and one of our officers own interests, and 27% by
our Chairman.
Internet services. Effective October 1, 1998, US Unwired began providing to
Cameron and its affiliates internet services that are resold to Cameron's and
its affiliates' customers.
PCS partnership. MIT owns a 20% interest in Wireless Management Corporation,
the corporation that serves as general partner of the PCS Partnership.
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SECURITIES OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table provides information as of October 30, 1999 regarding
the beneficial ownership of the capital stock of US Unwired by (a) each of our
directors and officers listed in the summary compensation table, (b) all
directors and officers as a group and (c) each person known to us to be the
beneficial owner of 5% or more of any class of our voting securities. Except as
otherwise indicated, the address for each stockholder is c/o US Unwired Inc.,
One Lakeshore Drive, Suite 1900, Lake Charles, Louisiana 70629.
<TABLE>
<CAPTION>
Series A Preferred
Stock Class B Common Stock(/1/)
----------------------- ----------------------------------------------
Percentage of
Percentage Percentage Class as
Name of Beneficial Owner Shares of Class Shares of Class converted(/9/)
- ------------------------ ------- ---------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
William L. Henning, Sr.. -- -- 4,602,983(/2/) 40.9% 35.1%
William L. Henning, Jr.. -- -- 1,043,178(/3/)(/4/) 9.3 7.9
John A. Henning......... -- -- 990,716(/4/)(/5/) 8.8 7.5
Thomas G. Henning....... -- -- 1,357,740(/6/) 12.1 10.3
Thomas D. Henning....... -- -- 779,596 6.9 5.9
Robert W. Piper......... -- -- 33,286(/7/) 0.3 0.3
Lawrence C. Tucker...... 500,000(/8/) 100% 1,883,239(/8/)(/9/) -- 14.3
The 1818 Fund III,
L.P.................... 500,000 100 1,883,239(/9/) -- 14.3
All officers and
directors as a group
(11 persons total, 7
with ownership
interests)............. 500,000(/8/) 100 10,690,738 78.3 81.3
</TABLE>
- --------
(/1/) As used in this table "beneficial ownership" means the sole or shared
power to vote or direct the voting or to dispose or direct the disposition
of any security. A person is deemed as of any date to have "beneficial
ownership" of any security that such person has a right to acquire within
60 days after such date. Any security that any person named above has the
right to acquire within 60 days is deemed to be outstanding for purposes
of calculating the ownership percentage of any other person.
(/2/) Includes 9,228 shares held by William L. Henning, Sr. as custodian under
the Uniform Gifts to Minors Act for the benefit of the minor children of
Thomas G. Henning, of which shares William L. Henning. Sr. disclaims
beneficial ownership. The remainder includes the community property
interest of Mrs. William L. Henning, Sr. Also includes William L. Henning,
Sr.'s proportionate interest in 33,286 shares held by a general
partnership comprised of Mr. and Mrs. William L. Henning, Sr., William L.
Henning, Jr., John A. Henning and Thomas G. Henning, based on his interest
in that partnership.
(/3/) Excludes 7,228 shares held by Thomas G. Henning as custodian under the
Uniform Gifts to Minors Act for the benefit of the minor children of
William L. Henning, Jr.
(/4/) Excludes 116,501 shares held in each of two trusts for the benefit of the
minor children of William J. Henning, Jr. and John A. Henning,
respectively, of which shares each of them disclaims beneficial ownership.
Includes each of William L. Henning, Jr.'s and John A. Henning's
proportionate interest in 33,286 shares held by a general partnership
comprised of Mr. and Mrs. William L. Henning, Sr., William L. Henning,
Jr., John A. Henning and Thomas G. Henning, based on each of their
respective interests in that partnership.
(/5/) Excludes 9,760 shares held by Thomas G. Henning as custodian under the
Uniform Gifts to Minors Act for the benefit of the minor children of John
A. Henning.
(/6/) Includes an aggregate of 16,988 shares held by Thomas G. Henning as
custodian under the Uniform Gifts to Minors Act for the benefit of the
minor children of John A. Henning and William L. Henning, Jr. (see
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Notes (3) and (5) above), of all of which shares Thomas G. Henning
disclaims beneficial ownership. Excludes 9,228 shares held by William L.
Henning, Sr. as custodian under the Uniform Gifts to Minors Act for the
benefit of the minor children of Thomas G. Henning (see Note (2) above).
Includes 233,002 shares held by Thomas G. Henning as trustee for the minor
children of William L. Henning, Jr. and John A. Henning (see Note (4)
above), and 116,501 shares held by Thomas G. Henning as trustee for his
own minor children, of all of which shares he disclaims beneficial
ownership. Also includes Thomas G. Henning's proportionate interest in
33,286 shares held by a general partnership comprised of Mr. and Mrs.
William L. Henning, Sr., William L. Henning, Jr., John A. Henning and
Thomas G. Henning, based on his interest in that partnership.
(/7/) Includes the community property interest of Dr. Eileen Piper, the spouse
of Robert W. Piper.
(/8/) Mr. Tucker, a general partner of Brown Brothers Harriman & Co., which is
the general partner of The 1818 Fund, may be deemed to be the beneficial
owner of shares held of record by The 1818 Fund due to his role as a co-
manager of The 1818 Fund. Mr. Tucker disclaims beneficial ownership of the
shares beneficially owned by The 1818 Fund, except to the extent of his
pecuniary interest therein. Mr. Tucker was designated as a director by The
1818 Fund which is entitled to designate one other individual to become a
member of our board of directors, but has not yet done so.
(/9/) Assumes conversion of all shares of Series A preferred stock held by The
1818 Fund.
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CERTAIN INDEBTEDNESS
Senior Credit Facilities
Pursuant to a credit agreement dated as of October 1, 1999, US Unwired
entered into senior credit facilities for $130.0 million. The senior credit
facilities provide for an $80.0 million reducing revolving credit facility,
which matures on September 30, 2007, and a $50.0 million delay draw term loan,
which matures on September 30, 2007.
The reducing revolver will be permanently reduced in quarterly installments
beginning on June 30, 2000, in amounts which vary between $1.3 million and $6.0
million. The term loan will be amortized in quarterly installments beginning on
June 30, 2003, in quarterly amounts which vary between $1.3 million and $3.7
million.
Interest on all loans made under the senior credit facilities bear interest
at variable rates tied to the prime rate, the federal funds rate or the London
Interbank Offering Rate.
The senior credit facilities require US Unwired to pay an annual commitment
fee of 1.5% of the unused commitment under the senior credit facilities when
the unused portion is greater than or equal to 66.67% of the total amount of
the senior credit facilities, reducing to 1.25% when the unused portion is less
than 66.67% but equal to or greater than 50% of the total amount of the senior
credit facilities, and reducing to 1.00% when the unused portion is less than
50% of the total amount of the senior credit facilities.
All of US Unwired's obligations under the senior credit facilities are
guaranteed by:
. a fully secured guarantee from each of LA Unwired and Unwired Telecom and
. an unsecured partial guarantee from Lucent Technologies, Inc. in the
amount of up to $43.3 million available for principal, together with one-
third of accrued interest and other applicable fees (but excluding
prepayment premiums). If US Unwired (including the Subsidiary Guarantors
and Texas Unwired) demonstrates a defined total leverage ratio (including
subordinated indebtedness) of less than 6:1 for four consecutive
quarters, Lucent will be released from its guarantee.
The senior credit facilities are secured by:
. a first priority security interest in all tangible and intangible assets
of US Unwired (other than the corporate headquarters building), LA
Unwired and Unwired Telecom (including the owned PCS licenses, to the
extent legally permitted);
. a pledge by US Unwired and Cameron of 100% of the ownership interests in
LA Unwired, a pledge by US Unwired of its ownership interest in Unwired
Telecom and a pledge by LA Unwired of its ownership interest in Texas
Unwired; and
. an assignment by LA Unwired of all Sprint PCS agreements and any network
contract (including software rights).
The agreement governing the senior credit facilities contains covenants
customary for facilities similar to the senior credit facilities, including
covenants that restrict, among other things, the incurrence of indebtedness,
liens or contingent obligations, mergers and acquisitions, asset sales,
investments, transactions with affiliates other than at arm's length,
management fees, dividends and
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distributions, and covenants that, among other things, require compliance with
various financial covenants, the maintenance of existence, records, properties
and insurance, certain conduction of business, compliance with laws, reporting
of regulatory, litigation and other matters, rights of inspection and Year 2000
preparation in each case by US Unwired, LA Unwired, Unwired Telecom and Texas
Unwired.
Other terms of the agreement include annual mandatory prepayments beginning
after December 31, 2002 of 50% of excess cash flow and limitations on a change
in control of US Unwired.
Borrowings under the senior credit facilities are available to finance
working capital requirements and capital expenditures for LA Unwired.
Other Credit
LEC Unwired loan agreements and US Unwired undertaking. On July 22, 1998,
LEC Unwired entered into a loan agreement for $15.0 million and a subordinated
loan agreement for $3.0 million with certain lenders. Under these agreements,
no more than two loans may be made to LEC Unwired in any calendar month, and
each loan must be of a minimum principal amount of $500,000. All loans made
under either of these agreements are represented by notes stated to mature on
July 1, 2006. All loans made under the $15.0 million agreement bear interest at
variable rates tied to the defined Commercial Paper Rate, London Interbank
Offering Rate or U.S. Treasury securities rate, and all loans made under the
$3.0 million agreement bear interest at the U.S. Treasury securities rate plus
the defined Applicable Margin. Both loan agreements contain customary covenants
for similar facilities. Loans made under these agreements are available for LEC
Unwired to build, own and operate its competitive local exchange carrier
systems and for other costs.
As required by these loan agreements, US Unwired entered into an Undertaking
Agreement dated March 31, 1999, which obligates US Unwired to provide cash
capital contributions, not to exceed $4.5 million, to LEC Unwired if LEC
Unwired is not in compliance with specified financial covenants in the loan
agreements, including projected EBITDA and revenue requirements, specified
ratio requirements and minimum cash availability requirements. The amount of
cash that US Unwired is required to provide depends on the covenant with which
LEC Unwired has failed to comply.
Meretel credit agreement and US Unwired guarantee. On May 16, 1997, Meretel
entered into a credit agreement which provides for a $57.0 million reducing
revolving senior credit facility which matures on July 1, 2007.
All loans made under the senior credit facility bear interest at variable
rates tied to the prime rate, the London Interbank Offering Rate or the U.S.
Treasury Rate. The credit agreement contains customary covenants for similar
facilities. Loans made under this agreement are available for Meretel to
construct its network and working capital.
As required by the credit agreement, US Unwired entered into a primary
guaranty agreement on May 16, 1997. The primary guarantors are the owners of
Meretel. The primary guarantors guarantee $19.0 million of Meretel's senior
credit facility. US Unwired's proportionate share of the guarantee is based on
its ownership percentage, which is currently 13.5% or approximately $2.6
million.
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DESCRIPTION OF NOTES
You can find the definitions of certain terms used in this description under
the subheading "Certain Definitions." In this description, the word "Company"
refers only to US Unwired and not to any of its subsidiaries.
The Company will issue the exchange notes under an Indenture (the
"Indenture") among itself, the Subsidiary Guarantors and State Street Bank and
Trust Company, as trustee (the "Trustee"), that also governs the existing
notes. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act").
The following description is a summary of the material provisions of the
Indenture. It does not restate the Indenture in its entirety. We urge you to
read the Indenture because it, and not this description, defines your rights as
a Holder of the Notes. We have filed a copy of the Indenture as an exhibit to
the registration statement which includes this prospectus. Certain defined
terms used in this description but not defined below under "--Certain
Definitions" have the meanings assigned to them in the Indenture.
As of the date of the Indenture, all of our Subsidiaries will be "Restricted
Subsidiaries." However, under the circumstances described below under the
subheading "--Certain Covenants--Designation of Restricted and Unrestricted
Subsidiaries," we will be permitted to designate certain of our other
Subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will
not be subject to many of the restrictive covenants in the Indenture. Our
Unrestricted Subsidiaries will not guarantee the Notes.
Brief Description of the Notes and the Subsidiary Guarantees
The Notes
The Notes are:
. general unsecured obligations of the Company;
. subordinated in right of payment to all existing and future Senior Debt
of the Company;
. equal in right of payment with any future senior subordinated
Indebtedness of the Company; and
. unconditionally guaranteed by the Subsidiary Guarantors.
The Subsidiary Guarantees
The Notes are guaranteed by all of our Restricted Subsidiaries except LEC
Unwired. Each Subsidiary Guarantee is:
. a general unsecured obligation of the Subsidiary Guarantor;
. subordinated in right of payment to all existing and future Senior Debt
of the Subsidiary Guarantor; and
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. equal in right of payment with any future senior subordinated
Indebtedness of the Subsidiary Guarantor.
Only our Restricted Subsidiaries (other than LEC Unwired) will guarantee the
Notes. In the event of a bankruptcy, liquidation or reorganization of LEC
Unwired or any of our Unrestricted Subsidiaries, these non-Subsidiary Guarantor
subsidiaries will pay the holders of their debts and their trade creditors
before they will be able to distribute any of their assets to us. The
Restricted Subsidiaries (other than LEC Unwired) generated 92.2% of our pro
forma consolidated revenues in the twelve-month period ended September 30, 1999
and held 93.1% of our pro forma consolidated assets as of September 30, 1999.
See footnote 4 to our Consolidated Financial Statements included in this
prospectus for more detail about the division of our consolidated revenues and
assets between our Restricted Subsidiaries and Unrestricted Subsidiaries.
As of the date of the Indenture, all of our Subsidiaries except Texas
Unwired will be "Restricted Subsidiaries." Under the circumstances described
below under the subheading "Certain Covenants--Designation of Restricted and
Unrestricted Subsidiaries," we will be permitted to designate certain of our
other Subsidiaries as "Unrestricted Subsidiaries." Unrestricted Subsidiaries
will not be subject to many of the restrictive covenants in the Indenture. Our
Unrestricted Subsidiaries will not guarantee these Notes.
Principal, Maturity and Interest
The Company will issue exchange notes with a maximum aggregate principal
amount of $400.0 million. The Company will issue Notes in denominations of
$1,000 and integral multiples of $1,000. The Notes will mature on November 1,
2009.
The existing notes were offered at a substantial discount from their
principal amount at maturity to generate gross proceeds of approximately $209.2
million. See "Certain U.S. Federal Tax Considerations." Until November 1, 2004,
interest will not accrue or be payable on the Notes, but the Accreted Value
will accrete (representing the amortization of the original issue discount)
between the date of issuance and November 1, 2004, on a semi-annual bond
equivalent basis using a 360-day year composed of twelve 30-day months such
that the Accreted Value shall be equal to the full principal amount at maturity
of the Notes on November 1, 2009. Interest on the Notes will accrue at the rate
of 13 3/8% per annum and will be payable semi-annually in arrears on May 1 and
November 1, commencing on May 1, 2005. The Company will make each interest
payment to the Holders of record on the immediately preceding April 15 and
October 15.
Methods of Receiving Payments on the Notes
If a Holder has given wire transfer instructions to the Company, the Company
will pay all principal, interest and premium and Liquidated Damages, 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 the Company elects to make
interest payments by check mailed to the Holders at their addresses set forth
in the register of Holders.
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Paying Agent and Registrar for the Notes
The Trustee will initially act as Paying Agent and Registrar. The Company
may change the Paying Agent or Registrar without prior notice to the Holders,
and the Company or any of its 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, among other things, to
furnish appropriate endorsements and transfer documents and the Company may
require a Holder to pay any taxes and fees required by law or permitted by the
Indenture. The Company is not required to transfer or exchange any 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, except for certain purposes of the exchange offer, as discussed in
this prospectus.
Subsidiary Guarantees
The Subsidiary Guarantors will jointly and severally guarantee the Company's
obligations under the Notes. Each Subsidiary Guarantee will be subordinated to
the prior payment in full of all Senior Debt of that Subsidiary Guarantor. The
obligations of each Subsidiary Guarantor under its Subsidiary Guarantee will be
limited as necessary to prevent that Subsidiary Guarantee from constituting a
fraudulent conveyance under applicable law. See "Risk Factors--Federal and
state statutes allow courts, under specific circumstances, to void or modify
the Notes and the guarantees of the Notes."
A Subsidiary Guarantor may not sell or otherwise dispose of all or
substantially all of its assets to, or consolidate with or merge with or into
(whether or not such Subsidiary Guarantor is the surviving Person), another
Person, other than the Company or another Subsidiary Guarantor, unless:
(1) immediately after giving effect to that transaction, no Default or
Event of Default exists; and
(2) either:
(a) the Person acquiring the property in any such sale or disposition
or the Person formed by or surviving any such consolidation or
merger assumes all the obligations of that Subsidiary Guarantor
under the Indenture, its Subsidiary Guarantee and the Registration
Rights Agreement pursuant to a supplemental indenture satisfactory
to the Trustee; or
(b) the Net Proceeds of such sale or other disposition are applied in
accordance with the "Asset Sale" provisions of the Indenture.
The Subsidiary Guarantee of a Subsidiary Guarantor will be released:
(1) in connection with any sale or other disposition of all or
substantially all of the assets of that Subsidiary Guarantor (including
by way of merger or consolidation) to a Person that is not (either
before or after giving effect to such transaction) a Subsidiary of the
Company, if the
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Subsidiary Guarantor applies the Net Proceeds of that sale or other
disposition in accordance with the "Asset Sale" provisions of the
Indenture;
(2) in connection with any sale of all of the Capital Stock of a Subsidiary
Guarantor to a Person that is not (either before or after giving effect
to such transaction) a Subsidiary of the Company, if the Company
applies the Net Proceeds of that sale in accordance with the "Asset
Sale" provisions of the Indenture; or
(3) if the Company properly designates any Restricted Subsidiary that is a
Subsidiary Guarantor as an Unrestricted Subsidiary.
See "--Repurchase at the Option of Holders--Asset Sales."
Subordination
The payment of principal, interest and premium and Liquidated Damages, if
any, on the Notes and any other payment Obligations in respect of the Notes
(including any obligation to repurchase the Notes) will be subordinated to the
prior payment in full of all Senior Debt of the Company, including Senior Debt
incurred after the date of the Indenture. The payment of any amounts pursuant
to the Subsidiary Guarantees will be subordinated to the prior payment in full
in cash of all Senior Debt of the applicable Subsidiary Guarantor.
The holders of Senior Debt will be entitled to receive payment in full of
all Obligations due in respect of Senior Debt (including interest after the
commencement of any bankruptcy proceeding at the rate specified in the
applicable Senior Debt) before the Holders of Notes will be entitled to receive
any payment with respect to the Notes or the Subsidiary Guarantees (except that
Holders of Notes may receive and retain Permitted Junior Securities and
payments made from the trust described under "--Legal Defeasance and Covenant
Defeasance"), in the event of any distribution to creditors of the Company or
the Subsidiary Guarantors:
(1) in a liquidation or dissolution of such entity;
(2) in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to such entity or its property;
(3) in an assignment for the benefit of creditors of such entity; or
(4) in any marshaling of the assets and liabilities of such entity.
In addition, until the Senior Debt is paid in full, any payment or
distribution to which Holders of Notes would be entitled but for the
subordination provisions of the Indenture will be made to holders of Senior
Debt as their interests may appear.
The Company also may not make any payment in respect of the Notes including
any deposit into the trust described under "--Legal Defeasance and Covenant
Defeasance" nor may any Subsidiary Guarantor make any payment in respect of its
Subsidiary Guarantee (except in Permitted Junior Securities or from the trust
described under "--Legal Defeasance and Covenant Defeasance") if:
(1) a failure to make any payment on any series of Designated Senior Debt
when due (including upon any acceleration of any series of Designated
Senior Debt); or
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(2) any other default occurs and is continuing on any series of Designated
Senior Debt that permits holders of that series of Designated Senior
Debt to accelerate its maturity and the Trustee receives a notice of
such default (a "Payment Blockage Notice") from the Company or the
holders of any Designated Senior Debt.
Payments on the Notes and the Subsidiary Guarantees may and shall be
resumed:
(1) in the case of a payment default, upon the date on which such default
is cured or waived (and, if applicable, any acceleration is rescinded);
and
(2) in case of a nonpayment default, the earlier of the date on which such
nonpayment default is cured or waived or 179 days after the date on
which the applicable Payment Blockage Notice is received, unless the
maturity of any Designated Senior Debt has been accelerated.
No new Payment Blockage Notice may be delivered unless and until:
(1) 360 days have elapsed since the delivery of the immediately prior
Payment Blockage Notice; and
(2) all scheduled payments of principal, interest and premium and
Liquidated Damages, if any, on the Notes that have come due have been
paid in full in cash.
No nonpayment default that existed or was continuing on the date of delivery
of any Payment Blockage Notice to the Trustee shall be, or be made, the basis
for a subsequent Payment Blockage Notice.
If the Trustee or any Holder of the Notes receives a payment in respect of
the Notes (except in Permitted Junior Securities or from the trust described
under "--Legal Defeasance and Covenant Defeasance") when:
(1) the payment is prohibited by these subordination provisions; and
(2) the Trustee or the Holder has actual knowledge that the payment is
prohibited;
the Trustee or the Holder, as the case may be, shall hold the payment in trust
for the benefit of the holders of Senior Debt. Upon the proper written request
of the holders of Senior Debt, the Trustee or the Holder, as the case may be,
shall deliver the amounts in trust to the holders of Senior Debt or their
proper representative.
The Company must promptly notify holders of Senior Debt if payment of the
Notes is accelerated because of an Event of Default. Neither the Company nor
any Subsidiary Guarantor may make any payment with respect to the Notes or the
Subsidiary Guarantees until five Business Days after the holders of the Senior
Debt receive notice of such acceleration and, thereafter, may make payments
with respect to the Notes only if the subordination provisions of the Indenture
otherwise permit payment at the time.
As a result of the subordination provisions described above, in the event of
a bankruptcy, liquidation or reorganization of the Company or a Subsidiary
Guarantor, Holders of Notes may recover less ratably than creditors of such
entity who are holders of Senior Debt. See "Risk Factors--Your right to receive
payments on the Notes is junior to our and our guarantor subsidiaries' existing
indebtedness and possibly all of our and our guarantors subsidiaries' future
borrowings."
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"Designated Senior Debt" means:
(1) any Indebtedness outstanding under or with respect to the Credit
Agreement (whether outstanding on the date of issuance of the Notes or
thereafter incurred), including fees, brokerage costs and related
Hedging Agreements; and
(2) after payment in full of all Obligations under the Credit Agreement,
any other Senior Debt permitted under the Indenture the principal
amount of which is $25.0 million or more and that has been designated
by the Company as "Designated Senior Debt."
"Permitted Junior Securities" means:
(1) Equity Interests in the Company or any Subsidiary Guarantor; or
(2) debt securities that are subordinated to all Senior Debt and any debt
securities issued in exchange for Senior Debt to substantially the same
extent as, or to a greater extent than, the Notes and the Subsidiary
Guarantees are subordinated to Senior Debt under the Indenture.
"Senior Debt" means:
(1) all Indebtedness of the Company or any Subsidiary Guarantor outstanding
under Credit Facilities and all Hedging Obligations with respect
thereto;
(2) any other Indebtedness of the Company or any Subsidiary Guarantor
permitted to be incurred under the terms of the Indenture, unless the
instrument under which such Indebtedness is incurred expressly provides
that it is on a parity with or subordinated in right of payment to the
Notes or any Subsidiary Guarantee; and
(3) all Obligations with respect to the items listed in the preceding
clauses (1) and (2).
Notwithstanding anything to the contrary in the preceding, Senior Debt will
not include:
(1) any liability for federal, state, local or other taxes owed or owing by
the Company;
(2) any Indebtedness of the Company or any Subsidiary Guarantor to any of
their Subsidiaries or other Affiliates (other than the Company or a
Subsidiary Guarantor);
(3) any trade payables; or
(4) the portion of any Indebtedness that is incurred in violation of the
Indenture.
Pledge With Respect to Texas Unwired
The Notes are secured by: (1) a pledge of LA Unwired's 80% partnership
interest in the Texas Unwired general partnership; and (2) a pledge of any
intercompany notes payable to LA Unwired by Texas Unwired.
LA Unwired has entered into a pledge agreement defining the terms of the
pledges that secure the Notes and the Obligations under the Credit Agreement.
These pledges secure payment and performance when due of all of the Obligations
of LA Unwired under the Credit Agreement and all Obligations of LA Unwired
under the Indenture and the Notes as provided in the pledge agreement.
The security interest created by the pledge agreement in favor of the
Trustee is junior to the security interest in favor of the Obligations under
the Credit Agreement. The pledge agreement
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provides that the agent under the Credit Agreement is entitled to control
virtually all decisions relating to the exercise of remedies under the pledge
agreement. As a result, the Holders of Notes will not be able to force a sale
of collateral or otherwise exercise many of the remedies available to a secured
creditor without the concurrence of the agent under the Credit Agreement. So
long as no event of default shall have occurred and be continuing, and subject
to certain terms and conditions, LA Unwired is entitled to receive all cash
dividends, interest and other payments made upon or with respect to the
collateral pledged by it and to exercise any voting and other consensual rights
pertaining to the collateral pledged by it. The pledge agreement will be
terminated and the pledges will be released if the partnership interests in
Texas Unwired are sold and the Net Proceeds from that sale are applied in
accordance with the terms of the covenant entitled "Assets Sales."
Optional Redemption
At any time prior to November 1, 2002, the Company may on any one or more
occasions redeem up to 35% of the originally issued aggregate principal amount
of Notes issued under the Indenture at a redemption price of 113 3/8% of the
Accreted Value thereof as of the redemption date, and Liquidated Damages, if
any, to the redemption date, with the net cash proceeds of one or more public
equity offerings; provided that:
(1) at least 65% of the aggregate principal amount of the Notes issued
under the Indenture remains outstanding immediately after the
occurrence of such redemption (excluding Notes held by the Company and
its Subsidiaries); and
(2) the redemption must occur within 45 days of the date of the closing of
such public equity offering.
Except pursuant to the preceding paragraph, the Notes will not be redeemable
at the Company's option prior to November 1, 2004.
After November 1, 2004, the Company may redeem all or a part of the Notes
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 and Liquidated Damages, if any, thereon, to the applicable
redemption date, if redeemed during the twelve-month period beginning on
November 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004........................................................... 106.688%
2005........................................................... 104.458%
2006........................................................... 102.229%
2007 and thereafter............................................ 100.000%
</TABLE>
Mandatory Redemption
The Company is not required to make mandatory redemption or sinking fund
payments with respect to the Notes.
Selection and Notice
If less than all of the Notes are to be redeemed at any time, the Trustee
will select Notes for redemption as follows:
(1) if the Notes are listed, in compliance with the requirements of the
principal national securities exchange on which the Notes are listed;
or
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(2) if the Notes are not so listed, on a pro rata basis, by lot or by such
method as the Trustee shall deem fair and appropriate.
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 that Note shall state the portion of the principal amount thereof to
be redeemed. A new Note in principal amount equal to the unredeemed portion of
the original Note 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.
Repurchase at the Option of Holders
Change of Control
If a Change of Control occurs, each Holder of Notes will have the right to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that Holder's Notes pursuant to a Change of
Control Offer on the terms set forth in the Indenture. In the Change of Control
Offer, the Company will offer a Change of Control Payment in cash equal to 101%
of the aggregate Accreted Value of the Notes on the date of purchase (if such
date of purchase is prior to November 1, 2004) or 101% of the aggregate
principal amount of Notes repurchased plus accrued and unpaid interest and
Liquidated Damages, if any, thereon, to the date of purchase (if such date of
purchase is on or after November 1, 2004). Within ten 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 repurchase Notes on the Change of Control Payment 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, pursuant to the procedures required by the
Indenture and described in such notice. The Company will comply with the
requirements of Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder to the extent such laws and regulations are
applicable in connection with the repurchase of the Notes as a result of a
Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with the Change of Control provisions of the Indenture,
the Company will comply with the applicable securities laws and regulations and
will not be deemed to have breached its obligations under the Change of Control
provisions of the Indenture by virtue of such conflict.
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 Accreted Value (if
such date of purchase is prior to November 1, 2004) or the aggregate
principal amount of the Notes (if such date or purchase is on or after
November 1, 2004) or portions thereof being purchased by the Company.
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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) 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.
Prior to complying with any of the provisions of this "Change of Control"
covenant, but in any event within 90 days following a Change of Control, the
Company will either repay all outstanding Senior Debt or obtain the requisite
consents, if any, under all agreements governing outstanding Senior Debt to
permit the repurchase of Notes required by this covenant. The Company will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The provisions described above that require the Company to make a Change of
Control Offer following a Change of Control will be applicable regardless of
whether any other provisions of the Indenture are applicable. Except as
described above with respect to a Change of Control, the Indenture does not
contain provisions that permit the Holders of the Notes to require that the
Company repurchase or redeem the Notes in the event of a takeover,
recapitalization or similar transaction.
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 definition of Change of Control includes a phrase relating to the direct
or indirect sale, lease, transfer, conveyance or other disposition of "all or
substantially all" of the properties or assets of the Company and its
Subsidiaries taken as a whole. Although there is a limited 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 repurchase 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 of the assets or Equity Interests issued or sold or
otherwise disposed of;
(2) such fair market value is determined by the Company's Board of
Directors and evidenced by a resolution of the Board of Directors set
forth in an Officers' Certificate delivered to the Trustee; and
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(3) at least 75% of the consideration therefor received by the Company or
such Restricted Subsidiary is in the form of cash or Cash Equivalents.
For purposes of this provision, each of the following shall be deemed
to be cash:
(a) 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
Subsidiary Guarantee) 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) any securities, notes or other obligations received by the Company or
any such Restricted Subsidiary from such transferee that are
contemporaneously (subject to ordinary settlement periods) converted
by the Company or such Restricted Subsidiary into cash (to the extent
of the cash received in that conversion).
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds at its option:
(1) to repay Senior Debt and, if the Senior Debt repaid is revolving credit
Indebtedness to correspondingly reduce commitments with respect
thereto;
(2) to acquire all or substantially all of the assets of, or a majority of
the Voting Stock of, another Permitted Business;
(3) to make a capital expenditure; or
(4) to 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
temporarily reduce revolving credit borrowings or otherwise 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 the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company will
make an Asset Sale offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes 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 to purchase the maximum principal amount
of Notes and such other pari passu Indebtedness that may be purchased out of
the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to
100% of the Accreted Value (if such date of purchase is prior to November 1,
2004) and Liquidated Damages, if any, to the date of purchase, or 100% of the
principal amount (if such date of purchase is on or after November 1, 2004)
plus accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase, and will be payable in cash. If 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 and/or Accreted Value, as the case may be, of Notes and such
other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes and such other
pari passu Indebtedness to be purchased on a pro rata basis. Upon completion of
each Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.
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The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of the Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the Indenture by virtue of such
conflict.
The agreements governing the Company's outstanding Senior Debt currently
prohibit the Company from purchasing any Notes, and also provides that certain
change of control or asset sale events with respect to the Company would
constitute a default under these agreements. Any future credit agreements or
other agreements relating to Senior Debt to which the Company becomes a party
may contain similar restrictions and provisions. In the event a Change of
Control or Asset Sale occurs at a time when the Company is prohibited from
purchasing Notes, the Company could seek the consent of its senior lenders to
the purchase of Notes or could attempt to refinance the borrowings that contain
such prohibition. If the Company does not obtain such a consent or repay such
borrowings, the Company will 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 which would, in turn, constitute a default
under such Senior Debt. In such circumstances, the subordination provisions in
the Indenture would likely restrict payments to the Holders of Notes.
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 in Equity Interests (other than Disqualified
Stock) of the Company or 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 or any
direct or indirect parent of the Company;
(3) 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 or the Subsidiary Guarantees, except a
payment of interest or principal at the Stated Maturity thereof; or
(4) make any Restricted Investment (all such payments and other actions set
forth in clauses (1) through (4) above being collectively referred to
as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof;
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(2) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness (other
than Permitted Debt) pursuant to the test set forth in the first
paragraph of the covenant described below under the caption "--
Incurrence of Indebtedness and Issuance of Preferred Stock"; and
(3) 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 Indenture is less than the sum,
without duplication, of:
(a) the amount determined by subtracting (x) 2.0 times the aggregate
Consolidated Interest Expense of the Company for the period (taken as
one accounting period) from December 31, 2002 to the last day of the
last full fiscal quarter prior to the date of the proposed Restricted
Payment (the "Computation Period") from (y) Operating Cash Flow of the
Company for the Computation Period, plus
(b) 100% of the aggregate net cash proceeds received by the Company since
the date of the Indenture as a contribution to its common equity
capital or from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) or from the issue or sale of
convertible or exchangeable Disqualified Stock or convertible or
exchangeable debt securities of the Company that have been converted
into or exchanged for such Equity Interests (other than Equity
Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of the Company), plus
(c) 50% of any dividends received by the Company or a Wholly Owned
Restricted Subsidiary after the date of the Indenture from LEC Unwired
or 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, plus
(d) to the extent that any Unrestricted Subsidiary of the Company is
redesignated as a Restricted Subsidiary after the date of the
Indenture, the lesser of (i) the fair market value of the Company's
Investment in such Subsidiary as of the date of such redesignation or
(ii) such fair market value as of the date on which such Subsidiary
was originally designated as an Unrestricted Subsidiary.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of its
declaration, if on the date of declaration such payment would have
complied with the provisions of the Indenture;
(2) the redemption, repurchase, retirement, defeasance or other acquisition
of any subordinated Indebtedness of the Company or any Subsidiary
Guarantor or of any Equity Interests of the Company in exchange for, or
out of the net cash proceeds of the substantially concurrent sale
(other than to a Restricted Subsidiary of the Company) of, Equity
Interests of the Company (other than Disqualified Stock); provided that
the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement, defeasance or other acquisition
shall be excluded from clause (3)(b) of the preceding paragraph;
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(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Restricted Subsidiary
with the net cash proceeds from an incurrence of Permitted Refinancing
Indebtedness;
(4) the payment of any dividend by a Restricted Subsidiary of the Company
to the holders of its common Equity Interests on a pro rata basis;
(5) the repurchase, redemption or other acquisition or retirement for value
of any 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 pursuant to any management equity
subscription agreement or stock option agreement in effect as of the
date of the Indenture; provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests (i)
shall not exceed $2.0 million in any fiscal year and (ii) any unused
amount in any twelve-month period may be carried forward to one or more
future periods;
(6) payments not otherwise permitted by clauses (1) through (5) in an
amount not to exceed $10.0 million.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or
securities proposed to be transferred or issued to or by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any assets or securities that are required to be
valued by this covenant shall be determined by the Board of Directors whose
resolution with respect thereto shall be delivered to the Trustee. The Board of
Directors' determination must be based upon an opinion or appraisal issued by
an accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $5.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this "Restricted Payments"
covenant were computed, together with a copy of any fairness opinion or
appraisal required by the Indenture.
Incurrence of Indebtedness and Issuance of Preferred Stock
The Company will not, and will not permit any of its 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 Disqualified Stock, and the Subsidiary Guarantors may incur Indebtedness
or issue preferred stock, if:
(1) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and
(2) the Company's Annualized Operating Cash Flow Ratio after giving effect
to the incurrence of the Indebtedness would have been less than the
ratios set forth below for the calendar year periods indicated:
<TABLE>
<CAPTION>
For the Period Ratio
-------------- -----
<S> <C>
1999-2005........................................................... 7.0x
2006 and after...................................................... 6.0x
</TABLE>
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The first paragraph of this covenant will not prohibit the incurrence of any
of the following items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by the Company of revolving credit Indebtedness and
letters of credit under the Credit Agreement in an aggregate principal
amount at any one time outstanding under this clause (1) (with letters
of credit being deemed to have a principal amount equal to the maximum
potential liability of the Company and its Restricted Subsidiaries
thereunder) not to exceed $150.0 million less the aggregate amount of
all Net Proceeds of Asset Sales applied by the Company to repay
Indebtedness under the Credit Agreement and effect a corresponding
commitment reduction thereunder pursuant to the covenant described
above under the caption "--Repurchase at the Option of Holders--Asset
Sales";
(2) the incurrence by the Company and the Subsidiary Guarantors of
Permitted Acquisition Indebtedness;
(3) the incurrence by the Company and its Restricted Subsidiaries of the
Existing Indebtedness;
(4) the incurrence by the Company and the Subsidiary Guarantors of
Indebtedness represented by the Notes and the related Subsidiary
Guarantees to be issued on the date of the Indenture and the Exchange
Notes and the related Subsidiary Guarantees to be issued pursuant to
the Registration Rights Agreement;
(5) the incurrence by the Company or any of its Subsidiary Guarantors 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 Subsidiary Guarantor, in an
aggregate principal amount, including all Permitted Refinancing
Indebtedness incurred to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (5), not to exceed $5.0 million at any
time outstanding;
(6) the incurrence by the Company or any of its Subsidiary Guarantors of
Permitted Refinancing Indebtedness in exchange for, or the net proceeds
of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that was permitted by the Indenture to
be incurred under the first paragraph of this covenant or clauses (3)
or (4) of this paragraph;
(7) the incurrence by the Company or any of its Subsidiary Guarantors of
intercompany Indebtedness between or among the Company and any of its
Subsidiary Guarantors; provided, however, that:
(a) if the Company or any Subsidiary Guarantor is the obligor on such
Indebtedness, such Indebtedness must be unsecured and expressly
subordinated to the prior payment in full in cash of all Obligations
with respect to the Notes, in the case of the Company, or the
Subsidiary Guarantee, in the case of a Subsidiary Guarantor; an d
(b) (i) any subsequent issuance or transfer of Equity Interests that
results in any such Indebtedness being held by a Person other than the
Company or a Subsidiary Guarantor and (ii) any sale or other transfer
of any such Indebtedness to a Person that is not either the Company or
a Subsidiary Guarantor; shall be deemed, in each case, to constitute
an incurrence of such Indebtedness by the Company or such Subsidiary
Guarantor, as the case may be, that was not permitted by this clause
(7);
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(8) the incurrence by the Company or any of the Subsidiary Guarantors of
additional Indebtedness in an aggregate principal amount (or accreted
value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (8), not to exceed $50.0
million;
(9) the incurrence by the Company or any of Subsidiary Guarantors 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;
(10) the Guarantee by the Company or any of the Subsidiary Guarantors of
Indebtedness of the Company or the Subsidiary Guarantors that was
permitted to be incurred by another provision of this covenant;
(11) the accrual of interest, accretion or amortization of original issue
discount, the payment of interest on any Indebtedness in the form of
additional Indebtedness with the same terms, and the payment of
dividends on Disqualified Stock in the form of additional shares of
the same class of Disqualified Stock; and
(12) the incurrence by LEC Unwired or by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt, provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of LEC Unwired or of an
Unrestricted Subsidiary, such event shall be deemed to constitute an
incurrence of Indebtedness by a Restricted Subsidiary of the Company
that was not permitted by this clause (12).
For purposes of determining compliance with this "Incurrence of Indebtedness
and Issuance of Preferred Stock" covenant, in the event that an item of
proposed Indebtedness meets the criteria of more than one of the categories of
Permitted Debt described in clauses (1) through (12) above, or is entitled to
be incurred pursuant to the first paragraph of this covenant, the Company will
be permitted to classify such item of Indebtedness on the date of its
incurrence in any manner that complies with this covenant. Indebtedness under
the US Unwired Credit Agreement outstanding on the date on which Notes are
first issued and authenticated under the Indenture shall be deemed to have been
incurred on such date in reliance on the exception provided by clause (1) of
the definition of Permitted Debt.
No Senior Subordinated Debt
The Company will not incur, create, issue, assume, guarantee or otherwise
become liable for any Indebtedness that is subordinate or junior in right of
payment to any Senior Debt of the Company and senior in any respect in right of
payment to the Notes. No Subsidiary Guarantor will incur, create, issue,
assume, guarantee or otherwise become liable for any Indebtedness that is
subordinate or junior in right of payment to the Senior Debt of such Subsidiary
Guarantor and senior in any respect in right of payment to such Subsidiary
Guarantor's Subsidiary Guarantee.
Liens
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
of any kind securing Indebtedness or trade payables on any asset now owned or
hereafter acquired, except Permitted Liens.
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Dividend and Other Payment Restrictions Affecting Subsidiaries
The Company will not, and will not permit any Subsidiary Guarantor to,
directly or indirectly, create or permit to exist or become effective any
consensual encumbrance or restriction on the ability of any Subsidiary
Guarantor to:
(1) pay dividends or make any other distributions on its Capital Stock to
the Company or any of its Restricted Subsidiaries, or with respect to
any other interest or participation in, or measured by, its profits, or
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 preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness as in effect on the date of the Indenture and any
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacements or refinancings thereof, provided that such
amendments, modifications, restatements, renewals, increases, supplements,
refundings, replacement or refinancings are no more restrictive, taken as
a whole, with respect to such dividend and other payment restrictions than
those contained in such Existing Indebtedness, as in effect on the date of
the Indenture;
(2) the Indenture, the Notes and the Subsidiary Guarantees;
(3) applicable law;
(4) 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;
(5) customary non-assignment provisions in leases entered into in the
ordinary course of business and consistent with past practices;
(6) purchase money obligations for property acquired in the ordinary course
of business that impose restrictions on the property so acquired of the
nature described in clause (3) of the preceding paragraph;
(7) any agreement for the sale or other disposition of a Restricted
Subsidiary that restricts distributions by that Restricted Subsidiary
pending its sale or other disposition;
(8) Permitted Refinancing Indebtedness, provided that the restrictions
contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those
contained in the agreements governing the Indebtedness being
refinanced;
(9) Permitted Liens that limit the right of the Company or any of its
Restricted Subsidiaries to dispose of the assets subject to such
Permitted Lien;
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(10) provisions with respect to the disposition or distribution of assets
or property in joint venture agreements and other similar agreements
entered into in the ordinary course of business; and
(11) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of
business.
Designation of Restricted and Unrestricted Subsidiaries
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default; provided
that in no event shall the business currently operated by US Unwired, Unwired
Telecom or LA Unwired be transferred to or held by an Unrestricted Subsidiary.
If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the
aggregate fair market value of all outstanding Investments owned by the Company
and its Restricted Subsidiaries in the Subsidiary so designated will be deemed
to be an Investment made as of the time of such designation and will either
reduce the amount available for Restricted Payments under the first paragraph
of the covenant described above under the caption "--Restricted Payments" or
reduce the amount available for future Investments under one or more clauses of
the definition of Permitted Investments, as the Company shall determine. That
designation will only be permitted if such Investment would be permitted at
that time and if such Restricted Subsidiary otherwise meets the definition of
an Unrestricted Subsidiary. The Board of Directors may redesignate any
Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation
would not cause a Default.
Merger, Consolidation or Sale of Assets
The Company may not, directly or indirectly: (1) consolidate or merge with
or into another Person (whether or not the Company is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person; unless:
(1) either: (a) the Company is the surviving corporation; or (b) the Person
formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, 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 Person formed by or surviving any such consolidation or merger (if
other than the Company) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes
all the obligations of the Company under the Notes, the Indenture and
the Registration Rights Agreement pursuant to agreements reasonably
satisfactory to the Trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) the Company or the Person formed by or surviving any such consolidation
or merger (if other than the Company), or to which such sale,
assignment, transfer, conveyance or other disposition shall have been
made:
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(a) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company
immediately preceding the transaction; and
(b) will, on the date of such transaction after giving pro forma effect
thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period, be
permitted to incur at least $1.00 of additional Indebtedness pursuant
to the Annualized Operating 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."
The sale of the Company's PCS business shall be deemed a sale of
substantially all of the assets of the Company for the purposes of this
covenant. In addition, the Company, Unwired Telecom and LA Unwired may not,
directly or indirectly, lease all or substantially all of their properties or
assets, in one or more related transactions, to any other Person.
This "Merger, Consolidation or Sale of Assets" covenant will not apply to a
sale, assignment, transfer, conveyance or other disposition of assets between
or among the Company and any of its Wholly Owned Restricted Subsidiaries.
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, 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
$1.0 million, a resolution of the Board of Directors set forth in an
Officers' Certificate certifying that such Affiliate Transaction
complies with this covenant 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
$5.0 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.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment agreement entered into by the Company or any of its
Restricted Subsidiaries in the ordinary course of business;
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(2) transactions between or among the Company and/or its Restricted
Subsidiaries;
(3) transactions with a Person that is an Affiliate of the Company solely
because the Company owns an Equity Interest in such Person;
(4) payment of reasonable directors fees to Persons who are not otherwise
Affiliates of the Company;
(5) sales of Equity Interests (other than Disqualified Stock) to Affiliates
of the Company; and
(6) Restricted Payments that are permitted by the provisions of the
Indenture described above under the caption "--Restricted Payments."
The following items shall be deemed Affiliate Transactions, but shall not be
subject to the fairness opinion provisions in paragraph (2)(b) above:
(1) transactions involving the leasing or sharing or other use by the Company
or any Restricted Subsidiary of communication network facilities, including,
without limitation, cable or other fiber lines, equipment of transmission
capacity, of any Affiliate of the Company (such Affiliate being a "Related
Party") on terms that are no less favorable, when taken as a whole, to the
Company or such Restricted Subsidiary, as applicable, than those available from
such Related Party to unaffiliated third parties;
(2) transactions involving the provision of telecommunication services,
including billing and related back-office support, by a Related Party in the
ordinary course of business to the Company or any Restricted Subsidiary, or by
the Company or any Restricted Subsidiary to a Related Party, on terms that are
no less favorable, when taken as a whole, to the Company or such Restricted
Subsidiary, as applicable, than those available from such Related Party to
unaffiliated third parties; and
(3) any sales agency agreement pursuant to which an Affiliate has the right to
market any or all of the products or services of the Company or any of the
Restricted Subsidiaries.
Additional Subsidiary Guarantees
If the Company or any of its Restricted Subsidiaries acquires or creates
another Restricted Subsidiary after the date of the Indenture, then that newly
acquired or created Restricted Subsidiary must become a Subsidiary Guarantor
and execute a supplemental indenture satisfactory to the Trustee within 10
Business Days of the date on which it was acquired or created.
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.
Payments for Consent
The Company will not, and will not permit any of its Restricted Subsidiaries
to, directly or indirectly, pay or cause to be paid any consideration to or for
the benefit of any Holder of Notes for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Indenture or the
Notes unless such consideration is offered to be paid and is paid to all
Holders of the Notes that consent, waive or agree to amend in the time frame
set forth in the solicitation documents relating to such consent, waiver or
agreement.
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Reports
Whether or not required by the Commission, so long as any Notes are
outstanding, the Company will furnish to the Holders of Notes, within the time
periods specified in the Commission's rules and regulations:
(1) 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" and, with respect to the annual information
only, a report on the annual financial statements by the Company's
certified independent accountants; and
(2) 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.
If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph shall include a reasonably detailed presentation,
either on the face of the financial statements or in the footnotes thereto, and
in Management's Discussion and Analysis of Financial Condition and Results of
Operations, of 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.
In addition, following the consummation of this exchange offer, whether or
not required by the Commission, the Company will file a copy of all of the
information and reports referred to in clauses (1) and (2) above 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 and the Subsidiary
Guarantors have agreed that, for so long as any Notes remain outstanding, it
they will 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 is an Event of Default:
(1) default for 30 days in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes whether or not prohibited
by the subordination provisions of the Indenture;
(2) default in payment when due of the principal of, or premium, if any, on
the Notes whether or not prohibited by the subordination provisions of
the Indenture;
(3) failure by the Company or any of its Restricted Subsidiaries to comply
with the provisions described under the captions "--Repurchase at the
Option of Holders--Change of Control," "--Repurchase at the Option of
Holders--Asset Sales," "--Certain Covenants--Restricted Payments," "--
Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock" or "--Certain Covenants--Merger, Consolidation or Sale of
Assets;"
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(4) failure by the Company or any of its Subsidiaries for 60 days after
notice to comply with any of the other agreements in the Indenture;
(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 Restricted
Subsidiaries other than LEC Unwired (or the payment of which is
guaranteed by the Company or any of its Restricted Subsidiaries other
than LEC Unwired ) whether such Indebtedness or Subsidiary Guarantee
now exists, or is created after the date of the Indenture, if that
default:
(a) is caused by a failure to pay principal of, or interest or premium, if
any, 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 $5.0 million or
more;
(6) failure by the Company or any of its Restricted Subsidiaries other than
LEC Unwired to pay final judgments aggregating in excess of $5.0
million, which judgments are not paid, discharged or stayed for a
period of 60 days;
(7) except as permitted by the Indenture, any Subsidiary Guarantee shall be
held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any Subsidiary
Guarantor, or any Person acting on behalf of any Subsidiary Guarantor,
shall deny or disaffirm its obligations under its Subsidiary Guarantee;
and
(8) certain events of bankruptcy or insolvency with respect to the Company or
any of its Restricted Subsidiaries other than LEC Unwired.
In the case of an Event of Default arising from certain events of bankruptcy
or insolvency, with respect to the Company, any Restricted Subsidiary other
than LEC Unwired that is a Significant Subsidiary or any group of Restricted
Subsidiaries other than LEC Unwired that, taken together, would constitute a
Significant Subsidiary, all outstanding Notes will become due and payable
immediately without further action or notice. If any other Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the then outstanding Notes may declare all the Notes to be
due and payable immediately.
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 Trustee may withhold from
Holders of the Notes notice of any continuing Default or Event of Default
(except a Default or Event of Default relating to the payment of principal or
interest or Liquidated Damages) if it determines that withholding notice is in
their interest.
The Holders of a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may on behalf of the Holders of all of the
Notes waive any existing Default or Event
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of Default and its consequences under the Indenture except a continuing Default
or Event of Default in the payment of interest or Liquidated Damages on, or the
principal of, the Notes.
In the case of any Event of Default occurring by reason of any willful
action or inaction taken or not taken by or on behalf of the Company with the
intention of avoiding payment of the premium that the Company would have had to
pay if the Company then had elected to redeem the Notes pursuant to the
optional redemption provisions of the Indenture, an equivalent premium shall
also become and be immediately due and payable to the extent permitted by law
upon the acceleration of the Notes. If an Event of Default occurs prior to
November 1, 2004, by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Company with the intention of avoiding the
prohibition on redemption of the Notes prior to November 1, 2004, then the
premium specified in the Indenture shall also become immediately due and
payable to the extent permitted by law upon the acceleration of the Notes.
The Company is required to deliver to the Trustee annually a statement
regarding compliance with the Indenture. Upon becoming aware of any Default or
Event of Default, the Company is required to deliver to the Trustee a statement
specifying such Default or Event of Default.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Company
or any Subsidiary Guarantor, as such, shall have any liability for any
obligations of the Company or the Subsidiary Guarantors under the Notes, the
Indenture, the Subsidiary Guarantees, 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. The waiver may not be
effective to waive liabilities under the federal securities laws.
Legal Defeasance and Covenant Defeasance
The Company may, at its option and at any time, elect to have all of its
obligations discharged with respect to the outstanding Notes and all
obligations of the Subsidiary Guarantors discharged with respect to their
Subsidiary Guarantees ("Legal Defeasance") except for:
(1) the rights of Holders of outstanding Notes to receive payments in
respect of the principal of, or interest or premium and Liquidated Damages, if
any, 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;
(3) the rights, powers, trusts, duties and immunities of the Trustee, and
the Company's and the Subsidiary Guarantor'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 and the Subsidiary Guarantors released with
respect to certain covenants that are described
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in the Indenture ("Covenant Defeasance") and thereafter any omission to comply
with those covenants 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, bankruptcy, receivership, rehabilitation and
insolvency events) described under "Events of Default" 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 U.S. dollars, non-
callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal
of, or interest and premium and Liquidated Damages, if any, 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 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 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
either: (a) 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 (b) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on
the 91st day after the date of deposit;
(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 Subsidiaries is a party or by which the Company or any of
its Subsidiaries is bound;
(6) the Company must have delivered to the Trustee an Opinion of Counsel to
the effect that, assuming no intervening bankruptcy of the Company or
any Subsidiary Guarantor between the date of deposit and the 91st day
following the deposit and assuming that no Holder is an "insider" of
the Company under applicable bankruptcy law, after the 91st day
following
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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
(8) the Company must deliver to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent relating
to the Legal Defeasance or the Covenant Defeasance have been complied
with.
Amendment, Supplement and Waiver
Except as provided in the next three succeeding paragraphs, the Indenture or
the Notes may be amended or supplemented with the consent of the Holders of at
least a majority in principal amount of the 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 a majority in principal amount of the then
outstanding Notes (including, without limitation, consents obtained in
connection with a purchase of, or 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 (other
than provisions relating to the covenants described above under the
caption "--Repurchase 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
interest or premium, or Liquidated Damages, if any, 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 interest or premium or Liquidated Damages, if any,
on the Notes;
(7) waive a redemption payment with respect to any Note (other than a
payment required by one of the covenants described above under the
caption "--Repurchase at the Option of Holders"); or
(8) make any change in the preceding amendment and waiver provisions.
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Notwithstanding the preceding, without the consent of any Holder of Notes,
the Company, the Subsidiary Guarantors and the Trustee may amend or supplement
the Indenture or the Notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(3) to provide for the assumption of the Company's obligations to Holders
of Notes in the case of a merger or consolidation or sale of all or
substantially all of the Company's assets;
(4) 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
(5) 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
If the Trustee becomes a creditor of the Company or any Subsidiary
Guarantor, the Indenture limits its right 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 and be continuing, the Trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the Trustee will be under no obligation to
exercise any of its rights or powers under the Indenture at the request of any
Holder of Notes, unless such Holder shall have offered to the Trustee security
and indemnity satisfactory to it against any loss, liability or expense.
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.
"Accreted Value" means, for each $1,000 face amount of Notes, as of any date
of determination prior to November 1, 2004, the sum of:
(1) the initial offering price of each Note; and
(2) that portion of the excess of the principal amount of each Note over
such initial offering price which shall have been accreted thereon
through such date, such amount to be so accreted on a daily basis and
compounded semi-annually on each May 1 and November 1 at the rate of 13
3/8% per year from the date of issuance of the Notes through the date
of determination.
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The Accreted Value of any Note on or after November 1, 2004 shall be 100% of
the principal amount thereof.
"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,
whether or not such Indebtedness is 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.
"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,"
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. For purposes of
this definition, the terms "controlling," "controlled by" and "under common
control with" shall have correlative meanings.
"Annualized Operating Cash Flow" on any date, means with respect to any
Person the Operating Cash Flow for the Reference Period multiplied by four.
"Annualized Operating Cash Flow Ratio" on any date (the "Transaction Date")
means, with respect to any Person and its Restricted Subsidiaries, the ratio
of:
(1) consolidated Indebtedness of such Person and its Restricted
Subsidiaries (other than LEC Unwired) on the Transaction Date (after
giving pro forma effect to the Incurrence of such Indebtedness) divided
by
(2) the aggregate amount of Annualized Operating Cash Flow of such Person
(determined on a pro forma basis after giving effect to all
dispositions of businesses made by such Person and its Restricted
Subsidiaries from the beginning of the Reference Period through the
Transaction Date as if such disposition has occurred at the beginning
of such Reference Period);
provided, that for purposes of such computation, in calculating Annualized
Operating Cash Flow and consolidated Indebtedness:
(1) the transaction giving rise to the need to calculate the Annualized
Operating Cash Flow Ratio will be assumed to have occurred (on a pro
forma basis) on the first day of the Reference Period;
(2) the incurrence of any Indebtedness during the Reference Period or
subsequent thereto and on or prior to the Transaction Date (and the
application of the proceeds therefrom to the extent used to retire
Indebtedness) will be assumed to have occurred (on a pro forma basis)
on the first day of such Reference Period;
(3) Consolidated Interest Expense attributable to any Indebtedness (whether
existing or being incurred) bearing a floating interest rate shall be
computed as if the rate in effect on the Transaction Date had been the
applicable rate for the entire period; and
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(4) all members of the consolidated group of such Person on the Transaction
Date that were acquired during the Reference Period shall be deemed to
be members of the consolidated group of such Person for the entire
Reference Period.
"Asset Sale" means:
(1) the sale, lease, conveyance or other disposition of any assets or
rights, other than sales of inventory in the ordinary course of
business consistent with past practices; provided that the sale,
conveyance or other disposition of all or substantially all of the
assets of the Company and its Restricted Subsidiaries taken as a whole
will be governed by the provisions of the Indenture described above
under the caption "--Repurchase at the Option of Holders--Change of
Control" and/or the provisions described above under the caption "--
Certain Covenants--Merger, Consolidation or Sale of Assets" and not by
the provisions of the Asset Sale covenant; and
(2) the issuance of Equity Interests in any of the Company's Restricted
Subsidiaries or the sale of Equity Interests in any of its
Subsidiaries.
Notwithstanding the preceding, the following items shall not be deemed to be
Asset Sales:
(1) any single transaction or series of related transactions that involves
assets having a fair market value of less than $1.0 million;
(2) a transfer of assets to the Company or to any of its Restricted
Subsidiaries that are at least 90%-owned by the Company (other than LEC
Unwired);
(3) an issuance of Equity Interests by a Restricted Subsidiary to the
Company or to another Restricted Subsidiary that is at least 90%-owned
by the Company (other than LEC Unwired);
(4) the sale or lease of equipment, inventory, accounts receivable or other
assets in the ordinary course of business;
(5) the sale or other disposition of cash or Cash Equivalents; and
(6) a Restricted Payment or Permitted Investment that is permitted by the
covenant described above under the caption "--Certain Covenants--
Restricted Payments."
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire by
conversion or exercise of other securities, whether such right is currently
exercisable or is exercisable only upon the occurrence of a subsequent
condition. The terms "Beneficially Owns" and "Beneficially Owned" shall have a
corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of the
corporation;
(2) with respect to a partnership, the Board of Directors of the general
partner of the partnership; and
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(3) with respect to any other Person, the board or committee of such Person
serving a similar function.
"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 that 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
having maturities of not more than 12 months from the date of
acquisition;
(3) certificates of deposit and eurodollar time deposits with maturities of
six months or less from the date of acquisition, bankers' acceptances
with maturities not exceeding six months and overnight bank deposits,
in each case, with any lender party to the Credit Agreement or with any
domestic commercial bank having capital and surplus in excess of $500.0
million and a Thomson 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 Rating Services and in
each case maturing within six 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) through (5) of this
definition.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, 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 properties or
assets of the Company and its Restricted Subsidiaries taken as a whole
to any "person" (as that term is used in Section 13(d)(3) of the
Exchange Act) other than the Principal or a Related Party of the
Principal;
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(2) the adoption of a plan relating to the liquidation or dissolution of
the Company;
(3) 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 any Related Parties of the
Principal, becomes the Beneficial Owner, directly or indirectly, of
more than 35% of the Voting Stock of the Company, measured by voting
power rather than number of shares; or
(4) the first day on which a majority of the members of the Board of
Directors of the Company are not Continuing Directors; provided,
however, that changes in specific representatives of existing investors
that are entitled to nominate board representatives shall be excluded
from consideration for purposes of this clause (4).
"Consolidated Interest Expense" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of:
(1) interest expensed or capitalized, paid, accrued, or scheduled to be
paid or accrued (including interest attributable to Capitalized Lease
Obligations) of such Person and its Restricted Subsidiaries (other than
LEC Unwired) during such period, on a consolidated basis, including:
(a) original issue discount and non-cash interest payments or accruals
on any Indebtedness;
(b) the interest portion of all deferred payment obligations; and
(c) all commissions, discounts and other fees and charges owed with
respect to bankers' acceptances and letters of credit financings and
currency and Hedging Obligations, in each case to the extent
attributable to such period; plus
(2) the amount of dividends accrued or payable by such Person or any of its
consolidated Subsidiaries in respect of Preferred Stock (other than by
Restricted Subsidiaries (other than LEC Unwired) of such Person to such
Person or such Person's Wholly Owned Subsidiaries).
For purposes of this definition:
(1) interest on a Capitalized Lease Obligation shall be deemed to accrue at
an interest rate reasonably determined by the Company to be the rate of
interest implicit in such Capitalized Lease Obligation in accordance
with GAAP; and
(2) interest expense attributable to any Indebtedness represented by the
guaranty by such Person or a Subsidiary of such Person or an obligation
of another Person shall be deemed to be the interest expense
attributable to the Indebtedness guaranteed.
"Consolidated Net Income" of any Person for any period means the aggregate
of the net income (or loss) of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP,
adjusted to exclude (only to the extent included in computing such net income
(or loss)), and without duplication:
(1) all extraordinary gains and losses and gains and losses that are
nonrecurring (including as a result of Asset Sales outside the ordinary
course of business);
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(2) the net income or loss of LEC Unwired or of any Unrestricted Subsidiary
or any Person that is not a Restricted Subsidiary in which such Person
or any of its Restricted Subsidiaries has an interest;
(3) except as provided in the definition of "Annualized Operating Cash Flow
Ratio," the net income (or loss) of any Subsidiary acquired in a
pooling of interests transaction for any period prior to the date of
such acquisition; and
(4) the net income, (but not loss), of any Subsidiary of such Person to the
extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the terms of
its charter or any agreement or instrument applicable to such
Subsidiary.
"Consolidated Net Worth" means, with respect to any specified Person as of
any date, the sum of:
(1) the consolidated equity of the common stockholders of such Person and
its Restricted Subsidiaries (other than LEC Unwired) as of such date;
plus
(2) the respective amounts reported on such Person's balance sheet as of
such date with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of
net earnings in respect of the year of such declaration and payment,
but only to the extent of any cash received by such Person upon
issuance of such preferred stock.
"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;
or
(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.
"Credit Agreement" means that certain Credit Agreement, dated as of October
1, 1999, by and among the Company and CoBank, ACB, as Administrative Agent and
a lender; The Bank of New York, a Documentation Agent and a lender; BNY Capital
Markets, Inc., a Co-Arranger; First Union Securities, Inc., a Syndication Agent
and a Co-Arranger; First Union National Bank, a lender; and the other lenders
party thereto, providing for up to $130.0 million of term and revolving credit
borrowings, 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 from time to
time.
"Credit Facilities" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
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"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. Notwithstanding the preceding sentence, 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 above under the caption "--Certain Covenants--Restricted
Payments."
"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).
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of the Indenture, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of the Indenture.
"Global Notes" means, individually and collectively, each of the Restricted
Global Notes and the Unrestricted Global Notes, issued in accordance with
certain sections of the Indenture.
"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 specified 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 designed to protect such Person
against fluctuations in interest rates.
"Indebtedness" means, with respect to any specified Person, any indebtedness
of such Person, whether or not contingent, in respect of:
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(1) borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements in respect thereof);
(3) banker's acceptances;
(4) representing Capital Lease Obligations;
(5) the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade
payable; or
(6) representing any Hedging Obligations;
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) would appear as a liability upon a balance sheet of
the specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the
Subsidiary Guarantee by the specified 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.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the
forms of loans (including Subsidiary Guarantees 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 any Equity Interests of any direct or indirect Restricted
Subsidiary of the Company such that, 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 Restricted 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." The acquisition by the
Company or any Restricted Subsidiary of the Company of a Person that holds an
Investment in a third Person shall be deemed to be an Investment by the
Company or such Restricted Subsidiary in such third Person in an amount equal
to the fair market value of the Investment held by the acquired Person in such
third Person 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 the time and date of the first issuance of the Notes
under the Indenture.
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"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.
"Net Pops" of any Person with respect to any system means the Pops of the
MSA or RSA served by such system multiplied by the direct and/or indirect
percentage interest of such Person in the entity licensed or designated to
receive an authorization by the Federal Communications Commission to construct
or operate a system in that MSA or RSA.
"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 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, taxes paid or payable as a result thereof, in
each case, after taking into account any available tax credits or deductions
and any tax sharing arrangements, and amounts required to be applied to the
repayment of Indebtedness, other than Senior Debt, secured by a Lien on the
asset or assets that were the subject of such Asset Sale and any reserve for
adjustment in respect of the sale price of such asset or assets established in
accordance with GAAP.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither the Company nor any Subsidiary Guarantor (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 Subsidiary 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 LEC Unwired or an
Unrestricted Subsidiary) would permit upon notice, lapse of time or
both any holder of any other Indebtedness (other than the Notes) of the
Company or any Subsidiary Guarantor 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
Subsidiary Guarantor.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Operating Cash Flow" means, with respect to any specified 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 (other than LEC Unwired) for such period, to
the extent that such provision for taxes was deducted in computing such
Consolidated Net Income; plus
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(2) consolidated interest expense of such Person and its Restricted
Subsidiaries (other than LEC Unwired) for such period, 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, commissions, discounts and other fees and
charges incurred in respect of letter of credit or bankers' acceptance
financings, and net of the effect of all payments made or received
pursuant to Hedging Obligations), to the extent that any such expense
was deducted in computing such Consolidated Net Income; plus
(3) depreciation, amortization (including amortization of goodwill and
other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period) 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 or
amortization of a prepaid cash expense that was paid in a prior period)
of such Person and its Restricted Subsidiaries (other than LEC Unwired)
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) the amount of all cash payments made during such period by such Person
and its Restricted Subsidiaries (other than LEC Unwired) to the extent
such payments relate to non-cash items increasing such Consolidated Net
Income for such period, other than the accrual of revenue in the
ordinary course of business, in each case, on a consolidated basis and
determined in accordance with GAAP; minus
(5) any extraordinary gain (but not loss) of such Person and its Restricted
Subsidiaries (other than LEC Unwired) during such period, together with
any related provision for taxes on such extraordinary gain (but not
loss) to the extent such gains increased Consolidated Net Income.
Notwithstanding the preceding, the provision for taxes based on the income
or profits of, and the depreciation and amortization and other non-cash
expenses of, a Restricted Subsidiary of the Company (other than LEC Unwired)
shall be added to Consolidated Net Income to compute Consolidated Cash Flow of
the Company only to the extent that a corresponding amount would be permitted
at the date of determination to be dividended to the Company by such Restricted
Subsidiary without prior governmental approval (that has not been obtained),
and without direct or indirect restriction pursuant to the terms of its charter
and all agreements, instruments, judgments, decrees, orders, statutes, rules
and governmental regulations applicable to that Restricted Subsidiary or its
stockholders.
"Permitted Acquisition Indebtedness" means,with respect to any Person,
Indebtedness incurred in connection with the acquisition of property,
businesses or assets which, or Capital Stock of a Person all or substantially
all of whose assets, are of a type generally used in a Permitted Business;
provided that, in the case of the Company or its Restricted Subsidiaries, as
applicable, (1) the Company's Annualized Operating Cash Flow Ratio, after
giving effect to such acquisition and such Incurrence on a pro forma basis, is
no greater than such ratio prior to giving pro forma effect to such
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acquisition and such Incurrence, (2) the Company's consolidated Indebtedness,
divided by the Net Pops of the Company and its Restricted Subsidiaries in each
case giving pro form effect to the acquisition and such Incurrence, does not
exceed $50, (3) the Company's consolidated Indebtedness divided by the Net Pops
of the Company and its Restricted Subsidiaries does not increase as a result of
the acquisition and such Incurrence and (4) after giving effect to such
acquisition and such Incurrence the acquired property, businesses or assets or
such Capital Stock is owned directly by the Company or a Wholly Owned
Restricted Subsidiary of the Company.
"Permitted Business" means any business primarily involved in the ownership,
design, construction, development, acquisition, installation, management or
provision of wireless communications systems, including any business conducted
by US Unwired or any Restricted Subsidiary on the Closing Date.
"Permitted Investments" means:
(1) any Investment in a Restricted Subsidiary of the Company that is at
least 90%-owned by the Company (other than LEC Unwired);
(2) any Investment in Cash Equivalents;
(3) any Investment by the Company or any Restricted Subsidiary of the
Company in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of the Company that is
at least 90%-owned by the Company (other than LEC Unwired); or
(b) 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
that is at least 90%-owned by the Company (other than LEC Unwired);
(4) any 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 "--
Repurchase at the Option of Holders--Asset Sales";
(5) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company;
(6) Hedging Obligations; and
(7) Permitted Texas Unwired Investments.
"Permitted Liens" means:
(1) Liens securing the Credit Facilities permitted by the Indenture to be
incurred;
(2) Liens in favor of the Company or the Subsidiary Guarantor (other than
with respect to intercompany Indebtedness);
(3) Liens on property of a Person existing at the time such Person is
merged with or into or consolidated with the Company or any Subsidiary
of the Company; provided that such Liens were in existence prior to the
contemplation of such merger or consolidation and do not extend to any
assets other than those of the Person merged into or consolidated with
the Company or the Subsidiary;
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(4) Liens on property existing at the time of acquisition thereof by the
Company or any Subsidiary of the Company, provided that such Liens were
in existence prior to the contemplation of such acquisition;
(5) Liens to secure the performance of statutory obligations, surety or
appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;
(6) Liens to secure Indebtedness (including Capital Lease Obligations)
permitted by clause (5) of the second paragraph of the covenant entitled
"--Certain Covenants--Incurrence of Indebtedness and Issuance of
Preferred Stock" covering only the assets acquired with such
Indebtedness;
(7) Liens existing on the date of the Indenture;
(8) 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; and
(9) Liens incurred in the ordinary course of business of the Company or any
Subsidiary of the Company with respect to obligations that do not exceed
$2.0 million at any one time outstanding;
(10) Liens securing Non-Recourse Debt of LEC Unwired; and
(11) Liens securing Indebtedness, in an aggregate amount not to exceed $7.0
million, permitted by clause (8) of the second paragraph of the
covenant entitled "--Certain Covenants--Incurrence of Indebtedness and
Issuance of Preferred Stock" for the purpose of financing the
construction or acquisition of a headquarters building and associated
rights in real estate and covering only the assets acquired with such
Indebtedness.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its 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 Subsidiaries (other than intercompany
Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such Permitted
Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended,
refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of all expenses and premiums incurred in
connection therewith, including any market premium required to repurchase
such Indebtedness in a transaction where the repurchase price does not
exceed the fair market value of such Indebtedness);
(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;
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(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 has a final maturity date later
than the final maturity date of, and 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
Subsidiary who is the obligor on the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"Permitted Texas Unwired Investments" means the initial contribution of the
customer base, assets and rights and obligations related to the Beaumont-Port
Arthur and Lufkin-Nacagdoches markets to Texas Unwired and the extension of an
intercompany loan by the Company of up to $20.0 million to Texas Unwired.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Pops" means the estimate of the population of a Metropolitan Statistical
Area ("MSA") or Rural Service Area ("RSA") as derived from the most recent
Donnelly Market Service or if such statistics are no longer printed in the
Donnelly Market Service or the Donnelly Market Service is no longer published,
the most recent Rand McNally Commercial Atlas or if such statistics are no
longer printed in the Rand McNally Commercial Atlas or the Rand McNally
Commercial Atlas is no longer published, such other nationally recognized
source of such information.
"Principal" means William Henning, Sr.
"Reference Period" with regard to any Person means the last full fiscal
quarter of such Person for which financial information (which the Company shall
use its best efforts to compile in a timely manner) in respect thereof is
available ended on or immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Notes or the
Indenture.
"Related Party" means:
(1) any controlling stockholder, 80% (or more) owned Subsidiary, or
immediate family member (in the case of an individual) of the
Principal; or
(2) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80%
or more controlling interest of which consist of the Principal and/or
such other Persons referred to in the immediately preceding clause (1).
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of Persons means any Subsidiary of the referenced
Persons that is not an Unrestricted Subsidiary.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
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"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.
"Subsidiary" means, with respect to any specified 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 one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantors" means each of:
(1) LA Unwired, LLC;
(2) Unwired Telecom; and
(3) any other Subsidiary that executes a Subsidiary Guarantee in accordance
with the provisions of the Indenture;
and their respective successors and assigns.
"Unrestricted Subsidiary" means any Subsidiary of the Company (other than LA
Unwired and Unwired Telecom or any successor to any of them) 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:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) 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;
(3) is a Person with respect to which neither the Company nor any of its
Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or
preserve such Person's financial condition or to cause such Person to
achieve any specified levels of operating results;
(4) has not guaranteed or otherwise directly or indirectly provided credit
support for any Indebtedness of the Company or any of its Restricted
Subsidiaries; and
(5) 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.
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Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary
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 preceding
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 preceding requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Indenture and any Indebtedness of such Subsidiary shall be
deemed to be incurred by a Restricted Subsidiary of the Company as of such date
and, if such Indebtedness is not permitted to be incurred as of such date under
the covenant described under the caption "--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 under the caption
"--Certain Covenants--Incurrence of Indebtedness and Issuance of Preferred
Stock," and (2) no Default or Event of Default would 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 specified 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 and one or more Wholly Owned Restricted
Subsidiaries of such Person.
Book-Entry, Delivery and Form
Depository Procedures
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Direct Participants") and to facilitate the clearance and settlement of
transactions in those securities between Direct Participants through electronic
book-entry changes in accounts of Direct Participants. The Direct Participants
include securities brokers and dealers (including the initial purchasers of the
existing notes), banks, trust companies, clearing corporations and certain
other organizations. Access to DTC's system is also available to other
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entities that clear through or maintain a direct or indirect custodial
relationship with a Direct Participant (collectively, the "Indirect
Participants"). Persons who are not Direct Participants may beneficially own
securities held by or on behalf of DTC only through the Direct Participants or
Indirect Participants. The beneficial ownership interest and transfer of
beneficial ownership interest of each actual purchaser of each security held by
or on behalf of DTC are recorded on the records of the Direct Participants and
Indirect Participants.
The exchange notes will initially be represented by one or more permanent
Global Notes in definitive, fully registered book-entry form that will be
registered in the name of Cede & Co., as nominee of DTC. The Global Notes will
be deposited with a custodian for DTC for credit to the respective accounts of
the acquirors of the exchange notes or to the other accounts as the acquirors
may direct at DTC.
DTC has also advised the Company that pursuant to procedures established by
it:
(1) upon deposit of the Global Notes, DTC will credit the accounts of
Direct Participants with portions of the principal amount of Global
Notes; and
(2) ownership of such interests in the Global Notes will be shown on, and
the transfer ownership thereof will be effected only through, records
maintained by DTC (with respect to Direct Participants) or by Direct
Participants and the Indirect Participants (with respect to other
beneficial owners of interests in the Global Notes).
Investors in the Global Notes may hold their interests therein directly
through DTC or indirectly through organizations such as Euroclear and CEDEL.
All interests in a Global Note, including those held through Euroclear or
CEDEL, may be subject to the procedures and requirements of DTC. Those
interests held by Euroclear or CEDEL may also be subject to the procedures and
requirements of such systems. The Euroclear System is a clearance and
settlement system for international securities and operated by the Brussels
office of Morgan Guaranty Trust Company of New York. CEDEL International clears
and settles securities transactions in the Eurobond market.
The laws of some states require that certain persons take physical delivery
in definitive, certificated form of securities they own. This may limit or
curtail the ability to transfer a beneficial interest in a Global Note to such
persons. Because DTC can act only on behalf of Direct Participants, which in
turn act on behalf of Indirect Participants and others, the ability of a person
having a beneficial interest in a Global Note to pledge such interest to
persons or entities that are not Direct Participants in DTC, or to otherwise
take actions in respect of such interests, may be affected by the lack of
physical certificate evidencing such interests. For certain other restrictions
on the transferability of the Notes, see "--Book-Entry, Delivery and Form--
Transfer of Interests in Global Notes for Certificated Notes" and "--Book-
Entry, Delivery and Form--Exchanges of Global Notes."
Except as described in "--Transfer of Interests in Global Notes for
Certificated Notes," beneficial 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 holders thereof under
the Indenture for any purpose.
Under the terms of the Indenture, the Company and the Trustee will treat the
persons in whose names the Notes are registered (and not holders of book-entry
interests in the Notes or other
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beneficial owners) as the owners thereof for the purpose of receiving payments
in respect of the principal and premium, if any, and interest on the Notes and
for any and all other purposes whatsoever, except for certain purposes of the
exchange offer, as discussed in this prospectus. Payments in respect of the
principal and premium, if any, and interest on Global Notes registered in the
name of DTC or its nominee will be payable by the Trustee to DTC or its nominee
as the registered holder under the Indenture. Consequently, neither the
Company, nor the Trustee nor any agent of the Company or the Trustee has or
will have any responsibility or liability for:
(1) any aspect of DTC's records or any Direct 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 Direct
Participant's or Indirect Participant's records relating to the
beneficial ownership interests in any Global Note, or
(2) any other matter relating to the actions and practices of DTC or any of
its Direct Participants or Indirect Participants.
DTC has advised the Company that its current practice, upon receipt of any
payment in respect of securities such as the Notes, is to credit the accounts
of the relevant Direct Participants with the payment on the payment date, in
amounts proportionate to such Direct Participants' respective ownership
interests in the Global Notes as shown on DTC's records. Payments by Direct
Participants and Indirect Participants to the beneficial owners of Notes will
be governed by standing instructions and customary practices between them and
will not be the responsibility of DTC, the Trustee or the Company. Neither the
Company nor the Trustee will be liable for any delay by DTC or its Direct
Participants in identifying the beneficial owners of the Notes, and the Company
and the Trustee may conclusively rely on and will be protected in relying on
instructions from DTC or its nominee as the registered owner of the Notes for
all purposes.
The Global Notes will trade in DTC's Same-Day Funds Settlement System and
therefore, transfers between Direct Participants in DTC will be effected in
accordance with DTC's procedures, and will be settled in immediately available
funds. Transfers between Indirect Participants who hold interests in the Notes
through Euroclear and CEDEL will be effected in the ordinary way 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 Direct Participants in DTC, on
the one hand, and Indirect Participants, who hold interests in the Notes
through Euroclear and CEDEL, on the other hand, will be effected by Euroclear's
or CEDEL's respective nominee through DTC in accordance with DTC's rules on
behalf of Euroclear or CEDEL; however, delivery of instructions relating to
cross-market transactions must be made directly to Euroclear or CEDEL, as the
case may be, by the counterparty in accordance with the rules and procedures of
Euroclear or CEDEL and within their established deadlines (Brussels time for
Euroclear and UK time for CEDEL). Euroclear or CEDEL, as the case may be, will,
if the transaction meets its settlement requirements, deliver instructions to
its depositary to take action to effect final settlement on its behalf by
delivering or receiving interests in the relevant Global Note in DTC, and
making or receiving payment in accordance with normal procedures for same-day
fund settlement applicable to DTC. Euroclear Participants and CEDEL
Participants may not deliver instructions directly to the depositaries for
Euroclear or CEDEL.
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Because of time zone differences, the securities accounts of an Indirect
Participant who holds interests in the Notes through Euroclear or CEDEL
purchasing an interest in a Global Note from a Direct Participant in DTC will
be credited, and any such crediting will be reported to Euroclear or CEDEL
during the European business day immediately following the settlement date of
DTC in New York. Although transactions will be recorded in DTC's accounting
records as of DTC's settlement date in New York, Euroclear and CEDEL customers
will not have access to the cash amount credited to their accounts as a result
of a sale of an interest in a Global Note to a DTC Participant until the
European business day for Euroclear or CEDEL immediately following DTC's
settlement date.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Notes only at the direction of one or more Direct
Participants to whose account DTC interests in the Global Notes are credited
and only in respect of such portion of the aggregate principal amount of the
Notes to which such Direct Participant or Direct Participants have given
direction. However, if there is an Event of Default under the Notes, DTC
reserves the right to exchange Global Notes for Notes in certificated form, and
to distribute such Notes to its Direct Participants.
The information in this section concerning DTC, Euroclear and CEDEL and
their book-entry systems has been obtained from sources that the Company
believes to be reliable, but the Company takes no responsibility for the
accuracy thereof.
Although DTC, Euroclear and CEDEL have agreed to the foregoing procedures to
facilitate transfers of interests in the Global Notes among Direct
Participants, including Euroclear and CEDEL, they are under no obligation to
perform or to continue to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC, Euroclear or CEDEL or their
respective Direct Participants and Indirect Participants of their respective
obligations under the rules and procedures governing any of their operations.
Transfer of Interests in Global Notes for Certificated Notes
A Global Note is exchangeable for definitive Notes in registered
certificated form if:
(1) DTC (x) notifies the Company that it is unwilling or unable to continue
as depositary for the Global Note and the Company thereupon fails to
appoint a successor depositary or (y) has ceased to be a clearing
agency registered under the Exchange Act,
(2) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of Certificated Notes, or
(3) there shall have occurred and be continuing to occur a Default or an
Event of Default with respect to the Notes.
In addition, beneficial interests in a Global Note may be exchanged for
certificated Notes upon request but only upon at least 20 days' prior written
notice given to the Trustee by or on behalf of DTC in accordance with customary
procedures. In all cases, certificated Notes delivered in exchange for any
Global Note or beneficial interest therein will be registered in the names, and
issued in any approved denominations, requested by or on behalf of the
depositary (in accordance with its customary procedures).
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Exchanges of Global Notes
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 another Global Note
will, upon transfer, cease to be an interest in such Global Note and become an
interest in such other Global Note, and accordingly, will thereafter be subject
to all transfer restrictions and other procedures applicable to beneficial
interests in such other Global Note for as long as it remains such an interest.
Transfers involving an exchange of a beneficial interest in a Global Note
for a beneficial interest in another Global Note will be effected by DTC by
means of an instruction originated by the Trustee through the DTC/Deposit
Withdraw at Custodian system. Accordingly, in connection with such transfer,
appropriate adjustments will be made to reflect a decrease in the principal
amount of the one Global Note and a corresponding increase in the principal
amount of the other Global Note, as applicable.
Certificated Notes
Subject to certain conditions, any person having a beneficial interest in
the Global Note may, upon request to the Trustee, exchange such beneficial
interest for Notes in the form of Certificated Notes. Upon any such issuance,
the Trustee is required to register such Certificated Notes in the name of, and
cause the same to be delivered to, such person or persons (or the nominee of
any thereof). In addition, if:
(1) the Company notifies the Trustee in writing that DTC is no longer
willing or able to act as a depositary and the Company is unable to
locate a qualified successor within 90 days, or
(2) the Company, at its option, notifies the Trustee in writing that it
elects to cause the issuance of Notes in the form of Certificated Notes
under the Indenture,
then, upon surrender by the Global Note Holder of its Global Note, Notes in
such form will be issued to each person that the Global Note Holder and DTC
identify as being the beneficial owner of the related Notes.
Neither the Company nor the Trustee will be liable for any delay by the
Global Note Holder or DTC in identifying the beneficial owners of Notes and the
Company and the Trustee may conclusively rely on, and will be protected in
relying on, instructions from the Global Note Holder or DTC for all purposes.
Same Day Settlement And Payment
The Indenture requires that payments in respect of the Notes represented by
the Global Note (including principal, premium, if any, and interest) be made by
wire transfer of immediately available next day funds to the accounts specified
by the Global Note Holder. With respect to Certificated Notes, the Company will
make all payments of principal, premium, if any, and interest, by wire transfer
of immediately available funds to the accounts specified by the Holders thereof
or, if no such account is specified, by mailing a check to each such Holder's
registered address. Any secondary trading in the Certificated Notes will also
be settled in immediately available funds.
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DESCRIPTION OF CAPITAL STOCK
In this description, "we," "us" and "our" refer to US Unwired and not to any
of its subsidiaries or affiliates.
Our authorized capital stock consists of 100,000,000 shares of Class A
common stock, par value $0.01 per share; 60,000,000 shares of Class B common
stock, par value $0.01 per share; and 40,000,000 shares of preferred stock, no
par value. Immediately prior to this offering, there were 11,250,000 shares of
Class B common stock, no shares of Class A common stock and 500,000 shares of
Series A preferred stock issued and outstanding, and we had approximately 16
holders of record of our Class B common stock and one holder of record of our
Series A preferred stock.
Common Stock
We have two classes of authorized common stock, Class A common stock and
Class B common stock. Other than as described in this prospectus with respect
to voting rights and transfer restrictions applicable to the Class B shares,
the Class A and Class B shares have identical rights. The Class A common stock
has one vote per share and the Class B common stock has 10 votes per share. The
Class A and Class B shares vote together in the election of directors and
generally with respect to all matters for which a vote of stockholders is
required.
Shares of Class B common stock generally convert automatically into shares
of Class A common stock on a share-for-share basis immediately upon any
transfer of the Class B common stock other than a transfer from an original
holder of Class B common stock to specified "qualified holders, which are
defined as persons and entities who receive Class B common stock in connection
with the initial issuance of Class B common stock or as a distribution from an
entity which received Class B common stock in connection with the initial
issuance; such persons' descendants, spouses or surviving spouses; specified
entities and tax-exempt organizations; The 1818 Fund and its affiliates and
persons or entities designated by the Class B holders."
Holders of common stock have no cumulative voting rights and no preemptive,
subscription or sinking fund rights. Subject to preferences that may be
applicable to any then outstanding preferred stock, holders of common stock
will be entitled to receive ratably such dividends as may be declared by our
board of directors out of funds legally available therefor. In the event of our
liquidation, dissolution or winding up, holders of common stock will be
entitled to share ratably in all assets remaining after payment of liabilities
and the liquidation preference to any then outstanding preferred stock.
Preferred Stock
We are authorized under our articles of incorporation to issue 40,000,000
shares of preferred stock, which may be issued from time to time in one or more
series upon authorization by our board of directors. The board of directors,
without further approval of the stockholders, is authorized to fix the dividend
rights and terms, conversion rights, voting rights, redemption rights and
terms, liquidation preferences and any other rights, preferences, privileges
and restrictions applicable to each series of preferred stock.
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Series A preferred stock. Contemporaneously with the issuance of the
existing notes, we issued 500,000 shares of Series A preferred stock to The
1818 Fund for $50 million. The stated value of the Series A preferred stock is
$100 per share, which is also the liquidation preference per share. The
proceeds from the sale of the Series A preferred stock are available to us for
use for general corporate purposes, including the buildout of our network.
As holders of the Series A preferred stock, The 1818 Fund has the following
rights:
. the payments due the holders are inferior in rank, including liquidation,
to payments due the holders of the Notes;
. the Series A preferred stock ranks senior in terms of payment to all
classes of common stock in case of a liquidation or similar event;
. the holders may convert the Series A preferred stock into our Class B
common stock at any time, at a price of $26.55 per share, representing
13.8% of the common equity of US Unwired, subject to adjustments and
assuming the exercise of options granted to management to purchase
500,000 shares of the common equity, unless The 1818 Fund sells or
transfers the Series A preferred stock, in which case the Series A
preferred stock will be convertible into our Class A common stock;
. the holders are entitled to dividends equivalent, on an as-converted
basis, to dividends paid on our common stock;
. the holders of the Series A preferred stock have the voting rights of our
Class B common stockholders on an as-converted basis unless The 1818 Fund
sells or transfers to a non-affiliate the Series A preferred stock, in
which case the transferee holders of the Series A preferred stock will
have the voting rights of our Class A common stockholders on an as-
converted basis;
. holders who represent two-thirds of the liquidation preference of the
Series A preferred stock must approve specified significant events,
including the issuance of additional preferred stock equal or senior to
the Series A preferred stock as to dividends or liquidation, the issuance
of any preferred stock having an earlier mandatory or optional redemption
date than the Series A preferred stock, amendments to our corporate
documents that may adversely affect the holders, and sales or mergers of
us or our significant subsidiaries;
. if The 1818 Fund (or its affiliates) holds 50% or more of our common
stock issued or issuable upon conversion of the Series A preferred stock,
The 1818 Fund may designate two persons to our board of directors; if The
1818 Fund (or its affiliates) holds less than 50% but more than 25% of
our common stock issued or issuable upon conversion of the Series A
preferred stock, The 1818 Fund may designate one person to our board of
directors;
. the Series A preferred stock has a mandatory redemption at its stated
value 91 days after the maturity of the Notes;
. if we have not effected an initial public offering of our common stock by
the fifth anniversary of the offering of the Notes, by action of holders
who represent 50% or more of the liquidation preference of the Series A
preferred stock, we will be required to offer to purchase the Series A
preferred stock at a price equal to 100% of the fair market value of the
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Series A preferred stock, on an as-converted, undiscounted, fully
distributed basis. If we are unable to do this because of restrictions in
our credit facilities or the indenture governing the Notes, the holders
of the Series A preferred stock will receive compensatory warrants;
. we may elect to require the holders of the Series A preferred stock to
convert their Series A preferred stock, in connection with or after an
initial public offering, if the holders would receive, on an as-converted
basis, an internal rate of return of at least 20% per year based either
on the initial offering price to the public on the date of the initial
public offering, or, at any time after the date of the initial public
offering, on the trading price of our Class B common stock over a 30
consecutive trading day period; and
. the holders of the Series A preferred stock are entitled to customary
contractual covenants, including anti-dilution protections, dividend
protections, liquidation rights, registration rights, restrictions on
significant corporate events, acts and transactions, and customary events
of default.
Shareholder Agreement
On September 24, 1999, we entered into an agreement with the holders of
Class B common stock, including several members of the Henning family. The
agreement provides, among other things, that the signatory stockholders agree
that they will not approve any amendment to the articles of incorporation that
restricts the transfer of Class B common stock beyond the restrictions
contained in the articles of incorporation. The agreement also contains
piggyback registration rights in favor of the signatory stockholders. The
registration rights terminate six years after the date of the agreement, and
the other provisions terminate 25 years after the date of the agreement,
unless otherwise extended pursuant to the terms of the agreement.
Certain Charter, By-Law and Statutory Provisions
The following sections describe certain provisions of our articles of
incorporation and by-laws, and of the Louisiana Business Corporation Law.
Classified board of directors. Our articles of incorporation divide the
members of the board of directors into three classes serving three-year
staggered terms each. The Class I directors are John A. Henning and Thomas G.
Henning, whose terms expire in 2001. The Class II directors are William L.
Henning, Sr. and Robert Piper, whose terms expire in 2002. The Class III
directors are William L. Henning, Jr. and Lawrence C. Tucker, whose terms
expire in 2000. Mr. Tucker was designated as a director by The 1818 Fund,
which is entitled to designate one other individual to become a member of our
board of directors whose term will expire in 2000, but has not yet done so.
Special meetings of stockholders. The articles of incorporation and by-laws
provide that meetings of our stockholders may be called upon written request
of any stockholder or stockholders holding in the aggregate 60% of our total
voting power. In addition, a special meeting of stockholders of any class or
series may be called upon written request of any stockholder or group of
stockholders holding in the aggregate 60% of the total voting power of such
class or series.
Advance notice requirements for director nominations. Our by-laws provide
that nominations of persons for election to our board of directors may be made
at a meeting of stockholders by or at
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the direction of the board of directors or by any stockholder of record
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in the by-laws. Such nominations, other than
those made by or at the direction of the board of directors, shall be made
pursuant to timely notice in writing to our secretary. To be timely, a
stockholder's notice must be delivered or mailed and received at our principal
office not less than 45 days nor more than 90 days prior to the meeting,
provided, however, that in the event that less than 55 days' notice or prior
public disclosure of the date of the meeting is given or made to stockholders,
notice by the stockholder to be timely must be received no later than the close
of business on the tenth day following the day on which such notice of the date
of the meeting was mailed or such public disclosure was made.
Directors elected by preferred stockholders. Whenever holders of any one or
more classes or series of stock having a preference over the common stock as to
dividends or upon liquidation has the right, voting separately as a class, to
elect one or more directors, our articles of incorporation (as may be amended
from time to time fixing the rights and preferences of the preferred stock)
shall govern the nomination, election, term, removal, vacancies or other
related matters with respect to these directors.
Director and officer indemnification and limitation of liability. As
permitted by the Louisiana Business Corporation Law, our articles of
incorporation contain provisions eliminating the personal liability of our
directors and officers to us and our stockholders for monetary damages for
breaches of their fiduciary duties as directors or officers, except for (1) a
breach of a director's or officer's duty of loyalty to us or our stockholders,
(2) acts or omissions not in good faith or that involve intentional misconduct
or a knowing violation of law, (3) liability for unlawful distributions of our
assets to, or redemptions or repurchases of our shares from, our stockholders,
under and to the extent provided in Section 92D of the Louisiana Business
Corporation Law, and (4) any transaction in which a director or officer
receives an improper personal benefit. As a result of the inclusion of such
provisions, stockholders may be unable to recover monetary damages against
directors or officers for actions taken by them that constitute negligence or
gross negligence or that are in violation of their fiduciary duties, although
it may still be possible to obtain injunctive or other equitable relief with
respect to such actions. If equitable remedies are found not to be available to
stockholders in any particular case, stockholders may not have any effective
remedy against the challenged conduct.
Our by-laws provide in effect that we shall, to the fullest extent permitted
by the Louisiana Business Corporation Law, as amended from time to time,
indemnify our directors and executive officers and advance expenses to each of
them in connection with such indemnification.
Redemption of capital stock. Our articles of incorporation permit us to
redeem shares of our capital stock from any stockholder whose ownership causes
us to violate foreign ownership restrictions applicable to FCC licensees or
otherwise would prevent us from holding or delay us in obtaining any
governmental license or franchise that is necessary to conduct any material
portion of our and our subsidiaries' communications business or would
materially increase our or our subsidiaries' cost of obtaining or operating
under any such license or franchise. Shares to be redeemed are to be selected
in a manner determined by the board of directors. The redemption price may be
paid in cash or in debt or equity securities of us or our subsidiaries or any
other entity.
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Removal of directors; filling vacancies on board of directors. Our articles
of incorporation provide that any director may be removed, with or without
cause, only by a vote of a majority of the total voting power of the shares
that would be entitled to elect the successor to the removed director. Our
articles of incorporation provide that any vacancies on the board of directors
(including any resulting from an increase in the authorized number of
directors) may be filled as follows: if the vacant position is that of a
director elected by holders of preferred stock, the vacancy may be filled as
provided in our articles of incorporation. If the vacant position is that other
than of a director elected by holders of preferred stock, the vacancy may be
filled by the affirmative vote of a majority of the directors remaining in
office, provided that the stockholders have the right, at any special meeting
called for that purpose prior to such action by the board, to fill the vacancy.
Adoption and amendment of by-laws. Our articles of incorporation and by-laws
provide that by-laws may be adopted by a majority vote of the board of
directors, subject to any power granted by the Louisiana Business Corporation
Law to stockholders to change or repeal any by-laws so adopted or amended. By-
laws may be amended or repealed only by either a two-thirds vote of the board
of directors or the affirmative vote of holders of at least two-thirds of the
total voting power, voting together as a single class, that is present or
represented at any regular or special meeting of stockholders, the notice of
which meeting expressly states that the proposed amendment or repeal is to be
considered at the meeting. Any amendment to the by-laws that would add a matter
not expressly covered in the by-laws prior to such amendment will be deemed the
adoption of a new by-law and not an amendment.
Special stockholder voting requirements. Our articles of incorporation
provide that any proposal to approve a merger, consolidation, share exchange,
disposition of all or substantially all of our assets, dissolution, or any
amendment to our articles of incorporation, requires the affirmative vote of a
majority of the total voting power, with all classes and series voting together
as if a single class, provided that the board of directors has previously
approved and/or recommended such proposal by the affirmative vote of three-
fourths of the number of directors constituting the full board of directors.
Otherwise, the affirmative vote of holders of at least two-thirds of the total
voting power, with all classes and series voting together as if a single class,
is required to approve such a proposal. The Louisiana Business Corporation Law
provides that if a proposed amendment to our articles of incorporation would
adversely affect, within the meaning of the Louisiana Business Corporation Law,
the shares of any class of capital stock, then the amendment must also be
approved by holders of the shares of that class. Under our articles of
incorporation, such approval would require the affirmative vote of holders of a
majority of the voting power present of that class. In addition, the Series A
preferred stock issued to The 1818 Fund has special voting rights which are
described under the heading "Preferred Stock--Series A preferred stock."
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CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
This general discussion of United States federal tax consequences applies to
you if you acquired existing notes at original issue for cash and you exchange
those existing notes for exchange notes in exchange offer. This discussion only
applies to you if you purchased existing notes in the private placement for an
amount equal to the "issue price" of the existing notes and hold the exchange
notes as a "capital asset," generally, for investment, under Section 1221 of
the Internal Revenue Code of 1986, as amended, referred to as the Code. If you
did not purchase your existing notes in the private placement for an amount
equal to the "issue price" of the existing notes, you should consult your tax
advisor regarding the consequences of the exchange offer.
This discussion is based upon the Code, Treasury Regulations, Internal
Revenue Service rulings and pronouncements, and judicial decisions now in
effect, all of which are subject to change at any time by legislative,
administrative, or judicial action, possibly with retroactive effect. The
discussion does not discuss every aspect of U.S. federal income and estate
taxation that may be relevant to a particular taxpayer in light of its personal
circumstances or to persons who are otherwise subject to a special tax
treatment. For example, special rules not discussed here may apply to you if
you are:
. a bank or a broker-dealer;
. an insurance company;
. a pension or other employee benefit plan;
. a tax exempt organization or entity;
. a U.S. expatriate;
. a trader in securities that elects mark-to-market accounting treatment;
. holding Notes as a part of a hedging or conversion transaction or a
straddle;
. a hybrid entity or an owner of interests therein; or
. a holder whose functional currency is not the U.S. dollar.
In addition, this discussion does not discuss the effect of any applicable
U.S. state or local or non-U.S. tax laws. We have not sought and will not seek
any rulings from the Internal Revenue Service concerning the tax consequences
of the purchase, ownership or disposition of the Notes, and, accordingly, we
cannot assure you that the Internal Revenue Service will not successfully
challenge the tax consequences described below. We urge you to consult your tax
advisor with respect to the U.S. federal income and estate tax considerations
relevant to holding and disposing of Notes, as well as any tax considerations
applicable under the laws of any U.S. state, local or non-U.S. taxing
jurisdiction.
U.S. Holders
If you are a "U.S. Holder," as defined below, this section applies to you.
Otherwise, the section "Non-U.S. Holders" applies to you. You are a U.S. Holder
if you hold the Notes and you are:
. a citizen or resident of the United States, including an individual
deemed to be a resident alien under the "substantial presence" test of
Section 7701(b) of the Code;
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. a corporation or partnership, including entities treated as partnerships
or corporations for federal income tax purposes, created or organized in
the United States or under the laws of the United States or of any state
thereof or the District of Columbia, unless in the case of a partnership,
Treasury Regulations provide otherwise;
. an estate whose income is includible in gross income for U.S. federal
income tax purposes regardless of its source; or
. a trust whose administration is subject to the primary supervision of a
U.S. court and which has one or more U.S. persons who have the authority
to control all substantial decisions of the trust. Notwithstanding the
preceding clause, to the extent provided in Treasury Regulations, certain
trusts in existence on August 20, 1996, and treated as U.S. persons prior
to such date that elect to continue to be treated U.S. persons, shall
also be considered U.S. persons.
Exchange of Notes. The exchange of existing notes for exchange notes in the
exchange offer will not constitute a taxable event to the U.S. Holders and thus
will not result in income, gain or loss to U.S. Holders who participate in the
exchange offer or to US Unwired. The exchange notes should be treated as a
continuation of the existing notes. Such U.S. Holders shall have the same
adjusted tax basis and holding period in the exchange notes immediately after
the exchange as the U.S. Holders had in the existing notes immediately prior to
the exchange.
Original Issue Discount. Because the existing notes were sold at a
substantial discount from their principal amount at maturity and because there
will not be any payment of interest on the Notes until May 1, 2005, the Notes
have original issue discount, referred to as "OID," in an amount equal to the
excess of the "stated redemption price at maturity" over the "issue price" of
the existing notes. The "issue price" of the existing notes is the first price
at which a substantial number of Notes were sold for money, excluding sales to
underwriters, placement agents or wholesalers. The "stated redemption price at
maturity" is the sum of all payments to be made on the Notes other than
"qualified stated interest." The term "qualified stated interest" means,
generally, stated interest that is unconditionally payable at least annually at
a single fixed rate. Because no interest will be paid on the Notes before 2005,
none of the interest paid on the Notes will be qualified stated interest.
Accordingly, all payments on the Notes will be treated as part of the Notes'
stated redemption price at maturity.
U.S. Holders of Notes must, in general, include in income OID calculated on
a constant-yield accrual method in advance of the receipt of some or all of the
related cash payments. The amount of OID includible in income by an initial
U.S. Holder of Notes is the sum of the "daily portions" of OID with respect to
such Notes for each day during the taxable year or portion of the taxable year
in which such U.S. Holder holds such Notes. This amount is referred to as
"Accrued OID." The daily portion is determined by allocating to each day in any
accrual period a pro rata portion of the OID allocable to that accrual period.
The accrual period for the Notes may be of any length selected by the U.S.
Holder and may vary in length over the term of the Notes, provided that each
accrual period is no longer than one year and each scheduled payment of
principal or interest occurs on the first day or the final day of an accrual
period. The amount of OID allocable to any accrual period is equal to:
. the product of the Notes' adjusted issue price at the beginning of such
accrual period and its yield to maturity (determined on the basis of
compounding at the close of each accrual period and properly adjusted for
the length of the accrual period) over
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. the qualified stated interest allocable to such accrual period (which, in
the case of the Notes, will be zero).
OID allocable to the final accrual period is the difference between the
amount payable at maturity of the Note and the Note's "adjusted issue price" at
the beginning of the final accrual period. Special rules will apply calculating
OID for an initial short accrual period. The "adjusted issue price" of a Note
at the beginning of any accrual period is equal to its issue price increased by
the Accrued OID for each prior accrual period and reduced by any payments made
on such Note on or before the first day of the accrual period.
Stated interest, when paid on the Notes, will be treated first as a payment
of OID to the extent of the OID that has accrued as of the date of the payment
and has not been allocated to prior payments. Such amount will not be
includible in a U.S. Holder's gross income. Any excess will be treated as a
payment of principal on the Notes.
Sale, Retirement, or Other Taxable Disposition of Notes. Upon the sale,
retirement or other taxable disposition of a Note, a U.S. Holder will recognize
gain or loss to the extent of the difference between the sum of the cash and
the fair market value of any property received in exchange therefor (except to
the extent attributable to the payment of accrued and unpaid interest on the
Notes, which generally will be taxed as ordinary income), and the U.S. Holder's
adjusted tax basis in the Notes. A U.S. Holder's tax basis in a Note will
initially equal the price paid for such Note plus any OID included in the
holder's income prior to the disposition of the Note and reduced by any
payments received on the Note of amounts included in the stated redemption
price at maturity of the Note. Any such gain or loss recognized by a U.S.
Holder upon the sale, retirement or other taxable disposition of a Note will be
capital gain or loss and will be long-term capital gain or loss if the Notes
have been held for more than one year.
Information Reporting; Backup Withholding. We are required to furnish to
record holders of the Notes, other than corporations and other exempt holders,
and to the Internal Revenue Service, information with respect to interest paid
and the amount of any OID accrued on the Notes.
Certain U.S. Holders may be subject to backup withholding at the rate of 31%
with respect to interest and any OID paid on the Notes or with respect to
proceeds received from a disposition of the Notes. Generally, backup
withholding applies only if:
. the payee fails to furnish a correct taxpayer identification number to
the payor in the manner required or fails to demonstrate that it
otherwise qualifies for an exemption;
. the Internal Revenue Service notifies the payor that the taxpayer
identification number furnished by the payee is incorrect;
. the payee has failed to report properly the receipt of a "reportable
payment" on one or more occasions, and the Internal Revenue Service has
notified the payor that withholding is required; or
. the payee fails (in certain circumstances) to provide a certified
statement, signed under penalties of perjury, that the taxpayer
identification number furnished is the correct number and that such
holder is not subject to backup withholding.
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Backup withholding is not an additional tax but, rather, is a method of tax
collection. U.S. Holders will be entitled to credit any amounts withheld under
the backup withholding rules against their actual tax liabilities provided the
required information is furnished to the Internal Revenue Service.
Non-U.S. Holders
The term "Non-U.S. Holder" refers to a person that is not classified for
U.S. federal tax purposes as a U.S. person as defined in "--U.S. Holders,"
above. Non-U.S. Holders are urged to consult their tax advisors regarding the
U.S. federal tax consequences that may arise under the laws of any foreign,
state, local or other taxing jurisdiction.
Interest and OID. In general, a Non-U.S. Holder will not be subject to U.S.
federal income tax or withholding tax with respect to stated interest or OID
received or accrued on the Notes by reason of the portfolio interest exemption
so long as:
. the interest and OID is not effectively connected with the conduct of a
trade or business within the United States;
. the Non-U.S. Holder does not actually or constructively own 10% or more
of the total combined voting power of all classes of stock of US Unwired
entitled to vote;
. the Non-U.S. Holder is not a "controlled foreign corporation" (within the
meaning of the Code) that is "related" to US Unwired (within the meaning
of the Code) actually or constructively through stock ownership; and
. the Non-U.S. Holder certifies, under penalties of perjury that such
holder is not a U.S. person and provides such holder's name and address
in an appropriate form (currently IRS Form W-8) to us or an agent
appointed by us (or, a security clearing organization, bank or other
financial institution that holds the Notes on a holder's behalf in the
ordinary course of its trade or business certifies on the holder's behalf
that it has received such certification from the holder and provides a
copy to us or our agent).
If a Non-U.S. Holder is not qualified for an exemption under these rules,
interest and OID paid on the Notes may be subject to withholding tax at the
rate of 30% (or any lower applicable treaty rate). The payment of interest and
OID that is effectively connected with a Non-U.S. Holders trade or business
within the United States, however, would not be subject to a 30% withholding
tax so long as the Non-U.S. Holder provides us or our agent with an adequate
certification (currently IRS Form 4224), but such interest and OID would be
subject to U.S. federal income tax on a net basis at the rates applicable to
U.S. persons generally. In addition, a Non-U.S. Holder that is a corporation
may also be subject to a 30% branch profits tax on interest and OID that is
effectively connected with such Non-U.S. Holder's trade or business within the
United States.
Gain on Disposition of Notes. Non-U.S. Holders generally will not be subject
to U.S. federal income taxation on gain recognized on a disposition of Notes so
long as:
. the gain is not effectively connected with the conduct by the Non-U.S.
Holder of a trade or business within the United States; and
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. in the case of a Non-U.S. Holder who is an individual, such Non-U.S.
Holder is not present in the United States for 183 days or more in the
taxable year of disposition and other requirements are met.
Payments received on the disposition of a Note by a Non-U.S. Holder whose
investment in the Note is effectively connected with such Non-U.S. Holder's
trade or business would be subject to U.S. federal income tax on a net basis at
the rates applicable to U.S. persons generally. In addition, in the case of
payments received on the disposition of a Note by a corporate Non-U.S. Holder
whose investment in the Note is effectively connected with such Non-U.S.
Holder's trade or business within the United States, the payments may also be
subject to a 30% branch profits tax.
Federal Estate Taxes. A Note held by an individual who, at the time of
death, is a Non-U.S. Holder generally will not be subject to U.S. federal
estate tax as a result of such individual's death if:
. the individual does not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of US Unwired
entitled to vote; and
. at the time of the individual's death, interest payments with respect to
such Note would not have been effectively connected with the conduct by
such individual of a trade or business in the United States.
Information Reporting; Backup Withholding. Under current U.S. federal income
tax law, a 31% backup withholding tax requirement applies to certain payments
of interest and OID on, and the proceeds of a sale, exchange or redemption of
the Notes. We will, where required, report to holders of Notes and the Internal
Revenue Service the amount of any payments on the Notes and the amounts of tax
withheld, if any, from those payments.
Generally, payments of interest on the Notes to Non-U.S. Holders will not be
subject to information reporting or backup withholding if the Non-U.S. Holder
certifies, under penalties of perjury, that such holder is not a U.S. Holder
and provides such holder's name and address as described above.
Non-U.S. Holders will not be subject to information reporting or backup
withholding with respect to the payment of proceeds from the disposition of
Notes effected by, to or through the foreign office of a broker; provided,
however, that if the broker is a U.S. person or a U.S.-related person,
information reporting (but not backup withholding) would apply unless the
broker has documentary evidence in its records as to the Non-U.S. Holder's
foreign status, and has no actual knowledge to the contrary, or the Non-U.S
Holder certifies as to its non-U.S. status under penalties of perjury or
otherwise establishes an exemption. Non-U.S. Holders will be subject to
information reporting and backup withholding at a rate of 31% with respect to
the payment of proceeds from the disposition of Notes effected by, to or
through the U.S. office of a broker, unless the Non-U.S. Holder certifies as to
its non-U.S. status under penalty of perjury or otherwise establishes an
exemption.
Amounts withheld under the backup withholding rules do not constitute a
separate U.S. federal income tax. Rather, amounts withheld under the backup
withholding rules from a payment to a Non-U.S. Holder will be allowed as a
credit against such Non-U.S. Holder's U.S. federal income tax
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liability and any amounts withheld in excess of such Non-U.S. Holder's U.S.
federal income tax liability will be refunded, provided that the required
information is furnished to the Internal Revenue Service.
Non-U.S. Holders should be aware that the Treasury Department promulgated
revised final regulations regarding the withholding and information reporting
rules discussed above. In general, the final regulations do not significantly
alter the substantive withholding and information reporting requirements but
unify certain certification procedures and forms and clarify reliance
standards. The final regulations would generally be effective for payments made
after December 31, 2000, subject to certain transition rules. Non-U.S. Holders
should be aware that this discussion does not give effect to these new
withholding regulations. We strongly urge Non-U.S. Holders to consult their tax
advisors for information on these new withholding regulations.
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PLAN OF DISTRIBUTION
Each broker-dealer that receives exchange notes for its own account in
exchange for existing notes acquired as a result of market-making or other
trading activities must acknowledge that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of the
exchange notes. The SEC has taken the position that this prospectus, as it may
be amended or supplemented from time to time, may be used by a broker-dealer in
connection with such resales of exchange notes, but not in the case of a resale
of an unsold allotment from the original sale of the existing notes.
We will not receive any proceeds from any sale of exchange notes by broker-
dealers. Exchange 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 exchange notes or a combination of these methods of resale, at
market prices prevailing at the time of resale, at prices related to those
prevailing market prices or at negotiated prices. Any resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any broker-dealer
or the purchasers of any exchange notes. Any broker-dealer that resells
exchange notes that were received by it for its own account in the exchange
offer, and any broker or dealer that participates in a distribution of the
exchange notes, may be an "underwriter" within the meaning of the Securities
Act, and any profit on any resale of exchange notes, and any commission or
concessions received by any person may be considered underwriting compensation
under the Securities Act. The letter of transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a broker-
dealer will not be regarded as having made an admission that it is an
"underwriter" within the meaning of the Securities Act.
We will not make any payment to brokers, dealers or others soliciting
acceptances of the exchange offer. We have agreed, however, to pay all expenses
incident to our performance of and compliance with the registration rights
agreement, including all registration and filing fees and expenses, all fees
and expenses of compliance with securities laws, all printing expenses, all
fees and expenses of our legal counsel and independent accountants and any
application and filing fees in connection with listing the exchange notes on a
national securities exchange or automated quotation system. In addition, we
have agreed to reimburse the initial purchasers of the existing notes and
holders who are tendering existing notes and/or selling or reselling existing
notes or exchange notes pursuant to this "Plan of Distribution" for the
reasonable fees and disbursements of not more than one counsel. We have agreed
to indemnify the holders of the Notes against certain liabilities, including
certain liabilities under the Securities Act.
There has been no public market for the existing notes or the exchange notes
prior to the exchange offer. We do not intend to apply for listing of the
exchange notes on any securities exchange or for quotation through The Nasdaq
Stock Market. We cannot assure you that an active market for the exchange notes
will develop. To the extent that a market for the exchange notes does develop,
future trading prices of the exchange notes will depend on many factors,
including, among other things, prevailing interest rates, and the market for
similar securities as well as our results of operations and financial
condition.
166
<PAGE>
LEGAL MATTERS
The validity of the exchange notes will be passed upon for US Unwired by
Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P. Other legal matters
will be passed upon for US Unwired by Thomas G. Henning, its general counsel,
and by Lukas, Nace, Gutierrez & Sachs, Chartered, its special regulatory
counsel. Mr. Henning is a director, officer and principal shareholder of US
Unwired.
AVAILABLE INFORMATION
We have filed with the SEC a registration statement on Form S-4, of which
this prospectus is a part, under the Securities Act with respect to the
offering of the exchange notes. As allowed by the SEC's rules, this prospectus
does not contain all of the information included in the registration statement
or the exhibits to the registration statement. You will find additional
information about us and the exchange notes in the registration statement. The
registration statement and related exhibits may be inspected and copied at the
SEC's public reference rooms located at its principal office, 450 Fifth Street,
NW, Washington, DC 20549, and at the regional offices of the SEC at 7 World
Trade Center, 13th Floor, New York, New York 10048 and the Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Please call 1-800-SEC-0330 for further information on the public reference
rooms. The SEC also maintains a site on the World Wide Web (http://www.sec.gov)
that contains reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. Statements made in
this prospectus about legal documents may not necessarily be complete, and you
should read the documents which are filed as exhibits or schedules to the
registration statement or otherwise filed with the SEC.
We are required under the indenture governing the Notes to furnish the
holders of the Notes with (a) all quarterly and annual financial information
that would be required to be contained in a filing with the SEC on forms 10-Q
and 10-K if we were required to file such Forms, including, without limitation,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by our certified independent accountants, and (b) all current reports that
would be required to be filed with the SEC on Form 8-K if we were required to
file such reports, in cach case, within the time periods specified in the SEC's
rules and regulations. Upon effectiveness of the registration statement of
which this prospectus is a part, we will file this information with the SEC, as
and to the extent provided by Section 15(d) of the Exchange Act. In addition,
we have agreed that, for so long as any Notes remain outstanding, we will
furnish the holders of the Notes and to securities analysts and prospective
investors, upon their request, the information required to be delivered
pursuant to Rule 144(d)(4) under the Securities Act during any period in which
we are not subject to Section 13 or 15(d) of the Exchange Act.
167
<PAGE>
EXPERTS
Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements of US Unwired Inc. as of December 31, 1998 and 1997, and
for the years then ended and the financial statements of Louisiana Unwired, LLC
as of December 31, 1998 and for the period from January 8, 1998 (inception)
through December 31, 1998, as set forth in their reports, and these financial
statements are included in this prospectus and in the registration statement of
which this prospectus is a part in reliance on Ernst & Young LLP's reports,
given on their authority as experts in accounting and auditing.
KPMG LLP, independent certified public accountants, have audited the
consolidated statements of operations, stockholders' equity and cash flows of
US Unwired Inc. for the year ended December 31, 1996, as set forth in their
report, and these 1996 financial statements are included in this prospectus and
in the registration statement of which this prospectus is a part in reliance on
KPMG LLP's report, given on their authority as experts in accounting and
auditing.
168
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
<S> <C>
US UNWIRED INC. AND SUBSIDIARIES
Reports of Independent Auditors.......................................... F-2
Consolidated Balance Sheets.............................................. F-4
Consolidated Statements of Operations.................................... F-5
Consolidated Statements of Stockholders' Equity.......................... F-6
Consolidated Statements of Cash Flows.................................... F-7
Notes to Consolidated Financial Statements............................... F-8
LOUISIANA UNWIRED, LLC
Report of Independent Auditors........................................... F-32
Balance Sheets........................................................... F-33
Statements of Operations................................................. F-34
Statements of Members' Equity............................................ F-35
Statements of Cash Flows................................................. F-36
Notes to Financial Statements............................................ F-37
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
US Unwired Inc.
We have audited the consolidated balance sheets of US Unwired Inc., as of
December 31, 1998 and 1997, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of US Unwired Inc., at December 31, 1998 and 1997, and the consolidated results
of its operations and its cash flows for the years then ended in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Houston, Texas
April 9, 1999, except for Note 13
as to which the date is
November 8, 1999
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
US Unwired Inc.:
We have audited the accompanying consolidated statements of operations,
stockholders' equity, and cash flows of US Unwired Inc. and subsidiaries for
the year ended December 31, 1996. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the results of operations and the
cash flows of US Unwired Inc. and subsidiaries for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
KPMG LLP
New Orleans, Louisiana
March 10, 1997
F-3
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
December 31,
---------------- September 30,
1997 1998 1999
-------- ------- -------------
(unaudited)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................... $ 4,955 $32,475 $ 16,966
Subscriber receivables, net of allowance for
doubtful accounts of $763, $217 and $193..... 8,663 4,419 6,282
Other receivables............................. 417 27 570
Inventory..................................... 2,385 2,541 4,563
Deferred income taxes......................... 2,033 -- --
Prepaid expenses.............................. 2,226 5,855 12,561
Receivables from related parties.............. 592 5,460 4,238
Receivables from officers..................... 81 92 82
-------- ------- --------
Total current assets........................ 21,352 50,869 45,262
Restricted cash in escrow....................... -- 5,164 5,318
Investments in and advances to unconsolidated
affiliates..................................... 8,728 9,835 1,601
Property and equipment, net..................... 38,891 22,565 102,972
Cellular and PCS licenses, net of accumulated
amortization of $10,593, $-0- and $815......... 70,899 -- 7,224
Other assets.................................... 2,263 1,481 5,324
-------- ------- --------
Total assets................................ $142,133 $89,914 $167,701
======== ======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................. $ 13,383 $ 2,972 $ 11,025
Accrued expenses.............................. 2,957 1,188 3,994
Current maturities of long term debt.......... 552 1,341 1,991
-------- ------- --------
Total current liabilities................... 16,892 5,501 17,010
Long term debt, net of current maturities....... 99,514 27,726 103,243
Deferred income taxes........................... 1,798 3,837 3,634
Minority interest............................... -- -- 737
Commitments and contingencies
Stockholders' equity:
Preferred stock, authorized 40,000,000 shares;
none issued or outstanding................... -- -- --
Common stock, $0.01 par value:
Class A: Authorized 100,000,000 shares; none
issued or outstanding...................... -- -- --
Class B: Authorized 60,000,000 shares;
issued and outstanding 11,250,000 shares... 113 113 113
Additional paid-in capital.................... 1,835 1,835 1,835
Retained earnings............................. 21,981 50,902 41,129
-------- ------- --------
Total stockholders' equity.................. 23,929 52,850 43,077
-------- ------- --------
Total liabilities and stockholders'
equity................................... $142,133 $89,914 $167,701
======== ======= ========
</TABLE>
See accompanying notes to the financial statements.
F-4
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
(In thousands)
<TABLE>
<CAPTION>
Nine Months
Ended
Year Ended December 31, September 30,
-------------------------- -----------------
1996 1997 1998 1998 1999
------- ------- -------- ------- --------
(unaudited)
<S> <C> <C> <C> <C> <C>
Revenues:
Service revenues:
Subscriber.................... $45,572 $53,255 $ 48,723 $39,920 $ 32,671
Roaming....................... 13,727 16,079 11,914 10,210 7,553
Merchandise sales............. 1,885 2,685 3,915 3,463 3,670
Management fees............... 624 1,376 4,455 3,304 1,499
Other revenue................. 85 1,273 2,704 2,026 168
------- ------- -------- ------- --------
Total revenues.............. 61,893 74,668 71,711 58,923 45,561
------- ------- -------- ------- --------
Operating expenses:
Cost of services.............. 16,513 20,111 18,586 15,245 15,787
Merchandise cost of sales..... 5,436 8,943 10,777 9,095 7,596
General and administrative.... 10,560 12,682 17,156 12,363 16,104
Sales and marketing........... 8,068 10,893 10,886 9,288 9,489
Depreciation and
amortization................. 9,153 12,478 9,831 8,065 14,833
------- ------- -------- ------- --------
Total operating expenses.... 49,730 65,107 67,236 54,056 63,809
------- ------- -------- ------- --------
Operating income (loss)......... 12,163 9,561 4,475 4,867 (18,248)
Other income (expense):
Interest expense.............. (6,539) (8,580) (6,157) (5,484) (5,691)
Interest income............... 317 1,690 1,778 780 1,396
Other expenses................ -- (1,082) -- -- --
Loss on sale of assets........ (9) -- (114) -- --
Gain on sale of certain
markets...................... -- -- 57,364 57,364 --
Gain on sale of PCS customer
base to affiliate............ -- -- 2,285 2,285 --
------- ------- -------- ------- --------
Total other income
(expense).................. (6,231) (7,972) 55,156 54,945 (4,295)
------- ------- -------- ------- --------
Income (loss) before income
taxes, extraordinary item,
minority interest, and equity
in income (losses) of
affiliates..................... 5,932 1,589 59,631 59,814 (22,543)
Income tax expense (benefit).... 2,421 95 17,726 20,155 (5,218)
------- ------- -------- ------- --------
Income (loss) before
extraordinary item, minority
interest and equity in income
(losses) of affiliates......... 3,511 1,494 41,905 39,659 (17,325)
Extraordinary item--
extinguishment of debt, net of
income tax..................... -- -- -- -- (477)
Minority interest in losses of
subsidiaries................... 308 134 -- -- 8,839
Equity in income (losses) of
affiliates..................... 35 (3,137) (12,984) (6,646) (810)
------- ------- -------- ------- --------
Net income (loss)............... $ 3,854 $(1,509) $ 28,921 $33,013 $ (9,773)
======= ======= ======== ======= ========
</TABLE>
See accompanying notes to the financial statements.
F-5
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share data)
<TABLE>
<CAPTION>
Class Class
A B Additional
Preferred Common Common Paid-in Retained
Stock Stock Stock Capital Earnings Total
--------- ------ ------ ---------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1995................... -- -- $112 $1,656 $19,636 $21,404
Issuance of 66,574.14
shares of Class B
Common Stock........... -- -- 1 179 -- 180
Net income.............. -- -- -- -- 3,854 3,854
---- ---- ---- ------ ------- -------
Balance at December 31,
1996................... -- -- 113 1,835 23,490 25,438
Net loss................ -- -- -- -- (1,509) (1,509)
---- ---- ---- ------ ------- -------
Balance at December 31,
1997................... -- -- 113 1,835 21,981 23,929
Net income.............. -- -- -- -- 28,921 28,921
---- ---- ---- ------ ------- -------
Balance at December 31,
1998................... -- -- 113 1,835 50,902 52,850
Net loss (unaudited).... -- -- -- -- (9,773) (9,773)
---- ---- ---- ------ ------- -------
Balance at September 30,
1999 (unaudited)....... $-- $-- $113 $1,835 $41,129 $43,077
==== ==== ==== ====== ======= =======
</TABLE>
See accompanying notes to the financial statements.
F-6
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
-------------------------- -------------------
1996 1997 1998 1998 1999
-------------------------- -------------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss).............. $ 3,854 $(1,509) $ 28,921 $ 33,013 $ (9,773)
Adjustments to reconcile net
income (loss) to net cash
provided by (used in)
operating activities:
Extinguishment of debt........ -- -- -- -- 477
Depreciation and
amortization................. 9,153 12,478 9,831 8,065 14,833
Minority interest............. (308) (134) -- -- (8,839)
Provision for bad debts....... 1,876 3,521 744 -- (203)
Deferred tax expense
(benefit).................... 332 (83) 4,601 (2,082) --
Unearned revenue.............. 53 (136) (105) 224 (509)
(Gain) loss on sale of
assets....................... 9 -- (59,535) (59,649) --
Equity in loss (income) of
affiliates................... (35) 3,137 12,984 6,646 810
Non-cash compensation......... 180 -- -- -- 533
Interest income on restricted
cash in escrow............... -- -- (164) (81) (154)
Changes in operating assets
and liabilities, net of
acquisitions and disposals
Subscriber receivables........ (3,879) (4,123) (351) 455 (1,501)
Other receivables............. (397) (458) 1,623 1,509 (405)
Inventory..................... (1,576) 922 (1,082) (3,184) (1,673)
Prepaid expenses.............. (991) (1,095) (4,264) 5,427 (6,400)
Receivables from related
parties...................... -- -- (2,450) 558 1,636
Other assets.................. (851) (606) (298) (266) 336
Accounts payable.............. 1,031 2,333 (4,417) (9,027) 1,469
Accrued expenses.............. 2,113 (2,208) (704) (772) 1,734
Prepaid income taxes.......... -- -- -- -- --
------- ------- -------- --------- --------
Net cash provided by (used
in) operating activities.... 10,564 12,039 (14,666) (19,164) (7,629)
------- ------- -------- --------- --------
Cash flows from investing
activities:
Purchases of property and
equipment..................... (7,223) (12,559) (20,575) (13,257) (41,411)
Proceeds from sale of property
and equipment................. 611 -- -- -- --
Acquisition of Alabama 3....... (17,871) -- -- -- --
Acquisition of Alabama 4....... (27,776) -- -- -- --
Transfer to escrow............. 1,110 -- -- -- --
Distributions from
unconsolidated affiliates..... 2,302 -- 813 793 312
Investments in unconsolidated
affiliates.................... (3,643) (5,040) (15,416) (11,642) (2,642)
Net proceeds from sale of
certain markets............... -- -- 154,877 154,877 --
Purchase of licenses........... -- -- (6,514) (6,183) (1,564)
Cash acquired from
consolidation of previous
unconsolidated affiliates..... -- -- -- -- 3,035
------- ------- -------- --------- --------
Net cash provided by (used
in) investing activities.... (52,490) (17,599) 113,185 124,588 (42,270)
------- ------- -------- --------- --------
Cash flows from financing
activities:
Proceeds from long-term debt... 50,405 6,770 29,724 29,724 38,069
Principal payments on long-term
debt.......................... (6,555) (2,604) (100,723) (100,712) (33)
Debt issuance cost............. (452) (225) -- -- (3,646)
------- ------- -------- --------- --------
Net cash provided by (used in)
financing activities.......... 43,398 3,941 (70,999) (70,988) 34,390
------- ------- -------- --------- --------
Net increase (decrease) in cash
and cash equivalents.......... 1,472 (1,619) 27,520 34,436 (15,509)
Cash and cash equivalents at
beginning of year............. 5,102 6,574 4,955 4,955 32,475
======= ======= ======== ========= ========
Cash and cash equivalents at
end of year................... $ 6,574 $ 4,955 $ 32,475 $ 39,391 $ 16,966
======= ======= ======== ========= ========
Supplemental cash flow
disclosures:
Cash paid for interest......... $ 6,023 $ 9,410 $ 5,008 $ 4,116 $ 4,367
======= ======= ======== ========= ========
Cash paid for income taxes..... $ 2,869 $ 1,248 $ 17,488 $ 16,671 $ 778
======= ======= ======== ========= ========
Non-cash activities:
Property purchases in accounts
payable....................... $ -- $ 5,495 $ 974 $ 6,227 $ 7,362
======= ======= ======== ========= ========
Distribution receivable from
affiliate..................... $ -- $ -- $ 120 $ -- $ --
======= ======= ======== ========= ========
Contribution of assets to
affiliate..................... $ -- $ -- $ 506 $ -- $ --
======= ======= ======== ========= ========
</TABLE>
See accompanying notes to the financial statements.
F-7
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Description of Business and Summary of Significant Accounting Policies
(a) Description of Organization
US Unwired Inc. (the "Company") is principally engaged in the ownership and
operation of wireless communications systems in Southwest Louisiana and
Southeast Texas. At December 31, 1998, the Company owns and operates cellular
and paging communications systems in two Rural Service Areas ("RSA's") and one
Metropolitan Service Areas ("MSA's"). The Company was incorporated as Mercury,
Inc. in 1967 by the principal shareholders of Cameron Communications
Corporation ("Cameron") to provide complementary services to Cameron's local
landline telephone service. Prior to October 31, 1996, the cellular and paging
communications services provided by the Company were conducted by a subsidiary
of Cameron and by the Company and its subsidiaries, all of which were
affiliated through common stock ownership control by a related group of
stockholders. In 1996, the Company and Cameron completed a reorganization plan
for the purpose of combining the wireless communications businesses of these
related entities and separating the wireless communications business of Cameron
from its traditional landline telephone business.
To accomplish the restructuring, the Company and Cameron executed a series
of transactions which included the following: (i) transfer of the landline
telephone business to a newly-formed subsidiary of Cameron ("Newco") and spin-
off of Newco to its stockholders, and (ii) merger of Cameron into the Company
and issuance of 2.192108 shares of Class B Common Stock of the Company on a
pro-rata basis to Cameron stockholders, resulting in the combination of all
wireless telecommunications businesses within the Company.
The combination of the wireless communications business represented a
combination of entities under common control and has been accounted for at
historical cost in a manner similar to that in pooling-of-interests accounting.
The spin-off of the landline telephone business has been treated as a change in
reporting entity, and the historical financial statements have been restated in
accordance with Staff Accounting Bulletin No. 93 since the Company and Newco
are in dissimilar businesses, have been managed and financed historically as if
they were autonomous, and will continue to be managed and financed autonomously
after the spin-off. In addition, all shares have been retroactively adjusted to
give effect to the issuance of Class B Common Stock described above.
(b) Consolidation Policy
The consolidated financial statements include the accounts of US Unwired
Inc. and its majority-owned subsidiaries. All significant intercompany balances
and transactions are eliminated in consolidation. Losses of subsidiaries
attributable to minority stockholders in excess of the minority interest in the
equity capital of the subsidiary are not eliminated in consolidation.
See Note 13 for additional information.
F-8
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(c) Cash Equivalents
The Company considers all highly liquid investments with original maturities
of three months or less when purchased to be cash equivalents.
(d) Inventory
Inventory consists of analog and digital telephones, pagers and related
accessories and is carried at cost. Cost is determined by the moving average
method, which approximates the first-in, first-out method.
(e) Property and Equipment
Property and equipment is stated at cost and depreciated on a straight-line
basis over the estimated useful lives of the assets as follows:
<TABLE>
<CAPTION>
Years
<S> <C>
Buildings........................................................... 39
Leasehold improvements.............................................. 3 to 5
Cellular facilities and equipment................................... 5
Furniture and fixtures.............................................. 5 to 7
Vehicles............................................................ 5
</TABLE>
(f) Cellular Licenses and Other Assets
Cellular licenses consist primarily of costs incurred in connection with the
Company's acquisition of cellular licenses and systems. These assets are
recorded at cost and amortized using the straight-line method over an estimated
useful life of 20 years.
Other assets primarily include deferred financing costs incurred in
connection with the issuance of the Company's long-term debt which are
capitalized and amortized over the terms of the related debt using the interest
method. Accumulated amortization at December 31, 1997 and 1998 was $10,260,000
and $49,000, respectively.
(g) Impairment of Long-Lived Assets
The Company assesses long-lived assets for impairment under Statement of
Financial Accounting Standards ("SFAS") 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of. SFAS 121
requires that long-lived assets and certain identifiable intangibles to be held
and used or disposed of by an entity be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. The Company periodically evaluates the recoverability of
the carrying amounts of its
F-9
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
licenses and property and equipment in each market, as well as the depreciation
and amortization periods based on estimated undiscounted future cash flows and
other factors to determine whether current events or circumstances warrant
reduction of the carrying amounts or acceleration of the related amortization
period.
(h) Investments in Unconsolidated Affiliates
The Company's investments in less than majority-owned affiliated companies
are accounted for using the equity method and equity in earnings are reported
as equity in income of affiliates.
(i) Revenue Recognition
The Company earns revenue by providing access to and usage of its cellular
and paging networks and sales of cellular and paging merchandise. Service
revenues include revenues for charges to subscribers for both access to and
usage of the Company's cellular and paging networks. These revenues are
recognized as they are earned by the Company. Revenues from the sales of
merchandise are recognized when the merchandise is provided to the customer.
(j) Advertising Costs
Advertising costs are charged to expenses as incurred. For the years ended
December 31, 1996, 1997 and 1998, approximately $1,626,000, $2,203,000 and
$3,658,000, respectively, of advertising costs were incurred.
(k) Commissions
Commissions are paid to sales agents for customer activations and are
expensed in the month the customer is activated within the cellular system.
(l) Income Taxes
The Company accounts for deferred income taxes using the asset and liability
method, under which deferred tax assets and liabilities are recognized for the
differences between the financial statement carrying amounts of assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled.
(m) Stock Compensation Arrangements
The Company accounts for its stock compensation arrangements under the
provisions of APB 25, Accounting for Stock Issued to Employees.
F-10
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(n) Use of Estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
(o) Concentrations of Credit Risk
Financial instruments which potentially expose the Company to concentrations
of credit risk consist primarily of cash and accounts receivable. The Company
places its cash and temporary cash investments with high credit quality
financial services companies. Collectibility of subscriber receivables is
impacted by economic trends in each of the Company's markets and the Company
has provided an allowance which it believes is adequate to absorb losses from
uncollectible accounts.
(p) Reclassifications
Certain reclassifications have been made to the 1996 and 1997 financial
statements to conform to the 1998 presentation.
(q) Unaudited Interim Information
The financial information for the six months ended June 30, 1998 and 1999
has been prepared without audit. Certain information and footnote disclosures
normally included in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted from
the unaudited interim financial information. In the opinion of management of
the Company, the unaudited interim financial information includes all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation. Results of operations for the interim periods are not
necessarily indicative of the results of operations for the respective full
years.
(2) Acquisitions and Dispositions of Markets
In May 1996, the Company purchased the assets of West Alabama Cellular
Telephone Company, Inc., principally consisting of the Alabama-3 RSA, for a
purchase price of approximately $17,900,000. In July 1996, the Company
purchased the Alabama 4 system assets from PriCellular Corporation principally
consisting of the Alabama-4 RSA, for a purchase price of approximately
$27,800,000. These acquisitions have been accounted for using the purchase
method of accounting and, accordingly, the results of operations of the
acquired businesses are included in the results of operations of the Company
from the dates of the acquisitions. The Company recorded cellular licenses
acquired in these transactions in the amount of $39,900,000 which are being
amortized over a twenty-year period using the straight-line method.
Effective July 1, 1998, the Company sold substantially all of the assets
related to its Kansas, Mississippi and Alabama markets, as well as its majority
ownership interest in MS 34 for
F-11
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
approximately $161,500,000, subject to purchase price adjustments as defined in
the sale agreement. Approximately $5,000,000 was placed in escrow for two years
from closing date to settle any adjustments to the purchase price. The cash in
escrow and related interest income has been recorded as restricted cash in
escrow in the accompanying consolidated balance sheet.
In late 1997, the Company began marketing PCS, which is a new generation of
wireless communications offering customers advanced, secure, two-way digital
wireless services and applications. Effective August 1, 1998, the Company sold
certain PCS subscribers and related assets to Meretel for $4.3 million in cash
and $1.5 million in additional ownership interest in Meretel. In connection
with this transaction, a gain of approximately $2.3 million has been reflected
in the accompanying consolidated statement of operations.
On September 30, 1998, the Company acquired substantially all assets and
assumed certain liabilities of Maas.net, LLC, ("Maas.net"), a related party.
Maas.net is a provider of Internet access services. As consideration, the
Company assumed $620,000 of the indebtedness of Maas.net. On October 1, 1998,
the Company contributed these assets, with a fair value of $506,000, to LEC
Unwired, LLC (LEC Unwired), an unconsolidated affiliate.
See Note 13 for additional information.
(3) Property and Equipment
Major categories of property and equipment were as follows:
<TABLE>
<CAPTION>
December 31,
-------------- September 30,
1997 1998 1999
------ ------- -------------
(In thousands) (unaudited)
<S> <C> <C> <C>
Land.......................................... $ 779 $ 1,061 $ 1,061
Buildings..................................... 787 1,946 2,007
Leasehold Improvements........................ 271 961 1,373
Cellular facilities and equipment............. 49,233 34,680 117,586
Furniture and fixtures........................ 1,263 1,477 9,602
Vehicles...................................... 324 240 512
Construction in progress...................... 13,070 1,328 7,303
------ ------- --------
65,727 41,693 139,444
Less accumulated depreciation................. 2,683 19,128 36,472
------ ------- --------
$3,889 $22,565 $102,972
====== ======= ========
</TABLE>
The Company recorded depreciation expense of $5,513,000, $5,867,000 and
$6,444,000 during the years ended December 31, 1996, 1997 and 1998,
respectively.
F-12
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(4) Investments in Unconsolidated Affiliates:
Investments in unconsolidated affiliates consists of the following:
<TABLE>
<CAPTION>
December 31,
Percentage -------------- September 30,
Ownership 1997 1998 1999
---------- ------ ------- -------------
(In thousands) (unaudited)
<S> <C> <C> <C> <C>
Meretel......................... 24.33% $5,547 $(1,971) $(1,939)
Command Connect, LLC ("Command
Connect")...................... 50.00% 2,532 1,361 2,626
GTE Mobilnet of Texas RSA #21
Limited Partnership ("GTE
#21").......................... 25.00% 649 688 622
Louisiana Unwired, LLC ("LA
Unwired")...................... 50.00% -- 7,996 --
LEC Unwired..................... 50.00% -- 1,761 --
------ ------- -------
$8,728 $ 9,835 $ 1,601
====== ======= =======
</TABLE>
Prior to June 1998, Meretel was the owner and operator of PCS licenses in
Lafayette, Louisiana; Baton Rouge, Louisiana; and Beaumont, Texas. On June 8,
1998, Meretel entered into an agreement with Sprint PCS in which Meretel agreed
to manage Sprint PCSs networks within each Basic Trading Area in which Meretel
operates. Pursuant to this agreement, Sprint PCS pays Meretel 92% of collected
revenues, as defined, from customers in these markets. The agreement requires
that Meretel build out the PCS networks in accordance with FCC requirements and
deadlines. Meretel and Sprint PCS will share equally the costs for any
necessary relocation of microwave sources that interfere with Sprint PCSs
spectrum. In conjunction with this agreement, Meretel elected to participate in
the FCC's amnesty program whereby Meretel surrendered its licenses in exchange
for extinguishment of all outstanding debt and related accrued interest due to
the FCC.
Command Connect and LA Unwired either own PCS licenses, or have rights to
use licenses owned by Sprint PCS under management agreements, in Louisiana,
Texas, Arkansas, Mississippi, and Oklahoma. As with Meretel, Sprint PCS pays
92% of collected revenues, as defined, from customers in these service areas.
Command Connect originally purchased the owned licenses, and holds the licenses
until such time as LA Unwired builds out the network for these licenses. At
that time, the license is transferred from Command Connect to LA Unwired, who
commences operations. At December 31, 1998, LA Unwired was operating in four
Louisiana markets (Lake Charles, Shreveport, Alexandria and Monroe).
GTE # 21 operates a cellular network in Texas RSA #21.
LEC Unwired is primarily engaged in providing competitive local telephone
and Internet services in Louisiana and east Texas.
F-13
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Summary financial information for the above-mentioned unconsolidated
affiliates is as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------- September 30,
1996 1997 1998 1999
------- -------- -------- -------------
(In thousands) (unaudited)
<S> <C> <C> <C> <C>
Meretel:
Total assets.................. $74,382 $115,218 $ 52,552 $ 40,598
Total liabilities............. 61,707 99,913 64,951 53,747
------- -------- -------- --------
Partners' capital............. $12,675 $ 15,305 $(12,399) $(13,149)
======= ======== ======== ========
Revenue....................... $ -- $ 173 $ 8,353 $ 16,615
======= ======== ======== ========
Operating expenses............ $ 1,867 $ 8,772 $ 30,056 $ 27,772
======= ======== ======== ========
Net loss...................... $(2,147) $(12,707) $(29,704) $ (3,561)
======= ======== ======== ========
Command Connect:
Total assets.................. $ 4,303 $ 14,402 $ 5,178 $ 6,152
Total liabilities............. 378 9,337 2,456 2,291
------- -------- -------- --------
Members' capital.............. $ 3,925 $ 5,065 $ 2,722 $ 3,861
======= ======== ======== ========
Revenue....................... $ -- $ -- $ 11 $ 4
======= ======== ======== ========
Operating expenses............ $ 75 $ 469 $ 463 $ 352
======= ======== ======== ========
Net loss...................... $ (75) $ (860) $ (452) $ (349)
======= ======== ======== ========
GTE #21:
Total assets.................. $ 2,613 $ 2,646 $ 3,285 $ N/A
Total liabilities............. 62 51 51 N/A
------- -------- -------- --------
Members' capital.............. $ 2,551 $ 2,595 $ 3,234 $ N/A
======= ======== ======== ========
Revenue....................... $ 2,271 $ 2,877 $ 2,572 $ N/A
======= ======== ======== ========
Operating expenses............ $ 1,627 $ 782 $ 798 $ N/A
======= ======== ======== ========
Net income.................... $ 1,646 $ 2,137 $ 1,808 $ N/A
======= ======== ======== ========
LA Unwired:
Total assets.................. $ -- $ -- $ 67,248 $ N/A
Total liabilities............. -- -- 51,256 N/A
------- -------- -------- --------
Members' capital.............. $ -- $ -- $ 15,992 $ N/A
======= ======== ======== ========
Revenue....................... $ -- $ -- $ 1,509 $ N/A
======= ======== ======== ========
Operating expenses............ $ -- $ -- $ 9,633 $ N/A
======= ======== ======== ========
Net loss...................... $ -- $ -- $ (9,474) $ N/A
======= ======== ======== ========
LEC Unwired:
Total assets.................. $ -- $ -- $ 6,448 $ N/A
Total liabilities............. -- -- 3,433 N/A
------- -------- -------- --------
Members' capital.............. $ -- $ -- $ 3,015 $ N/A
======= ======== ======== ========
Revenue....................... $ -- $ -- $ 570 $ N/A
======= ======== ======== ========
Operating expenses............ $ -- $ -- $ 3,081 $ N/A
======= ======== ======== ========
Net loss...................... $ -- $ -- $ (2,491) $ N/A
======= ======== ======== ========
</TABLE>
F-14
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(5) Accrued Expenses
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
December 31,
------------- September 30,
1997 1998 1999
------ ------ -------------
(In
thousands) (unaudited)
<S> <C> <C> <C>
Accrued taxes, other than income............... $ 139 $ 586 $1,321
Accrued payroll................................ 1,310 121 858
Accrued compensation........................... -- -- 533
Unearned revenue and customer deposits......... 496 56 751
Accrued interest expense....................... -- 121 31
Other.......................................... 1,012 304 500
------ ------ ------
$2,957 $1,188 $3,994
====== ====== ======
</TABLE>
(6) Long-Term Debt
Long-term debt consisted of the following:
<TABLE>
<CAPTION>
December 31,
--------------- September 30,
1997 1998 1999
------- ------- -------------
(In thousands) (unaudited)
<S> <C> <C> <C>
Debt outstanding under credit facilities:
Bank credit facility..................... $90,500 $28,500 $104,700
Vendor financing......................... 9,496 567 534
Other notes payable to related parties..... 70 -- --
------- ------- --------
Total long-term debt................... 100,066 29,067 105,234
Less current maturities.................... 552 1,341 1,991
------- ------- --------
Long-term obligations, excluding current
maturities................................ $99,514 $27,726 $103,243
======= ======= ========
</TABLE>
Maturities of long-term debt for the five years succeeding December 31, 1998
are as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
1999....................................................... $1,341
2000....................................................... 3,287
2001....................................................... 3,938
2002....................................................... 4,590
2003....................................................... 5,889
</TABLE>
The notes outstanding under the bank credit facility provide for quarterly
interest payments with quarterly amortization of principal beginning in June
1999 through June 2005. The notes outstanding under the vendor credit facility
provide for quarterly interest payments only through September 1997 when
quarterly amortization of principal commences with final maturity in January
2003. Interest rates are comprised of a combination of fixed rates over the
term of the note or variable rates based on either a variable lending rate
established by a commercial bank plus a margin ranging up to 1% or the average
offering rate for three-month commercial paper of major corporations. Weighted
average interest rates under the credit facilities were 8.31%, 8.45% and 8.40%
at December 31, 1996, 1997 and 1998, respectively. Substantially all of the
assets of the Company are pledged to secure the
F-15
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Company's obligations under the various loans and credit facilities described
above. Under key covenants outlined in the credit facilities, the Company is
restricted from paying dividends, and must meet certain minimum operating
results, a maximum leverage ratio, and a minimum debt service coverage ratio,
among other requirements. At December 31, 1998, the Company was not in
compliance with certain of these restrictive covenants. The Company has
obtained a waiver from the lender for such covenant violations.
See Note 13 for additional information.
(7) Income Taxes
Income tax expense (benefit) for the years ended December 31, 1996, 1997 and
1998 is as follows:
<TABLE>
<CAPTION>
1996 1997 1998
------- ---- -------
(In thousands)
<S> <C> <C> <C>
Federal:
Current............................................ $ 1,869 $-- $11,287
Deferred........................................... 297 (70) 4,020
------- ---- -------
2,166 (70) 15,307
------- ---- -------
State:
Current............................................ 220 178 1,838
Deferred........................................... 35 (13) 581
------- ---- -------
255 165 2,419
------- ---- -------
$ 2,421 $ 95 $17,726
======= ==== =======
</TABLE>
Income tax expense differed from the amounts computed by applying U.S.
federal income tax rate of 34% for the years ended December 31, 1996, 1997, and
1998, to income before income taxes, minority interest and equity in income of
affiliates as a result of the following:
<TABLE>
<CAPTION>
1996 1997 1998
------ ------ -------
(In thousands)
<S> <C> <C> <C>
Computed "expected" tax expense................... $2,017 $ 540 $20,275
Surtax............................................ -- -- 636
Change in valuation allowance..................... 193 652 --
State income taxes, net of Federal income taxes... 156 165 1,989
Equity in income (loss) of affiliates............. 12 (1,066) (4,549)
Other, net........................................ 43 (196) (625)
------ ------ -------
$2,421 $ 95 $17,726
====== ====== =======
</TABLE>
During 1998, the Company utilized all net operating losses that were carried
forward from 1997. The benefit realized from net operating loss carry forwards
totaled approximately $1,586,000.
F-16
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The tax effects of temporary differences that give rise to the significant
components of deferred tax assets and deferred tax liabilities at December 31,
are presented below:
<TABLE>
<CAPTION>
1997 1998
------- -------
(In thousands)
<S> <C> <C>
Deferred tax assets:
Operating loss carry forwards.......................... $ 3,955 $ --
Allowance for doubtful accounts........................ 307 90
Inventory reserve...................................... -- 64
Unearned revenue....................................... 198 40
Start-up losses on equity investees.................... 545 389
Intangible assets...................................... -- 240
Other.................................................. 115 209
------- -------
Gross deferred tax asset............................. 5,120 1,032
Less valuation allowance............................... 2,427 --
------- -------
Net deferred tax asset............................... 2,693 1,032
------- -------
Deferred tax liabilities:
Fixed assets, principally due to differences in
depreciation.......................................... (2,335) (2,927)
Deferred gain from sale of PCS customers............... -- (1,942)
Other.................................................. (123) --
------- -------
Deferred tax liabilities............................. (2,458) (4,869)
------- -------
Net deferred tax asset/(liability)................... $ 235 $(3,837)
======= =======
</TABLE>
In assessing the realizability of deferred tax assets at December 31, 1997,
the Company considered whether it was more likely than not that some portion or
all of the deferred tax assets will not be realized. The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible. The Company considers the scheduled reversal of deferred tax
liabilities, projected future taxable income and tax planning strategies in
making this assessment. Based upon these considerations, the Company provided a
valuation allowance to reduce the carrying value of deferred tax assets related
to net operating losses of MS 34, a majority owned subsidiary, to the amounts
that can be realized through future reversals of existing taxable temporary
differences. As MS 34 was sold in 1998 (see Note 2), the operating loss carry
forward and the related valuation allowances have been eliminated.
Prior to consummation of the reorganization described in Note 1, certain of
the Company's cellular and paging activities were included in the consolidated
federal income tax returns of Cameron and the Company. Effective November 1,
1996, the Company files a consolidated federal income tax return which includes
the Company, and its qualifying subsidiaries. MS 34 filed a separate federal
income tax return prior to its sale in 1988.
The Company has obtained a private letter ruling from the Internal Revenue
Service (IRS) to the effect that no gain or loss would be recognized by Cameron
or its shareholders by virtue of the transfer of assets or spin-off of
Cameron's land-based telephone business. In addition, tax counsel for the
Company has informed it that the merger of Cameron into the Company qualifies
as a
F-17
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
reorganization under Section 368(a) (1) (A) of the Internal Revenue Code so
that no gain or loss would be recognized by the respective corporations or
their shareholders by virtue of the merger.
(8) Stockholder's Equity
The Company is authorized by its Articles of Incorporation to issue
40,000,000 shares of preferred stock upon the authorization of the Company's
Board of Directors. The Board of Directors is authorized to fix the dividend
rights and terms, conversion and voting rights, redemption rights and other
privileges and restrictions applicable to the stock.
The Company has two classes of authorized common stock, Class A Common Stock
and Class B Common Stock. Other than as to voting rights and transfer
restrictions applicable to the Class B shares, the Class A and Class B shares
have identical rights.
Class A shares have one vote per share and Class B shares have ten votes per
share. Shares of Class B Common Stock generally convert automatically into
shares of Class A Common Stock on a share-for-share basis upon the transfer of
the Class B shares to other than a "qualified holder," generally the original
holders of Class B shares. Class B shares are also subject to other transfer
restrictions.
In January 1996, the Company issued to key employees shares of Common Stock,
that, after the reclassification of Common Stock discussed in Note 1, totaled
66,572.14 shares of Class B Common Stock. The shares were issued at the fair
value of the Company's Common Stock, based upon an independent valuation, at
the date of the grant. As a result, the Company recognized compensation expense
of $180,000 in 1996. There were no issuances of Common Stock to employees in
1997 or 1998.
In 1997, the Company withdrew from an initial public offering of its common
stock. As a result, costs totaling $1,082,000 which were previously deferred
were expensed and are included in other expenses.
In 1998, the Board of Directors adopted the US Unwired Inc. 1998 Equity
Incentive Plan (the "1998 Equity Plan"). The aggregate amount of Common Stock
with respect to which options or other awards may be granted may not exceed
1,600,000 shares. As of December 31, 1998, the Company had not granted any
options or other awards under the 1998 Equity Plan.
See Note 13 for additional information.
(9) Commitments and Contingencies
Employees of the Company participate in a 401(k) retirement plan (the
"401(k) plan") sponsored by a related party. Employees are eligible to
participate in the 401(k) plan when the employee has completed six months of
service. Under the 401(k) plan, participating employees may defer a portion of
their pretax earnings up to certain limits prescribed by the Internal Revenue
Service. The Company contributes a discretionary match equal to a percentage of
the amount
F-18
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
deferred by the employee and a discretionary amount determined by the Company
from current or accumulated net profits. The Company's contributions are fully
vested upon the completion of 5 years of service. Contribution expense related
to the 401(k) plan was approximately $178,000, $264,000, and $340,000 for the
years ended December 31, 1996, 1997, and 1998, respectively.
The Company is a party to various noncancellable operating leases for
facilities and equipment. Future minimum lease payments due under
noncancellable operating leases with terms in excess of one year are as
follows:
<TABLE>
<CAPTION>
Year ending December 31, (In thousands)
<S> <C>
1999...................................................... $958
2000...................................................... 833
2001...................................................... 685
2002...................................................... 130
2003...................................................... 117
</TABLE>
Rental expense was $768,000, $777,000 and $1,567,000 for the years ended
December 31, 1996, 1997, and 1998, respectively.
The Company is involved in, various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's consolidated financial position, results of operations or liquidity.
The Company has agreed to guarantee repayment of up to $5,928,000, plus
interest and fees thereon, pursuant to a loan agreement dated May 16, 1997,
related to bank financing obtained by Meretel which matures in 2007. The
Company has also guaranteed $8,100,000, plus interest and fees, pursuant to a
loan agreement dated May 13, 1998, related to bank financing for LA Unwired
which matures in 2006.
On March 31, 1999, the Company entered into an undertaking agreement as
required by LEC Unwired's loan agreements entered into in July 1998. This
undertaking agreement obligates the Company to provide cash capital
contributions, not to exceed $4.5 million, to LEC Unwired if LEC Unwired is not
in compliance with specified financial covenants in its loan agreements. The
amount of cash that the Company is required to provide depends on the covenant
with which LEC Unwired has failed to comply.
F-19
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(10) Supplemental Cash Flow Disclosure
The Company consummated the acquisition of various cellular operations and
certain other assets during 1996. In connection with these acquisitions, the
following assets were acquired and liabilities assumed:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Property and equipment..................................... $ 5,253
Intangible assets.......................................... 39,825
Other assets and liabilities excluding cash
and cash equivalents...................................... 569
-------
$45,647
=======
</TABLE>
Included in the acquisition amounts for the year ended December 31, 1996, is
$1,735,000 placed in escrow as restricted cash and a corresponding liability
was recorded in accrued expenses. During 1996, $625,000 of the original escrow
was paid to the seller with the remaining balance paid during 1997.
(11) Disclosure About Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, subscriber receivables,
accrued interest and other receivables, and accounts payable and accrued
expenses approximate fair value because of the short term nature of these
items. The estimated fair value of the Company's long-term debt at December 31,
1997 and 1998 was $101,801,000 and $29,040,000, compared to its carrying value
of $100,066,000 and $29,068,000. The fair value of long-term debt is valued at
future cash flows discounted using the current borrowing rate for loans of a
comparable maturity.
Fair value estimates are subject to inherent limitations. Estimates of fair
value are made at a specific point in time, based on relevant market
information and information about the financial instrument. The estimated fair
values of financial instruments presented above are not necessarily indicative
of amounts the Company might realize in actual market transactions. Estimates
of fair value are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
(12) Related Party Transactions
During the years ended December 31, 1996, 1997, and 1998, the Company paid
$304,000, $318,000, and $290,000, respectively, to a company owned by certain
of the Company's principal stockholders for voice mail services which the
Company uses in its business and also resells to its cellular subscribers.
The Company contracts with Unibill, Inc. ("Unibill"), a subsidiary of
Cameron, for all subscriber billing. The aggregate amounts paid to Cameron for
such services during 1996, 1997, and 1998 totaled $1,605,000, $2,674,000 and
$2,923,000, respectively.
F-20
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
From October 1997 through July 1998, the Company purchased PCS wholesale
minutes from Meretel pursuant to an oral agreement and resold the minutes to
the Company's customers. The aggregate amounts paid to Meretel for these
minutes during the years ended December 31, 1997 and 1998 totaled $105,000 and
$1,222,000, respectively.
The Company also purchases long distance services from Cameron pursuant to
an oral agreement and resells the service to the Company's customers. The
aggregate amounts paid to Cameron for such services during the years ended
December 31, 1996, 1997, and 1998, totaled $803,000, $951,000, and $764,000,
respectively.
In 1996, the Company sold land to a related party for $611,000, which
approximated the carrying value.
The Company has entered into management agreements with several affiliated
entities. During 1996, 1997, and 1998, the Company recorded $624,000,
$1,375,000, and $4,455,000, respectively, in management fee revenues pursuant
to these agreements. During 1997, the Company entered into an agreement with
Meretel whereby the Company receives a commission for each customer activated
for Meretel. Commissions received under this agreement totaled approximately
$1,200,000 in 1997 and $1,900,000 in 1998.
(13) Subsequent Events
From January 8, 1999 through September 30, 1999, the Company made a series
of capital contributions to LA Unwired and LEC Unwired which increased its
ownership percentage in LA Unwired and LEC Unwired to 71% and 53%,
respectively. As a result, the Company's operating results during 1999 include
the operations of LA Unwired and LEC Unwired on a consolidated basis.
On June 23, 1999, LA Unwired entered into senior credit facilities for $130
million with certain lenders. The senior credit facilities provide for an $80
million reducing revolving credit facility, which matures on September 30,
2007, and a $50 million delay draw term loan, which matures on September 30,
2007. All loans made under the senior credit facilities bear interest at
variable rates tied to the prime rate, the federal funds rate or the London
Interbank Offering Rate. The senior credit facilities are secured by a first
priority security interest in all tangible and intangible assets of LA Unwired
(including the owned PCS licenses, if legally permitted); a pledge by the
Company and Cameron of 100% of the ownership interests in LA Unwired; a pledge
by LA Unwired of its ownership interest in any of LA Unwired's present and
future subsidiaries; and an assignment of all Sprint PCS agreements and any
network contract (including software rights).
A portion of the proceeds from this new credit facility were used to
extinguish LA Unwired's existing credit facility. As a result, the unamortized
debt issuance costs related to this existing credit facility, totaling
$614,000, were written off, net of tax of $134,000, as an extraordinary item.
F-21
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
On September 7, 1999, the Company entered into an agreement with Meretel to
receive an 80% interest in each of the Beaumont and Lufkin BTA markets in
exchange for a reduction in the Company's ownership interest in Meretel from
24.33% to 13.5%. Additionally, this transaction resulted in a similar reduction
in the Company's guarantee of Meretel's debt.
Subsequent to December 31, 1998, the Board of Directors amended and modified
the 1998 Equity Plan to the US Unwired Inc. 1999 Equity Incentive Plan (the
"1999 Equity Plan"). As part of this amendment, the maximum aggregate amount of
Common Stock with respect to which options or other awards may be granted was
increased from 1,600,000 to 2,300,000 shares. On July 16, 1999, the Company
granted stock options for a total of 664,600 shares under the 1999 Equity Plan.
These options will vest over a four year period and have an exercise price of
$6.00 per share except for 166,600 options which have an exercise price of
$26.55 per share. Additionally, another 425,400 shares were granted on November
8, 1999 with an exercise price of $26.55 per share.
On September 27, 1999, the Company completed a reorganization by which the
shareholders of US Unwired Inc. exchanged all of their shares of common stock
for an equal number of shares with the same rights and privileges in "new" US
Unwired (the Holding Company) and "old" US Unwired changed its name to Unwired
Telecom Corp. All outstanding stock options were exchanged for stock options of
the Holding Company at the same exchange ratio. As a result, Unwired Telecom
Corp. is now a wholly-owned subsidiary of the Holding Company. This
reorganization has been accounted for at historical cost in a manner similar to
that in pooling of interests accounting.
Effective October 1, 1999, US Unwired entered into senior credit facilities
for $130.0 million. The senior credit facilities provide for an $80.0 million
reducing revolving credit facility, which matures on September 30, 2007, and a
$50.0 million delay draw term loan, which matures on September 30, 2007. The
reducing revolver will be permanently reduced in quarterly installments
beginning on June 30, 2000, in amounts which vary between $1.3 million and $6.0
million. The term loan will be amortized in quarterly installments beginning on
June 30, 2003, in quarterly amounts which vary between $1.3 million and $3.7
million. Interest on all loans made under the senior credit facilities bear
interest at variable rates tied to the prime rate, the federal funds rate or
the London Interbank Offering Rate.
These senior credit facilities require US Unwired to pay an annual
commitment fee ranging from 1.5% to 1% of the unused commitment under the
senior credit facilities. The senior credit facilities are secured by a first
priority security interest in all tangible and intangible assets of US Unwired
(other than the corporate headquarters building), LA Unwired and Unwired
Telecom (including the owned PCS licenses, to the extent legally permitted); a
pledge by US Unwired and Cameron of 100% of the ownership interests in LA
Unwired, a pledge by US Unwired of its ownership interest in Unwired Telecom;
and an assignment by LA Unwired of all Sprint PCS agreements and any network
contract (including software rights).
In connection with the execution of the above mentioned US Unwired senior
credit facilities, LA Unwired's existing $130 million senior credit facilities
and US Unwired's existing bank credit
F-22
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
facility were extinguished. As a result, the unamortized debt issuance costs
related to these existing credit facilities, totaling $2,380,000, were written
off in October 1999, net of tax of $904,000, as an extraordinary item.
On October 29, 1999, the Holding Company issued $209.2 million of 13 3/8%
Senior Subordinated Discount Notes due 2009 ("the Notes"). The Notes are fully
and unconditionally guaranteed by one wholly owned and one non-wholly owned
subsidiary of the Holding Company (collectively "Guarantor Subsidiaries" and
individually "Guarantor"). Each of the guarantees is a general unsecured
obligation of the Guarantor and will rank equally in right of payment to all of
our existing and future senior subordinated indebtedness and senior in right of
payment of existing and future obligations that are expressly subordinated in
right to payment to the Notes. The Notes will rank junior to all existing and
future senior debt. The following condensed consolidating balance sheets as of
December 31, 1998 and 1997 and the related condensed consolidating statements
of operations and cash flows for each of the three years in the period ended
December 31, 1998 sets forth certain financial information concerning the
Guarantor and non-Guarantor Subsidiaries.
F-23
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1998
------------------------------------------------------------------------------
Guarantor Subsidiaries
-------------------------- Non-
US Unwired LA Guarantor Consolidated
Unwired Inc. Telecom Corp. Unwired, LLC Subsidiaries Eliminations Total
------------ ------------- ------------ ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
CONDENSED CONSOLIDATING
BALANCE SHEET
Current asset:
Cash and cash
equivalents.......... $ -- $32,475 $ 1,350 $1,686 $ (3,036) $32,475
Subscriber
receivables, net..... -- 4,419 362 -- (362) 4,419
Other receivables..... -- 27 -- -- -- 27
Inventory............. -- 2,541 350 -- (350) 2,541
Prepaid expenses...... -- 5,855 244 61 (305) 5,855
Receivables from
related parties...... -- 5,460 872 (365) (507) 5,460
Receivables from
officers............. -- 92 -- -- -- 92
------- ------- ------- ------ -------- -------
Total current
assets.............. -- 50,869 3,178 1,382 (4,560) 50,869
Restricted cash
escrow............... -- 5,164 -- -- -- 5,164
Investments in
subsidiaries......... 113 9,835 -- -- (113) 9,835
Property and
equipment, net....... -- 22,565 57,581 4,047 (61,628) 22,565
Cellular licenses,
net.................. -- -- 5,684 -- (5,684) --
Other assets.......... -- 1,481 805 654 (1,459) 1,481
------- ------- ------- ------ -------- -------
Total assets......... $ 113 $89,914 $67,248 $6,083 $(73,444) $89,914
======= ======= ======= ====== ======== =======
Current liabilities:
Accounts payable...... $ -- $ 2,972 $12,414 $2,629 $(15,043) $ 2,972
Accrued expenses...... -- 1,188 712 336 (1,048) 1,188
Due to member......... -- -- -- 75 (75) --
Due to affiliates..... -- -- -- 28 (28) --
Current maturities of
long term debt....... -- 1,341 -- -- -- 1,341
------- ------- ------- ------ -------- -------
Total current
liabilities......... -- 5,501 13,126 3,068 (16,194) 5,501
Long term debt, net of
current maturities..... -- 27,726 38,130 -- (38,130) 27,726
Deferred income taxes... -- 3,837 -- -- -- 3,837
Stockholders' equity:
Common Stock.......... 113 113 -- -- (113) 113
Additional paid-in
capital.............. -- 1,835 -- -- -- 1,835
Members' capital...... -- -- 25,466 5,506 (30,972) --
Retained earnings
(deficit)............ -- 50,902 (9,474) (2,491) 11,965 50,902
------- ------- ------- ------ -------- -------
Total stockholders'
equity.............. 113 52,850 15,992 3,015 (19,120) 52,850
------- ------- ------- ------ -------- -------
Total liabilities
and stockholders'
equity.............. $ 113 $89,914 $67,248 $6,083 $(73,444) $89,914
======= ======= ======= ====== ======== =======
</TABLE>
F-24
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1997
---------------------------------------------------------
Guarantor
Subsidiary
----------
US Unwired Non-
Unwired Telecom Guarantor
Inc. Corp. Subsidiaries Eliminations Consolidated
------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
CONDENSED CONSOLIDATING
BALANCE SHEET
Current assets:
Cash and cash
equivalents............ $ -- $ 2,421 $ 2,534 $ -- $ 4,955
Subscriber receivables,
net.................... -- 5,318 3,345 -- 8,663
Other receivables....... -- 528 (111) -- 417
Inventory............... -- 1,489 896 -- 2,385
Deferred income taxes... -- 421 (186) 1,798 2,033
Prepaid expenses........ -- 2,078 148 -- 2,226
Receivables from related
parties................ -- (21,620) 22,212 -- 592
Receivables from
officers............... -- 81 -- -- 81
---- ------- -------- -------- --------
Total current assets.. $ -- $(9,284) $ 28,838 $ 1,798 $ 21,352
Investments in
subsidiaries........... 113 55,592 -- (46,977) 8,728
Property and equipment,
net.................... -- 14,886 24,290 (285) 38,891
Cellular licenses, net.. -- 1,414 69,485 -- 70,899
Other assets............ -- 654 1,609 -- 2,263
---- ------- -------- -------- --------
Total assets.......... $113 $63,262 $124,222 $(45,464) $142,133
==== ======= ======== ======== ========
Current liabilities:
Accounts payable........ $ -- $ 3,328 $ 10,340 $ (285) $ 13,383
Accrued expenses........ -- 756 2,201 -- 2,957
Current maturities of
long term debt......... -- -- 552 -- 552
---- ------- -------- -------- --------
Total current
liabilities.......... -- 4,084 13,093 (285) 16,892
Long term debt, net of
current maturities....... -- 10,194 89,320 -- 99,514
Deferred income taxes..... -- -- -- 1,798 1,798
Stockholders' equity:
Common Stock............ 113 1,476 21,386 (22,862) 113
Additional paid-in
capital................ -- 1,835 9,189 (9,189) 1,835
Retained earnings
(deficit).............. -- 45,673 (8,766) (14,926) 21,981
---- ------- -------- -------- --------
Total stockholders'
equity............... 113 48,984 21,809 (46,977) 23,929
---- ------- -------- -------- --------
Total liabilities and
stockholders' equity.. $113 $63,262 $124,222 $(45,464) $142,133
==== ======= ======== ======== ========
</TABLE>
F-25
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1998
------------------------------------------------------------------------------------
Guarantor Subsidiaries
-----------------------------
Non-
Unwired Guarantor Consolidated
US Unwired Inc. Telecom Corp. LA Unwired, LLC Subsidiaries Eliminations Total
--------------- ------------- --------------- ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
CONDENSED CONSOLIDATING
STATEMENT OF OPERATIONS
Revenues............... $ -- $ 67,735 $ 1,509 $ 4,546 $ (2,079) $ 71,711
Operating expenses..... -- 63,704 9,633 6,613 (12,714) 67,236
---- -------- ------- ------- -------- --------
Operating income
(loss)................ -- 4,031 (8,124) (2,067) 10,635 4,475
Interest expense...... -- (5,455) (1,580) (702) 1,580 (6,157)
Interest income....... -- 1,754 230 44 (250) 1,778
Loss on sale of
assets............... -- (114) -- -- -- (114)
Gain on sale of
certain markets...... -- 57,364 -- -- -- 57,364
Gain on sale of PCS
customer base
to affiliate......... -- 2,285 -- -- -- 2,285
---- -------- ------- ------- -------- --------
Income (loss) before
income taxes.......... -- 59,865 (9,474) (2,725) 11,965 59,631
Provision for
income taxes......... -- 17,726 -- -- -- 17,726
---- -------- ------- ------- -------- --------
Income (loss) before
equity in losses
of affiliates........ -- 42,139 (9,474) (2,725) 11,965 41,905
Equity in losses
of affiliates........ -- (12,984) -- -- -- (12,984)
---- -------- ------- ------- -------- --------
Net income (loss)...... $ -- $ 29,155 $(9,474) $(2,725) $ 11,965 $ 28,921
==== ======== ======= ======= ======== ========
</TABLE>
F-26
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1997
--------------------------------------------------------------------
Guarantor
Subsidiary
------------- Non-
Unwired Guarantor
US Unwired Inc. Telecom Corp. Subsidiaries Eliminations Consolidated
--------------- ------------- ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
CONDENSED CONSOLIDATING
STATEMENT OF OPERATIONS
Revenues............... $ -- $49,618 $36,632 $(11,582) $74,668
Operating expenses..... -- 42,151 34,538 (11,582) 65,107
------ ------- ------- -------- -------
Operating income
(loss)................ -- 7,467 2,094 -- 9,561
Interest expense...... -- (2,110) (6,470) -- (8,580)
Interest income....... -- 247 1,443 -- 1,690
Other expenses........ -- (1,082) -- -- (1,082)
------ ------- ------- -------- -------
Income (loss) before
income taxes.......... -- 4,522 (2,933) -- 1,589
Provision for
income taxes......... -- 730 (635) -- 95
------ ------- ------- -------- -------
Income (loss) before
minority interest
and equity in
losses of affiliates.. -- 3,792 (2,298) -- 1,494
Minority interest in
losses
of subsidiary........ -- -- - 134 134
Equity in losses
of affiliates........ -- (2,894) -- (243) (3,137)
------ ------- ------- -------- -------
Net income (loss)...... $ -- $ 898 $(2,298) $ (109) $(1,509)
====== ======= ======= ======== =======
</TABLE>
F-27
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1996
------------------------------------------------------------------------
Guarantor
Subsidiary
------------- Non-
Unwired Guarantor
US Unwired Inc. Telecom Corp. Subsidiaries Eliminations Consolidated
--------------- ------------- ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
CONDENSED CONSOLIDATING
STATEMENT OF OPERATIONS
Revenues............... $ -- $40,550 $29,604 $(8,261) $61,893
Operating expenses..... -- 31,507 26,484 (8,261) 49,730
------ ------- ------- ------- -------
Operating income....... -- 9,043 3,120 -- 12,163
Interest expense...... -- (1,877) (4,662) -- (6,539)
Interest income....... -- 183 134 -- 317
Loss on sale of
assets............... -- (9) -- -- (9)
------ ------- ------- ------- -------
Income (loss) before
income taxes.......... -- 7,340 (1,408) -- 5,932
Provision for
income taxes......... -- 1,610 811 -- 2,421
------ ------- ------- ------- -------
Income (loss) before
minority interest
and equity in income
of affiliates....... -- 5,730 (2,219) -- 3,511
Minority interest in
losses
of subsidiary........ -- -- - 308 308
Equity in income
of affiliates........ -- 4,701 -- (4,666) 35
------ ------- ------- ------- -------
Net income (loss)...... $ -- $10,431 $(2,219) $(4,358) $ 3,854
====== ======= ======= ======= =======
</TABLE>
F-28
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1998
------------------------------------------------------------------------------------
Guarantor Subsidiaries
-----------------------------
Non-
Unwired Guarantor
US Unwired Inc. Telecom Corp. LA Unwired, LLC Subsidiaries Eliminations Consolidated
--------------- ------------- --------------- ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
CONDENSED CONSOLIDATING
STATEMENT OF CASH FLOWS
Net cash (used in)
operating activities... $ -- $(13,480) $(9,866) $(2,277) $10,957 $ (14,666)
Cash flows from
investing activities:
Purchases of property
and equipment........ -- (20,380) (44,749) (2,074) 46,628 (20,575)
Payments for microwave
relocation costs..... -- -- (755) -- 755 --
Investments in
unconsolidated
affiliates........... -- (15,416) -- -- -- (15,416)
Distributions from
unconsolidated
affiliates........... -- 813 -- -- -- 813
Net proceeds from sale
of certain markets... -- 154,944 -- (67) -- 154,877
Purchase of licenses.. -- (6,514) -- -- -- (6,514)
------ -------- ------- ------- ------- ---------
Net cash provided by
(used in)
investing activities... -- 113,447 (45,504) (2,141) 47,383 113,185
Cash flows from
financing activities:
Capital
contributions........ -- (9,894) 23,303 14,894 (28,303) --
Proceeds from long-
term debt............ -- 29,724 38,131 -- (38,131) 29,724
Principal payments on
long-term debt....... -- (91,156) (4,302) (9,567) 4,302 (100,723)
Other................. -- -- (412) (345) 757 --
------ -------- ------- ------- ------- ---------
Net cash provide by
(used in)
financing activities... (71,326) 56,720 4,982 (61,375) (70,999)
------ -------- ------- ------- ------- ---------
Net increase in cash.... -- 28,641 1,350 564 (3,035) 27,520
Cash at beginning of
year................... -- 3,834 -- 1,121 -- 4,955
------ -------- ------- ------- ------- ---------
Cash at end of year..... $ -- $ 32,475 $ 1,350 $ 1,685 $(3,035) $ 32,475
====== ======== ======= ======= ======= =========
</TABLE>
F-29
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1997
--------------------------------------------------------------------------------
Guaranteed Subsidiaries
---------------------------- Non-
US Unwired Mercury Guarantor
Unwired Inc. Telecom Corp. Cellular, Inc. Subsidiaries Eliminations Consolidated
------------ ------------- -------------- ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
CONDENSED CONSOLIDATING
STATEMENT OF CASH FLOWS
Net cash provided by
(used in) operating
activities............. $ -- $ 18,791 $ -- $ (6,752) $ -- $ 12,039
Cash flows from
investing activities:
Purchases of property
and equipment........ -- (179) -- (12,380) -- (12,559)
Investments in
unconsolidated
affiliates........... -- (5,040) -- -- -- (5,040)
----- -------- ----- -------- ----- --------
Net cash used in
investing activities... -- (5,219) -- (12,380) -- (17,599)
Cash flows from
financing activities:
Proceeds from long-
term debt............ -- (11,903) -- 18,673 -- 6,770
Principal payments on
long-term debt....... -- (2,410) -- (194) -- (2,604)
Debt issuance costs... -- 416 -- (641) -- (225)
----- -------- ----- -------- ----- --------
Net cash provided by
(used in) financing
activities............. -- (13,897) -- 17,838 -- 3,941
----- -------- ----- -------- ----- --------
Net decrease in cash.... -- (325) -- (1,294) -- (1,619)
Cash at beginning of
year................... -- 3,360 -- 3,214 -- 6,574
----- -------- ----- -------- ----- --------
Cash at end of year..... $ -- $ 3,035 $ -- $ 1,920 $ -- $ 4,955
===== ======== ===== ======== ===== ========
</TABLE>
F-30
<PAGE>
US UNWIRED INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
<TABLE>
<CAPTION>
Year Ended December 31, 1996
---------------------------------------------------------------------
Guarantor
Subsidiary
------------- Non-
US Unwired Guarantor
Unwired Inc. Telecom Corp. Subsidiaries Eliminations Consolidated
------------ ------------- ------------ ------------ ------------
(in thousands)
<S> <C> <C> <C> <C> <C>
CONDENSED CONSOLIDATING
STATEMENT OF CASH FLOWS
Net cash provided by
operating activities... $ -- $ 6,340 $ 4,224 $ -- $ 10,564
Cash flows from
investing activities:
Proceeds from sale of
assets............... -- 609 2 -- 611
Purchases of property
and equipment........ -- (5,286) (1,937) -- (7,223)
Purchase of markets... -- -- (45,647) -- (45,647)
Distributions from
unconsolidated
affiliates........... -- 2,302 -- -- 2,302
Investments in
unconsolidated
affiliates........... -- (3,643) -- -- (3,643)
Transfer to escrow.... -- 1,110 -- -- 1,110
----- ------- -------- ----- --------
Net cash (used in)
investing activities... -- (4,908) (47,582) -- (52,490)
Cash flows from
financing activities:
Capital
contributions........ -- (5,898) 5,898 -- --
Proceeds from long-
term debt............ -- 10,078 40,327 -- 50,405
Principal payments on
long-term debt....... -- (5,712) (843) -- (6,555)
Debt issuance costs... -- 64 (516) -- (452)
----- ------- -------- ----- --------
Net cash provided by
(used in) financing
activities............. -- (1,468) 44,866 -- 43,398
----- ------- -------- ----- --------
Net increase (decrease)
in cash................ -- (36) 1,508 -- 1,472
Cash at beginning of
year................... -- 2,286 2,816 -- 5,102
----- ------- -------- ----- --------
Cash at end of year..... $ -- $ 2,250 $ 4,324 $ -- $ 6,574
===== ======= ======== ===== ========
</TABLE>
Contemporaneously with the issuance of the Notes, the Company issued 500,000
shares of Series A preferred stock for $50 million. The present holder of the
Series A preferred and any of its affiliates who become holders may convert the
preferred stock into Class B common stock, at any time, at a price of $26.55
per share, and such holders have voting rights of Class B common shareholders
on an as-converted basis. Upon a sale or transfer of the preferred stock by
such holders to a non-affiliate of such holders, the preferred stock becomes
convertible into Class A common stock and the transferee holders will have
voting rights of Class A common shareholders on an as-converted basis. The
Series A preferred stock has a mandatory redemption at its stated value 91 days
after the maturity of the Notes.
F-31
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners
Louisiana Unwired, LLC
We have audited the balance sheet of Louisiana Unwired, LLC as of December
31, 1998, and the related statements of operations, members' equity, and cash
flows for the period from January 8, 1998 (inception) through December 31,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Louisiana Unwired, LLC at
December 31, 1998, and the results of its operations and its cash flows for the
period from January 8, 1998 (inception) through December 31, 1998, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Houston, Texas
April 9, 1999, except for Note 6
as to which the date is
October 1, 1999
F-32
<PAGE>
LOUISIANA UNWIRED, LLC
BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents........................ $ 1,350 $ 693
Accounts receivable.............................. 362 1,618
Inventories...................................... 350 1,503
Prepaid expenses................................. 244 508
Due from members................................. 217 --
Due from affiliates.............................. 655 622
------- -------
Total current assets........................... 3,178 4,944
Property and equipment, net........................ 57,581 73,339
Licenses, net of accumulated amortization of $448
and $763.......................................... 5,684 6,933
Deferred financing costs, net of accumulated
amortization of $87 and $170...................... 692 3,074
Other assets....................................... 113 138
------- -------
Total assets................................... $67,248 $88,428
======= =======
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Accounts payable................................. $12,414 $ 4,924
Due to members................................... -- 644
Accrued expenses and other liabilities........... 712 1,065
------- -------
Total current liabilities...................... 13,126 6,633
Long-term debt..................................... 38,130 66,890
Commitments and contingencies
Members' equity:
Members' capital................................. 25,466 44,566
Accumulated deficit.............................. (9,474) (29,661)
------- -------
Total members' equity.......................... 15,992 14,905
------- -------
Total liabilities and members' equity.......... $67,248 $88,428
======= =======
</TABLE>
See accompanying notes to the financial statements.
F-33
<PAGE>
LOUISIANA UNWIRED, LLC
STATEMENTS OF OPERATIONS
(In thousands)
<TABLE>
<CAPTION>
Period from
January 8, 1998 Nine Months
(inception) Ended
through September 30,
December 31, -----------------
1998 1998 1999
--------------- ------- --------
(unaudited)
<S> <C> <C> <C>
Revenues:
Service revenues.......................... $ 787 $ 247 $ 8,899
Merchandise sales revenue................. 722 92 2,693
------- ------- --------
Total revenues........................... 1,509 339 11,592
Operating expenses:
Cost of service........................... 1,912 1,067 6,223
Merchandise cost of sales................. 1,422 177 5,580
Administrative expenses................... 3,045 1,210 6,846
Depreciation and amortization............. 3,254 1,183 9,129
------- ------- --------
Total operating expenses................. 9,633 3,637 27,778
------- ------- --------
Operating loss............................ (8,124) (3,298) (16,186)
Other income (expense):
Interest expense.......................... (1,580) (862) (3,442)
Interest income........................... 230 79 55
------- ------- --------
Total other income (expense)............. (1,350) (783) (3,388)
------- ------- --------
Loss before extraordinary item............ (9,474) (4,081) (19,573)
Extraordinary item--extinguishment of
debt..................................... -- -- (614)
------- ------- --------
Net loss.................................. $(9,474) $(4,081) $(20,187)
======= ======= ========
</TABLE>
See accompanying notes to the financial statements.
F-34
<PAGE>
LOUISIANA UNWIRED, LLC
STATEMENTS OF MEMBERS' EQUITY
(In thousands)
<TABLE>
<CAPTION>
US Cameron
Unwired Communications
Inc. Corporation Total
------- -------------- -------
<S> <C> <C> <C>
Capital contributions......................... $12,733 $12,733 $25,466
Net loss...................................... (4,737) (4,737) (9,474)
------- ------- -------
Balance at December 31, 1998.................. 7,996 7,996 15,992
Capital contributions (unaudited)............. 19,100 -- 19,100
Net loss (unaudited).......................... (12,928) (7,259) (20,187)
------- ------- -------
Balance at September 30, 1999 (unaudited)..... $14,168 $ 737 $14,905
======= ======= =======
</TABLE>
See accompanying notes to the financial statements.
F-35
<PAGE>
LOUISIANA UNWIRED, LLC
STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
Period from
January 8, 1998
(inception) Nine Months Ended
through September 30,
December 31, ------------------
1998 1998 1999
--------------- -------- --------
(unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................. $ (9,474) $ (4,081) $(20,187)
Adjustments to reconcile net loss to net
cash used in operating activities:
Extraordinary item...................... -- -- 614
Depreciation and amortization........... 3,254 1,183 9,129
Changes in operating assets and
liabilities:
Accounts receivable................... (362) (50) (1,256)
Inventories........................... (350) (506) (1,153)
Prepaid expenses...................... (242) (263) (264)
Due from members...................... (281) 1,381 861
Due to affiliates..................... (2,225) (2,072) 33
Accounts payable...................... (514) (840) 1,167
Accrued expenses and other
liabilities.......................... 440 -- 353
Other assets.......................... (112) (9) (25)
-------- -------- --------
Net cash used in operating
activities........................... (9,866) (5,257) (10,728)
Cash flows from investing activities:
Payments for microwave relocation costs... (755) (495) (1,564)
Payments for the purchase of equipment.... (44,749) (40,277) (32,980)
-------- -------- --------
Net cash used in investing
activities........................... (45,504) (40,772) (34,544)
Cash flows from financing activities:
Capital contributions from members........ 23,303 19,303 19,100
Proceeds from long-term debt.............. 38,131 31,962 28,760
Principal payments of long-term debt...... (4,302) (4,302) --
Payments for financing costs.............. (412) (369) (3,245)
-------- -------- --------
Net cash provided by financing
activities........................... 56,720 46,594 44,615
-------- -------- --------
Net increase (decrease) in cash and cash
equivalents.............................. 1,350 565 (657)
======== ======== ========
Cash and cash equivalents at beginning of
period -- -- 1,350
-------- -------- --------
Cash and cash equivalents at end of
period................................... $ 1,350 $ 565 $ 693
======== ======== ========
Supplemental cash flow disclosures:
Cash paid for interest.................... $ 1,617 $ 654 $ 2,169
======== ======== ========
Noncash transactions:
Purchases of equipment in accounts
payable.................................. $ 12,348 $ 4,372 $ 3,691
======== ======== ========
Contributions of net assets by members.... $ 2,163 $ 2,163 $ --
======== ======== ========
</TABLE>
See accompanying notes to the financial statements.
F-36
<PAGE>
LOUISIANA UNWIRED, LLC
NOTES TO FINANCIAL STATEMENTS
(1) Description of Business and Summary of Significant Accounting Policies
(a) Description of Organization
Louisiana Unwired, LLC (the "Company"), is principally engaged in providing
access to and usage of its personal communications service ("PCS") networks in
Louisiana. PCS is a new generation of wireless communications, offering
customers advanced, secure, two-way digital wireless services and applications.
As of December 31, 1998, the Company has been primarily engaged in the buildout
of its networks. In April 1998, the Company's members contributed PCS licenses
in four Louisiana markets to the Company from an affiliated company with common
ownership. Additionally, certain related assets and liabilities, including debt
used to finance the purchase of these four licenses, were also contributed.
These contributed assets and liabilities were recorded at their historical
costs. The Company commenced operations in these markets in late 1998. The
Company is currently in the process of building out PCS networks in other
markets for which its members hold licenses through the above mentioned
affiliated company. At the point these networks become operational, the
Company's members plan to contribute the applicable license to the Company
prior to commencement of operations. The Company is 50% owned by US Unwired
Inc. ("US Unwired"), and 50% by Cameron Communications Corporation ("Cameron").
See Note 6 for additional information.
The Company is economically dependent on its members for the continued
funding of its development and operations. The Company's members have committed
to provide such funding.
(b) Cash Equivalents
The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
(c) Inventory
Inventory consists of PCS telephones and related accessories and is carried
at cost. Cost is determined by the average cost method, which approximates the
first-in, first-out method.
(d) Property and Equipment
Property and equipment is stated at cost and depreciation is provided on a
straight-line basis over the estimated useful lives of the assets as follows:
<TABLE>
<CAPTION>
Year
<S> <C>
Facilities and equipment............................................ 5
Office equipment and fixtures....................................... 5 to 7
Vehicles............................................................ 5
Leasehold improvements.............................................. 3 to 5
</TABLE>
F-37
<PAGE>
LOUISIANA UNWIRED, LLC
NOTES TO FINANCIAL STATEMENTS--(Continued)
(e) Licenses
Licenses consist primarily of costs incurred in connection with the
acquisition of PCS licenses. These assets are recorded at cost and amortized
using the straight-line method over an estimated useful life of 20 years.
Amortization expense charged to operations in 1998 was $268,901.
(f) Long-Lived Assets
The Company assesses long-lived assets for impairment under Statement of
Financial Accounting Standards ("SFAS") 121, Accounting for Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of. SFAS 121 requires
that long-lived assets and certain identifiable intangibles to be held or
disposed of by an entity be reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company periodically evaluates the recoverability of the
carrying amounts of its licenses and property and equipment in each market, as
well as the depreciation and amortization periods, based on estimated
undiscounted future cash flows and other factors to determine whether current
events or circumstances warrant reduction of the carrying amounts or
acceleration of the related amortization period.
(g) Deferred Financing Costs
Deferred financing costs include costs incurred in connection with the
issuance of the Company's long-term debt which are amortized over the term of
the related debt.
(h) Revenue Recognition
The Company earns revenue by providing access to and usage of its PCS
networks and sales of PCS merchandise. Service revenues include revenues for
charges to subscribers for both access to and usage of the Company's networks.
These revenues are recognized as they are earned by the Company. Revenues from
the sales of merchandise are recognized when the merchandise is delivered.
(i) Advertising Cost
Advertising costs are expensed as incurred. For the period from January 8,
1998 (inception) through December 31, 1998, approximately $935,000 of
advertising costs were incurred.
(j) Use of Estimates
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
F-38
<PAGE>
LOUISIANA UNWIRED, LLC
NOTES TO FINANCIAL STATEMENTS--(Continued)
(k) Income Taxes
No provision for income taxes is provided as the Company's federal and state
income and/or loss is included in the income tax returns of its members.
(l) Concentrations of Credit Risk
Financial instruments which potentially expose the Company to concentrations
of credit risk consist primarily of cash and accounts receivable. The Company
places its cash and temporary cash investments with high credit quality
financial services companies. Collectibility of receivables is impacted by
economic trends in the Company's markets. The Company believes that accounts
receivable at December 31, 1998, is fully collectible and, as such, no
allowance was provided as of that date.
(m) Unaudited Interim Information
The financial information for the six months ended June 30, 1998 and 1999
has not been audited by independent accountants. Certain information and
footnote disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted from the unaudited interim financial information. In the opinion of
management of the Company, the unaudited interim financial information includes
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation. Results of operations for the interim periods are not
necessarily indicative of the results of operations for the respective full
years.
(2) Property and Equipment:
The major categories of property and equipment at December 31, 1998 were as
follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
Facilities and equipment................................... $43,352
Office equipment and fixtures.............................. 145
Vehicles................................................... 32
Leasehold improvements..................................... 39
Construction in progress................................... 16,910
-------
60,478
Less accumulated depreciation ............................. 2,897
-------
$57,581
=======
</TABLE>
The Company recorded depreciation expense of $2,897,306 during the period
from January 8, 1998 (inception) through December 31, 1998.
F-39
<PAGE>
LOUISIANA UNWIRED, LLC
NOTES TO FINANCIAL STATEMENTS--(Continued)
(3) Long-term Debt:
In May 1998, the Company executed a $48,600,000 bank credit facility. The
notes outstanding under this bank credit facility provide for quarterly
interest only payments through December 2001 and quarterly principal payments
ranging from $190,651 to $3,145,751 plus interest commencing March 2002 through
December 2006. Interest rates are comprised of a combination of variable rates
based on either a variable lending rate established by a commercial bank plus a
margin ranging up to .375% or LIBOR plus a margin ranging up to 2.375%. At
December 31, 1998, the effective interest rate for these notes was 7.55% and
the total unfunded commitment was approximately $10,470,000. Substantially all
of the assets of the Company are pledged to secure the Company's obligation
including a security interest in all property and equipment, and pledge
agreements for all membership interests in the Company. Additionally, the
members have guaranteed a portion of the credit facility. The debt is subject
to certain restrictive covenants including maintaining certain financial
ratios, reaching defined subscriber growth goals, and limiting annual capital
expenditures. At December 31, 1998, the Company was not in compliance with the
restrictive covenants related to the number of subscribers and capital
expenditures. The Company has obtained a waiver from the lender for such
covenant violations.
Maturities of long-term debt for the five years succeeding December 31, 1998
are as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
1999....................................................... $ --
2000....................................................... --
2001....................................................... --
2002....................................................... 763
2003....................................................... 3,813
</TABLE>
The Company has entered into an interest rate swap agreement with a
commercial bank to reduce the impact of changes in interest rates on its
floating rate long-term debt. As the notional amount in the swap agreement
corresponds to the principal amount outstanding on the debt and the variable
rates in the swap and the debt use the same index, this agreement effectively
changes the Company's interest rate exposure on $16 million of floating rate
notes to a fixed 8.37%. The interest rate swap agreements mature at the time
the related notes mature. The Company is exposed to credit loss in the event of
nonperformance by the other party to the interest rate swap agreements.
However, the Company does not anticipate nonperformance by the counterparties.
The net position is settled quarterly and is recorded as an adjustment to
interest expense.
See Note 6 for additional information.
(4) Commitments and Contingencies:
The Company's PCS licenses are subject to a requirement that the Company
construct network facilities that offer coverage to at least one-third of the
population in each of its Basic Trading Areas ("BTAs") within five years from
the grant of the licenses and to at least two-thirds of the population within
10 years from the grant of the licenses. Should the Company fail to meet these
coverage
F-40
<PAGE>
LOUISIANA UNWIRED, LLC
NOTES TO FINANCIAL STATEMENTS--(Continued)
requirements, it may be subject to forfeiture of its licenses or the imposition
of fines by the FCC. The PCS buildout in each BTA is subject to the successful
completion of the network design, site and facility acquisitions, the purchase
and installation of the network equipment, network testing and the satisfactory
accommodation of microwave users currently using the spectrum.
The Company has open purchase orders totaling approximately $1,950,000
outstanding at December 31, 1998. These purchase orders are primarily
commitments to purchase fixed assets.
The Company is a party to various operating leases for facilities and
equipment. Rent expense for the year ended December 31, 1998 was $713,161.
Future minimum annual lease payments due under noncancelable operating leases
with terms in excess of one year are as follows:
<TABLE>
<CAPTION>
(In thousands)
<S> <C>
1999....................................................... $1,124
2000....................................................... 1,108
2001....................................................... 1,058
2002....................................................... 1,008
2003....................................................... 950
Thereafter................................................. 3,740
------
$8,988
======
</TABLE>
A PCS licensee, such as the Company, is required to share a portion of its
spectrum with existing licensees that operate certain fixed microwave systems
within each of its BTAs. These licensees will initially have priority use of
their portion of the spectrum. To secure sufficient amount of unencumbered
spectrum to operate its PCS network efficiently, the Company has negotiated
agreements to pay for the microwave relocation of many of these existing
licensees, which costs have been capitalized. The Company also may be required
to contribute to the costs of relocation under agreements reached with other
PCS licenses if such relocation benefits the Company's license areas. Depending
on the terms of such agreements, the Company's ability to operate its PCS
network profitably could be adversely affected.
Employees of the Company participate in a 401(k) retirement plan (the
"401(k) plan") sponsored by a related party. Employees are eligible to
participate in the 401(k) plan when the employee has completed six months of
service. Under the 401(k) plan, participating employees may defer a portion of
their pretax earnings up to certain limits prescribed by the Internal Revenue
Service. The Company contributes a discretionary match equal to a percentage of
the amount deferred by the employee and a discretionary amount determined by
the Company from current or accumulated net profits. The Company's
contributions are fully vested upon the completion of 5 years of service.
Contribution expense related to the 401(k) plan was approximately $1,300 for
the period from January 8, 1998 (inception) through December 31, 1998.
F-41
<PAGE>
LOUISIANA UNWIRED, LLC
NOTES TO FINANCIAL STATEMENTS--(Continued)
(5) Related Party Transactions:
During the year ended December 31, 1998, the Company incurred management
fees of $960,000 and $240,000 to US Unwired and Cameron, respectively, of which
$80,000 is payable to US Unwired and $60,000 is payable to Cameron at December
31, 1998.
The Company contracts with UniBill, Inc. ("UniBill"), a subsidiary of
Cameron, for all subscriber billing and accounts receivable data processing.
UniBill charges a $2.50 fee per bill processed. Billing expenses totaled
approximately $22,000 in 1998, of which $13,485 is payable at December 31,
1998.
(6) Subsequent Event
From January 8, 1999 through September 30, 1999, US Unwired made a series of
capital contributions to the Company which increased US Unwired's ownership
percentage in the Company to 71%.
On June 23, 1999, the Company entered into senior credit facilities for $130
million with certain lenders. The senior credit facilities provide for an $80
million reducing revolving credit facility, which matures on September 30,
2007, and a $50 million delay draw term loan, which matures on September 30,
2007. All loans made under the senior credit facilities bear interest at
variable rates tied to the prime rate, the federal funds rate or the London
Interbank Offering Rate. The senior credit facilities are secured by a first
priority security interest in all tangible and intangible assets of the Company
and its subsidiaries (including the owned PCS licenses, if legally permitted);
a pledge by US Unwired and Cameron of 100% of the ownership interests in the
Company; a pledge by the Company of its ownership interest in any of the
Company's present and future subsidiaries; and an assignment of all Sprint PCS
agreements and any network contract (including software rights).
A portion of the proceeds from this new credit facility were used to
extinguish the Company's existing credit facility. As a result, the unamortized
debt issuance costs related to this existing credit facility, totaling
$614,000, were written off as an extraordinary item.
Effective October 1, 1999, US Unwired entered into a $130 million senior
credit facility. In connection with this new credit facility, the Company's
$130 million senior credit facilities discussed above were extinguished. As a
result, the unamortized debt issuance costs related to this existing credit
facility, totaling $3,151,000, were written off in October 1999 as an
extraordinary item.
F-42
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF US UNWIRED APPEARS HERE]
US Unwired Inc.
Offer to Exchange 13 3/8% Series B Senior
Subordinated Discount Notes due 2009
For All Existing 13 3/8% Series A Senior
Subordinated Discount Notes due 2009
-----------------------------
PROSPECTUS
-----------------------------
, 2000
- --------------------------------------------------------------------------------
Until , all dealers that effect transactions in these securities, whether
or not participating in this offering, may be required to deliver a prospectus.
This is in addition to the dealer's obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
Each broker-dealer that receives exchange notes for its own account in the
exchange offer must acknowledge that it will deliver a prospectus in connection
with any resale of such exchange notes. The letter of transmittal states that
by so acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act of 1933. 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
exchange notes received in exchange for existing notes where such existing
notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. We have agreed that, for a period of
one year and 30 days after the effective date of the registration statement of
which this prospectus is a part, we will make this prospectus available to any
broker-dealer for use in connection with any such resale.
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by us. This prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the securities to which it relates or any offer to sell or the
solicitation of an offer to buy such securities in any jurisdiction or under
any circumstances in which such offer or solicitation is unlawful. Neither the
delivery of this prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in our
affairs since the date hereof or that the information contained herein is
correct as of any time subsequent to its date.
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Officers and Directors.
Section 83A(1) of the Louisiana Business Corporation Law permits a
corporation to indemnify any person who was or is a party or is threatened to
be made a party to any action, suit, or proceeding, whether civil, criminal,
administrative, or investigative, including any action by or in the right of
the corporation, by reason of the fact that he is or was a director, officer,
employee, or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee, or agent of another business,
foreign or nonprofit corporation, partnership, joint venture, or other
enterprise, against expenses, including attorneys' fees, judgments, fines, and
amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 83A(2) provides that, in case of actions by or in the right of the
corporation, the indemnity shall be limited to expenses, including attorneys'
fees and amounts paid in settlement not exceeding, in the judgment of the board
of directors, the estimated expense of litigating the action to conclusion,
actually and reasonably incurred in connection with the defense or settlement
of such action, and that no indemnification shall be made in respect of any
claim, issue, or matter as to which such person shall have been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable for willful or intentional misconduct in the performance of his duty
to the corporation, unless, and only to the extent that the court shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, he is fairly and reasonably entitled
to indemnity for such expenses which the court shall deem proper.
Section 83(B) provides that to the extent that a director, officer, employee
or agent of a corporation has been successful on the merits or otherwise in
defense of any such action, suit or proceeding, or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.
Any indemnification under Section 83A, unless ordered by the court, shall be
made by the corporation only as authorized in a specific case upon a
determination that the applicable standard of conduct has been met, and such
determination shall be made:
. By the board of directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit, or
proceeding, or
. If such a quorum is not obtainable and the board of directors so
directs, by independent legal counsel, or
. By the shareholders.
The indemnification provided for by Section 83 shall not be deemed exclusive
of any other rights to which the person indemnified is entitled under any
bylaw, agreement, authorization of shareholders or directors, regardless of
whether directors authorizing such indemnification are
II-1
<PAGE>
beneficiaries thereof, or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of his heirs and legal representative;
however, no such other indemnification measure shall permit indemnification of
any person for the results of such person's willful or intentional misconduct.
Section 24 of the Louisiana Business Corporation Law provides that the
articles of incorporation of a corporation may contain a provision eliminating
or limiting the personal liability of a director or officer to the corporation
or its shareholders for monetary damages for breach of fiduciary duty as a
director or officer, provided that such provision shall not eliminate or limit
the liability of a director or officer:
. For any breach of the director's or officer's duty of loyalty to the
corporation or its shareholders;
. For acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
. Who knowingly or without the exercise of reasonable care and inquiry
votes in favor of a dividend paid in violation of Louisiana law, any
other unlawful distribution, payment or return of assets to be made to
the shareholders or stock purchases or redemptions in violation of
Louisiana law; or
. For any transaction from which the director or officer derived an
improper personal benefit.
Article VI of US Unwired's Articles of Incorporation contains the provisions
permitted by Section 24 of the Louisiana Business Corporation Law and permits
the Board of Directors to take further action to provide indemnification to,
and limit the liability of, to the full extent permitted by law, the directors
and officers of US Unwired by causing US Unwired to enter into contracts with
its directors and officers, adopting by-laws or resolutions, and causing US
Unwired to procure and maintain directors' and officers' liability insurance or
other similar arrangements, notwithstanding that some or all of the members of
the Board of Directors acting with respect to the foregoing may be parties to
such contracts or beneficiaries of such by-laws or resolutions or insurance or
arrangements.
Article VI permits the Board of Directors to cause US Unwired to approve for
its direct and indirect subsidiaries limitation of liability and
indemnification provisions comparable to the foregoing.
Section 11 of US Unwired's by-laws makes mandatory the indemnification of
any of its officers and directors against any expenses, costs, attorneys' fees,
judgments, punitive or exemplary damages, fines and amounts paid in settlement
actually and reasonably incurred by him (as they are incurred) by reason of his
position as director or officer of US Unwired or any subsidiary or other
specified positions if he is successful in his defense of the matter on the
merits or otherwise or has been found to have met the applicable standard of
conduct.
The standard of conduct is met when the director or officer is found to have
acted in good faith and in a manner that he reasonably believed to be in, or
not opposed to, the best interest of US
II-2
<PAGE>
Unwired, and, in the case of a criminal action or proceeding, with no
reasonable cause to believe that his conduct was unlawful. No indemnification
is permitted in respect of any matter as to which a director or officer shall
have been finally adjudged by a court of competent jurisdiction to be liable
for willful or intentional misconduct or to have obtained an improper personal
benefit, unless, and only to the extent that the court shall determine upon
application that, in view of all the circumstances of the case, he is fairly
and reasonably entitled to indemnity for such expenses which the court shall
deem proper.
Section 11 further provides that indemnification granted pursuant to this
section shall not be deemed exclusive of any other rights to which a director
or officer is or may become entitled under any statute, article of
incorporation, by-law, authorization of shareholders or directors, agreement or
otherwise; and that US Unwired intends by this section to indemnify and hold
harmless a director or officer to the fullest extent permitted by law.
On October 29, 1999, US Unwired issued $50 million of its Series A preferred
stock to The 1818 Fund. The 1818 Fund has already designated one individual as
a member of the Board of Directors of US Unwired and is entitled to appoint one
additional individual to become a member of the Board of Directors, but has not
yet done so. This individual, when appointed to our Board of Directors, will be
entitled to the foregoing indemnification. In connection with the issuance of
the Series A preferred stock to The 1818 Fund, US Unwired entered into a
registration rights agreement with The 1818 Fund pursuant to which a seller of
registrable securities may be required to indemnify US Unwired and its officers
and directors under specified circumstances.
US Unwired maintains a directors' and officers' liability insurance policy.
Item 21. Exhibits and Financial Statement Schedules.
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
3.1 Articles of Incorporation of US Unwired Inc. dated as of September 23,
1999.
3.2 Articles of Amendment to Articles of Incorporation of US Unwired Inc.
dated as of October 25, 1999.
3.3 By-laws of US Unwired Inc. adopted September 30, 1999.
3.4* Articles of Organization of Louisiana Unwired, LLC dated as of January
2, 1998.
3.5* Operating Agreement of Louisiana Unwired, LLC dated as of February 23,
1998.
3.6* Articles of Incorporation of Unwired Telecom Corp., as amended.
3.7* By-laws of Unwired Telecom Corp. dated as of January 16, 1997.
4.1 Indenture dated as of October 29, 1999 among US Unwired Inc., the
Guarantors (as defined therein) and State Street Bank and Trust
Company.
4.2 Pledge and Security Agreement dated as of October 29, 1999 by and
between Louisiana Unwired, LLC and State Street Bank and Trust
Company.
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
4.3 Intercreditor Agreement dated as of October 29, 1999 between CoBank,
ACB and State Street Bank and Trust Company.
4.4 A/B Exchange Registration Rights Agreement dated as of October 29,
1999 by and among US Unwired Inc.; Louisiana Unwired, LLC; Unwired
Telecom Corp.; Donaldson, Lufkin & Jenrette Securities Corporation;
First Union Securities, Inc. and BNY Capital Markets, Inc.
5.1* Opinion of Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P.
10.1 Purchase Agreement dated as of October 26, 1999 among US Unwired Inc.;
Louisiana Unwired, LLC; Unwired Telecom Corp.; Donaldson, Lufkin &
Jenrette Securities Corporation; First Union Securities, Inc. and BNY
Capital Markets, Inc.
10.2 Shareholders Agreement dated as of September 24, 1999 among US Unwired
Inc. and the shareholders of US Unwired Inc. who are signatories
thereto.
10.3 US Unwired Inc. 1999 Equity Incentive Plan.
10.4* Sprint PCS Management Agreement dated February 8, 1999 among
Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and Louisiana
Unwired, LLC, including Addendum I, Addendum II, Sprint Trademark and
Service Mark License Agreement and Sprint Spectrum Trademark and
Service Mark License Agreement.
10.5* Sprint PCS Management Agreement dated June 8, 1998 among Wirelessco,
L.P., Sprint Spectrum L.P., SprintCom, Inc. and Louisiana Unwired,
LLC, including Addendum I, Addendum II, Sprint Trademark and Service
Mark License Agreement and Sprint Spectrum Trademark and Service Mark
License Agreement.
10.6 Securities Purchase Agreement dated as of October 29, 1999 between US
Unwired Inc. and The 1818 Fund III, L.P.
10.7 Registration Rights Agreement dated as of October 29, 1999 between US
Unwired Inc. and The 1818 Fund, L.P.
10.8 Shareholders Agreement dated as of October 29, 1999 by and among US
Unwired Inc., The 1818 Fund III, L.P. and the shareholders of US
Unwired Inc. who are signatories thereto.
10.9* Headquarters Building Lease.
10.10 Credit Agreement dated as of October 1, 1999 by and among US Unwired
Inc., as Borrower, and CoBank, ACB, as Administrative Agent and a
Lender, First Union Capital Markets Corp., as Syndication Agent and a
Co-Arranger, The Bank of New York, as Documentation Agent and a
Lender, BNY Capital Markets, Inc., as a Co-Arranger, First Union
National Bank, as a Lender, and the other Lenders referred to therein.
10.11* Management and Construction Agreement dated as of January 1, 1999 by
and between US Unwired Inc. and Louisiana Unwired, LLC.
10.12* Authorized Dealer Agreement dated as of May 13, 1998 by and between US
Unwired Inc. and Louisiana Unwired, LLC.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
10.13* Agreement dated as of May 13, 1998 by and between US Unwired Inc. and
Louisiana Unwired, LLC for Louisiana Unwired, LLC to do business as US
Unwired Inc.
10.14* Billing Agreement dated as of May 13, 1998 by and between Unibill,
Inc. and Louisiana Unwired, LLC.
10.15* Long Distance Agreement dated as of June 10, 1998 by and between
Cameron Communications Corporation and US Unwired Inc.
10.16* Omnibus Agreement dated as of September 7, 1999 by and among US
Unwired Inc., EATELCORP, Inc., Fort Bend Telephone Company, XIT
Leasing, Inc., Wireless Management Corporation, Meretel Communications
Limited Partnership and Meretel Wireless, Inc.
12.1 Ratio of earnings to fixed charges.
21.1 Subsidiaries of US Unwired Inc.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG LLP.
23.3 Consent of Correro, Fishman, Haygood, Phelps, Walmsley & Casteix, LLP
(included in Exhibit 5.1).
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Beneficial Owners.
99.4 Form of Letter to Registered Holders and Book-Entry Transfer Facility
Participants.
99.5 Form of Instruction to Registered Holder and Book-Entry Transfer
Facility Participant from Owner.
</TABLE>
- --------
*To be filed by amendment.
(b) Financial Statement Schedules
No financial statement schedules are filed because the required information
is not applicable or is included in the consolidated financial statements or
related notes.
Item 22. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrants pursuant to the foregoing provisions, or otherwise, the registrants
have been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrants of expenses
incurred or paid by a director, officer or controlling person of the
registrants in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the
II-5
<PAGE>
registrants will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issues.
The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities (if
the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrants hereby undertake to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
registrant duly caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the city of Lake Charles,
State of Louisiana, on December 7, 1999.
US UNWIRED INC.
By: /s/ Robert W. Piper
----------------------------------
Robert W. Piper
President and Chief Operating
Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on December 7, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ William L. Henning, Jr. Chairman of the Board of Directors,
______________________________________ Chief Executive Officer and Director
William L. Henning, Jr. (Principal Executive Officer)
/s/ Jerry E. Vaughn Chief Financial Officer (Principal
______________________________________ Financial Officer)
Jerry E. Vaughn
/s/ Don Loverich Controller (Principal Accounting
______________________________________ Officer)
Don Loverich
/s/ Robert W. Piper President, Chief Operating Officer and
______________________________________ Director
Robert W. Piper
/s/ William L. Henning, Sr. Director
______________________________________
William L. Henning, Sr.
/s/ Thomas G. Henning Director
______________________________________
Thomas G. Henning
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
registrant set forth below has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the city
of Lake Charles, State of Louisiana, on December 7, 1999.
LOUISIANA UNWIRED, LLC
By: /s/ Robert W. Piper
----------------------------------
Robert W. Piper
Manager/President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on December 7, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ Robert W. Piper Manager/President (Principal Executive
______________________________________ Officer, Principal Financial Officer
Robert W. Piper and Principal Accounting Officer)
/s/ Thomas G. Henning Assistant Manager/Secretary
______________________________________
Thomas G. Henning
</TABLE>
UNWIRED TELECOM CORP. Member
By: /s/ Robert W. Piper
-------------------------------
Robert W. Piper, President
CAMERON COMMUNICATIONS Member
CORPORATION
By: /s/ Thomas G. Henning
-------------------------------
Thomas G. Henning, Vice
President
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
registrant set forth below duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the city of
Lake Charles, State of Louisiana, on December 7, 1999.
UNWIRED TELECOM CORP.
By: /s/ Robert W. Piper
----------------------------------
Robert W. Piper
President and Chief Operating
Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on December 7, 1999.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/s/ William L. Henning, Jr. Chairman of the Board of Directors,
______________________________________ Chief Executive Officer and Director
William L. Henning, Jr. (Principal Executive Officer)
/s/ Jerry E. Vaughn Chief Financial Officer (Principal
______________________________________ Financial Officer)
Jerry E. Vaughn
/s/ Don Loverich Controller (Principal Accounting
______________________________________ Officer)
Don Loverich
/s/ Robert W. Piper President, Chief Operating Officer and
______________________________________ Director
Robert W. Piper
/s/ William L. Henning, Sr. Director
______________________________________
William L. Henning, Sr.
/s/ Thomas G. Henning Director
______________________________________
Thomas G. Henning
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Exhibit Pages
------- ---------------------- ------------
<C> <S> <C>
3.1 Articles of Incorporation of US Unwired Inc. dated as
of September 23, 1999.
3.2 Articles of Amendment to Articles of Incorporation of
US Unwired Inc. dated as of October 25, 1999.
3.3 By-laws of US Unwired Inc. adopted September 30, 1999.
3.4* Articles of Organization of Louisiana Unwired, LLC
dated as of January 2, 1998.
3.5* Operating Agreement of Louisiana Unwired, LLC dated as
of February 23, 1998.
3.6* Articles of Incorporation of Unwired Telecom Corp., as
amended.
3.7* By-laws of Unwired Telecom Corp. dated as of January
16, 1997.
4.1 Indenture dated as of October 29, 1999 among US Unwired
Inc., the Guarantors (as defined therein) and State
Street Bank and Trust Company.
4.2 Pledge and Security Agreement dated as of October 29,
1999 by and between Louisiana Unwired, LLC and State
Street Bank and Trust Company.
4.3 Intercreditor Agreement dated as of October 29, 1999
between CoBank, ACB and State Street Bank and Trust
Company.
4.4 A/B Exchange Registration Rights Agreement dated as of
October 29, 1999 by and among US Unwired Inc.;
Louisiana Unwired, LLC; Unwired Telecom Corp.;
Donaldson, Lufkin & Jenrette Securities Corporation;
First Union Securities, Inc. and BNY Capital Markets,
Inc.
5.1* Opinion of Correro Fishman Haygood Phelps Walmsley &
Casteix, L.L.P.
10.1 Purchase Agreement dated as of October 26, 1999 among
US Unwired Inc.; Louisiana Unwired, LLC; Unwired
Telecom Corp.; Donaldson, Lufkin & Jenrette Securities
Corporation; First Union Securities, Inc. and BNY
Capital Markets, Inc.
10.2 Shareholders Agreement dated as of September 24, 1999
among US Unwired Inc. and the shareholders of US
Unwired Inc. who are signatories thereto.
10.3 US Unwired Inc. 1999 Equity Incentive Plan.
10.4* Sprint PCS Management Agreement dated February 8, 1999
among Wirelessco, L.P., Sprint Spectrum L.P.,
SprintCom, Inc. and Louisiana Unwired, LLC, including
Addendum I, Addendum II, Sprint Trademark and Service
Mark License Agreement and Sprint Spectrum Trademark
and Service Mark License Agreement.
10.5* Sprint PCS Management Agreement dated June 8, 1998
among Wirelessco, L.P., Sprint Spectrum L.P.,
SprintCom, Inc. and Louisiana Unwired, LLC, including
Addendum I, Addendum II, Sprint Trademark and Service
Mark License Agreement and Sprint Spectrum Trademark
and Service Mark License Agreement.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Description of Exhibit Pages
------- ---------------------- ------------
<C> <S> <C>
10.6 Securities Purchase Agreement dated as of October 29,
1999 between US Unwired Inc. and The 1818 Fund III,
L.P.
10.7 Registration Rights Agreement dated as of October 29,
1999 between US Unwired Inc. and The 1818 Fund, L.P.
10.8 Shareholders Agreement dated as of October 29, 1999 by
and among US Unwired Inc., The 1818 Fund III, L.P. and
the shareholders of US Unwired Inc. who are signatories
thereto.
10.9* Headquarters Building Lease.
10.10 Credit Agreement dated as of October 1, 1999 by and
among US Unwired Inc., as Borrower, and CoBank, ACB, as
Administrative Agent and a Lender, First Union.Capital
Markets Corp., as Syndication Agent and a Co-Arranger,
The Bank of New York, as Documentation Agent and a
Lender, BNY Capital Markets, Inc., as a Co-Arrnager,
First Union National Bank, as a Lender, and the other
Lenders referred to therein.
10.11* Management and Construction Agreement dated as of
January 1, 1999 by and between US Unwired Inc. and
Louisiana Unwired, LLC.
10.12* Authorized Dealer Agreement dated as of May 13, 1998 by
and between US Unwired Inc. and Louisiana Unwired, LLC.
10.13* Agreement dated as of May 13, 1998 by and between US
Unwired Inc. and Louisiana Unwired, LLC for Louisiana
Unwired, LLC to do business as US Unwired Inc.
10.14* Billing Agreement dated as of May 13, 1998 by and
between Unibill, Inc. and Louisiana Unwired, LLC.
10.15* Long Distance Agreement dated as of June 10, 1998 by
and between Cameron Communications Corporation and US
Unwired Inc.
10.16* Omnibus Agreement dated as of September 7, 1999 by and
among US Unwired Inc., EATELCORP, Inc., Fort Bend
Telephone Comany, XIT Leasing, Inc., Wireless
Management Corporation, Meretel Communications Limited
Partnership and Meretel Wireless, Inc.
12.1 Ratio of earnings to fixed charges.
21.1 Subsidiaries of US Unwired Inc.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of KPMG LLP.
23.3 Consent of Correro, Fishman, Haygood, Phelps, Walmsley
& Casteix, LLP (included in Exhibit 5.1).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
------- ----------------------
<C> <S>
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
99.3 Form of Letter to Beneficial Owners.
99.4 Form of Letter to Registered Holders and Book-Entry Transfer Facility
Participants.
99.5 Form of Instruction to Registered Holder and Book-Entry Transfer
Facility Participant from Beneficial Owner.
</TABLE>
- --------
*To be filed by amendment.
<PAGE>
ARTICLES OF INCORPORATION UNITED STATES OF AMERICA
OF STATE OF LOUISIANA
US UNWIRED INC. PARISH OF CALCASIEU
BE IT KNOWN: That on this 23rd day of September, 1999, before me, the
undersigned Notary Public in and for the said Parish and State, personally came
and appeared the undersigned who declared unto me in the presence of the
undersigned competent witnesses, that availing itself of the provisions of the
Louisiana Business Corporation Law (Title 12, Chapter 1, Louisiana Revised
Statutes of 1950, as revised and certified by Act 105 of 1968 of the Legislature
of Louisiana and as subsequently amended), he does hereby organize a corporation
in pursuance of that law, under and in accordance with the following Articles of
Incorporation:
Article I
Name; Duration
The name of the Corporation is:
US Unwired Inc.
Its duration is perpetual.
Article II
Purpose
The purpose of the Corporation is to engage in any lawful activity for
which corporations may be formed under the Louisiana Business Corporation Law
("LBCL").
Article III
Capital Stock: General Provisions
A. Authorized Stock. The Corporation has the authority to issue two
----------------
hundred million shares of capital stock, of which one hundred million are shares
of Class A Common Stock, par value $.0l per share, sixty million are shares of
Class B Common Stock, par value $.0l per share, and forty million are shares of
preferred stock having no par value.
<PAGE>
B. Common Stock. Except as otherwise expressly provided in these Articles
------------
or as may be required by the LBCL notwithstanding the provisions of these
Articles, the Class A Common Stock and Class B Common Stock have equivalent
rights. A holder of Class B Common Stock may at any time convert each of his,
her, or its shares of Class B Common Stock into one share of Class A Common
Stock.
C. Preferred Stock. The preferred stock may be issued from time to time
---------------
in one or more series. The Board of Directors has authority to amend the
Articles from time to time to fix the preferences, limitations and relative
rights of any series of preferred stock, and to establish, and fix variations in
relative rights as between or among series of preferred stock. The preferences,
limitations, and relative rights so established may be amended from time to time
by the Board of Directors, subject only to any approval of the holders of any
series of preferred stock that may be required by these Articles or by the LBCL
notwithstanding the provisions of these Articles.
D. Voting Rights.
-------------
(1) Preferred stock shall have such voting rights as are required by
the LBCL and as may be conferred by these Articles.
(2) Except as otherwise provided by these Articles or as may be
required by the LBCL notwithstanding the provisions, of these Articles, the
Class A Common Stock and Class B Common Stock shall vote together as a single
class in the election of Directors and with respect to any other matter for
which shareholder action or approval is required by these Articles or by the
LBCL notwithstanding the provisions of these Articles, even if action or
approval of the Class A or Class B Common Stock voting on such matter as a
separate class is also required. Whether voting together as a single class or
voting by class, as the case may be, the Class A Common Stock shall have one
vote per share, and the Class B Common Stock shall have ten votes per share.
E. Issuance of Class B Shares. Shares of Class B Common Stock shall not
--------------------------
be issued unless (i) there are simultaneously issued that number of shares of
Class A Common Stock as shall be necessary to maintain, immediately following
such issuance, the same proportionate equity ownership by the two classes as
existed immediately prior to such issuance, or (ii) such shares are issued in
connection with a stock split, stock dividend or other reclassification that
complies with Article III(H) or the exception thereto, or (iii) holders of the
Class A Common Stock, voting as a separate class, and the Class B Common Stock,
voting as a separate class, shall have approved such issuance or (iv) to the
1818 Fund III, L.P., or any of its affiliates.
F. Redemption of Disqualified Holders.
----------------------------------
(1) Except as may otherwise be expressly provided in these Articles
with respect to any series of preferred stock, the Corporation may at any time
redeem shares of its capital stock from any Disqualified Holder or Holders to
the extent that the ownership thereof (i)
2
<PAGE>
would constitute a violation of Section 310 of the Communications Act of 1934,
as such Act has been and may be further amended, or any similar or successor
federal law or regulation (a "Violation"), or (ii) would prevent the Corporation
or any subsidiary from holding or materially delay it or any subsidiary in
obtaining any governmental license or franchise necessary to conduct any
material portion of the Corporation's Business, or materially increase the
Corporation's or any subsidiary's cost of obtaining or operating under any such
license or franchise (a "Prevention").
(2) The terms and conditions of any such redemption shall be as
follows:
(i) The number of shares to be redeemed shall be (a) the
minimum number required, in the opinion of the Board of Directors, to remove the
Violation or Prevention, as the case may be, plus (b) in the discretion of the
Board of Directors, any number of additional shares up to 15% of the number
calculated pursuant to clause (a).
(ii) The redemption price shall be the Fair Market Value of the
Redeemed Shares;
(iii) The redemption price shall be paid in cash, Redemption
Securities, or any combination thereof, as determined by the Board of Directors;
(iv) The shares to be redeemed shall be selected in such manner
as shall be determined by the Board of Director.9, which may include selection
first of the most recently purchased shares thereof, selection by lot, or
selection in any other manner determined by the Board of Directors;
(v) at least 20 days' written notice of the Redemption Date
shall be given to the record holders of the shares selected to be redeemed;
provided, however, that only 10 days' written notice of the Redemption Date
shall be given to record holders if the cash or Redemption Securities necessary
to effect the redemption shall have been deposited in trust for the benefit of
such record holders and subject to immediate withdrawal by them on and after the
Redemption Date upon surrender of the stock certificates for their shares to be
redeemed; and
(vi) from and after the Redemption Date, any and all rights of
whatever nature (including without limitation any rights to vote or participate
in dividends declared on stock of the same class or series as such shares) with
respect to the shares selected for redemption shall cease and terminate and such
Disqualified Holders thenceforth shall be entitled only to receive the cash or
Redemption Securities payable upon redemption.
The Board of Directors may impose other terms and conditions not
inconsistent with the foregoing.
(3) For purposes of this Article III(F):
3
<PAGE>
(i) "Business" means the wireless communications business
including (but without limitation) cellular, paging and personal communications
service. The foregoing description does not limit the generality of Article 11.
(ii) "Disqualified Holder" shall mean any holder of capital
stock of the Corporation whose holding of such stock, either individually or
when taken together with the holding of capital stock of the Corporation by any
other holder or holders would, in the opinion of the Board of Directors, be a
Violation or a Prevention.
(iii) "Fair Market Value" of a share of the Corporation's stock
of any class or series shall mean the average of the closing prices for such a
share on its principal trading market for each of the ten trading days ending on
the day preceding the day on which notice of redemption shall be given;
provided, however, that if shares of stock of such class or series are not
traded on any securities exchange registered under the Securities Exchange Act
of 1934 and are not quoted in the Nasdaq National Market, "Fair Market Value"
shall be the fair market value as of such day as determined by the Board of
Directors in good faith. Notwithstanding the foregoing, shares of Class B Common
Stock shall be deemed to have the same "Fair Market Value" as an equivalent
number of shares of Class A Common Stock.
(iv) "Redemption Date" shall mean the date fixed by the Board of
Directors for the redemption of shares pursuant to this Article III(F).
(v) "Redemption Securities" shall mean any debt or equity
securities of the Corporation, any of its subsidiaries or affiliates or any
other corporation, or any combination thereof, having such terms and conditions
as shall be approved by the Board of Directors and which, together with any cash
to be paid as part of the redemption price, in the opinion of any nationally
recognized investment banking firm selected I)y the Board of Directors (which
may be a firm which provides other investment banking, brokerage or other
services to the Corporation), has a value, at the time notice of redemption is
given, at least equal to the redemption price required to be paid.
(4) The Corporation may assign in Whole or in part its redemption
rights under this Article III(F) to any third party, in whose hands such rights
shall become an option to purchase the shares on the same terms and conditions
as the Corporation's right of redemption.
(5) Notices of redemption shall be deemed to have been given at the
time deposited in the United States mail, certified or registered with return
receipt requested, properly addressed and postage prepaid. Time periods that
run from such notices shall commence on the first day after notice is given.
G. Restoration. Shares of Class A or Class B Common Stock that have
-----------
converted into the other Class shall be restored to authorized but unissued
shares.
4
<PAGE>
H. Reclassifications. No split, reverse split, stock dividend or other
-----------------
reclassification of the Class A Common Stock shall be effected unless a
simultaneous and equivalent split, reverse split, stock dividend, or other
reclassification of the Class B Common Stock is effected, and vice versa.
I. Dividends. No stock dividend on the Common Stock may be paid in any
---------
shares other than shares of the class to which the stock dividend pertains.
Subject to the preceding sentence, any dividends declared, whether in cash,
shares or other property, shall be paid equally to the holders of Class A Common
Stock and Class B Common Stock, on a share-for-share basis, and in the same
property.
J. No Preemptive Rights. Shareholders shall not have any preemptive
--------------------
rights.
Article IV
Capital Stock
Class B Common Stock Special Provisions
A. Qualified Holders. Class B Common Stock may be held only by the
-----------------
following holders (each of which is a "Qualified Holder"):
(i) Persons and entities who receive Class B Common Stock (a) in
connection with the initial issuance of Class B shares or (b) as a distribution
from any such entity which received Class B Common Stock in connection with such
original issuance (each such person or entity is hereinafter referred to as a
"Founder");
(ii) Any natural person who is:
a. a descendent (including by adoption) of a Founder; or
b. the spouse or surviving spouse of a Qualified Holder;
(iii) Any trustee or other fiduciary, but only if and so long as (a)
the sole beneficial owners of the shares are one or more Qualified Holders, or
(b) the related trust is a charitable lead or remainder trust or similar vehicle
established by a Founder.
(iv) Any corporation that is not a Founder, if the entire capital
stock thereof is owned by any one or more Qualified Holders;
(v) Any partnership or limited liability company that is not a
Founder, whose sole partners or owners are one or more Qualified Holders;
(vi) Any person or entity which is designated a Qualified Holder in
accordance with the following paragraph;
5
<PAGE>
(vii) Any organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986 (or any successor provision); and
(viii) The 1818 Fund III, L.P. or any of its affiliates.
If a Qualified Holder ceases to be such (as would, for example, a
corporation that is not a Founder some of whose stock is transferred by a
Qualified Holder to a non-Qualified Holder; or a natural person who has been a
Qualified Holder solely by virtue of being the spouse of a Qualified Holder but
who becomes divorced from such Qualified Holder), then the shares of Class B
Common Stock owned by the former Qualified Holder shall be automatically
converted into Class A Common Stock on a share-for-share basis. Notwithstanding
the foregoing, such unpurchased shares shall not be converted into Class A
Common Stock, if within 30 days after the holder ceased to be a Qualified
Holder, the holder is designated a "Qualified Holder" by holders of a majority
of the Class B Common Stock then outstanding, in which event the unpurchased
shares shall remain Class B Common Stock and shall continue to be subject to
Article IV. A Qualified Holder who is a natural person does not cease to be a
Qualified Holder by reason of such person's death, but transfer of such deceased
person's Class B Common Stock is subject to the restrictions of Article IV(B).
B. Transfer Restrictions.
---------------------
(1) Upon any sale, assignment, exchange, pledge, conveyance,
hypothecation transfer, donation, or other disposition of shares of
Class B Common Stock ("Transfer"), such shares shall be automatically
converted, on a share for share basis, into Class A Common Stock,
unless such Transfer is (a) to the Corporation or to a Qualified
Holder or Holders, (b) pursuant to any merger, consolidation, share
exchange, or disposition of all or substantially all of the
Corporation's assets that is approved in the manner provided in
Article X(A), or (c) any bona fide pledge or hypothecation of shares
to secure an obligation of the holder. Any transfer in violation of
the preceding sentence shall be void and the Corporation shall be
under no obligation to transfer such shares on its books, pay
dividends to the transferee, or otherwise regard the transferee
thereof as a shareholder.
C. If any Transfer shall not give rise to automatic conversion hereunder,
then any subsequent transfer by the holder or pledgor, as the case may be, shall
be subject to the terms and conditions set forth herein, including exceptions.
D. Certificate Legend. Each certificate representing shares of Class B
------------------
Common Stock that are subject to Article IV shall bear a legend making reference
to Article IV.
6
<PAGE>
Article V
Directors
A. Number. The number of Directors constituting the full Board of
Directors shall be the greater of (a) three; (b) the number set forth in the By-
Laws of the Corporation from time to time (but no decrease in such number shall
shorten the term of an incumbent director); and (c) the number that is two times
the sum of (i) one, plus (ii) the number of Directors which preferred stock is
entitled to elect ("Preferred Directors").
B. Quorum. A quorum of Directors shall consist of a majority of the
------
number of Directors constituting the full Board of Directors.
C. Proxies. Any Director who is absent from a meeting of the board or any
-------
committee thereof may be represented by any other Director, who may cast the
vote of the absent Director according to the written instructions, general or
special, of the absent Director.
D. Classification. The Board of Directors other than Preferred Directors,
--------------
who shall be elected and serve in accordance with the terms under which the
Preferred Stock was issued, shall be divided, with respect to the time during
which they shall hold office, into three classes as nearly equal in number as
possible, with the initial term of office of the Class I directors expiring at
the annual meeting of shareholders to be held in 2000, of the Class II directors
expiring at the next succeeding annual meeting of shareholders, and of the Class
III directors expiring at the second succeeding annual meeting, with all such
directors to hold office until their successors are elected and qualified. Any
increase or decrease in the number of directors shall be apportioned by the
Board of Directors so that all classes of directors shall be as nearly equal as
possible. At each annual meeting of shareholders, directors chosen to succeed
those whose terms then expire shall be elected to hold office for a term
expiring at the annual meeting of shareholders held in the third year following
the year of their election and until their successors are duly elected, and
qualified.
E. Vacancies. Any vacancy on the Board of Directors (including any
---------
vacancy resulting from an increase in the authorized number of Directors, from
the removal of a Director or from a failure of the shareholders to elect the
full number of authorized Directors) may be filled as follows: if the vacant
position is that of a Preferred Director, the vacancy may be filled as provided
elsewhere in these Articles and if the vacant position is other than that of a
Preferred Director, the vacancy may be filled by vote of a majority of the
remaining Directors who are not Preferred Directors, or, if not constituting a
quorum of the full Board of Directors other than Preferred Directors, or, if
such remaining Directors have not theretofore acted, by the holders of Common
Stock at any annual or special meeting of shareholders.
F. Removal. A Director may be removed at any time, with or without cause,
-------
but only by the vote of a majority of the shares that would be entitled to elect
the successor to the removed director.
7
<PAGE>
Article VI
Limitation of Liability; Indemnification
A. Limitation of Liability. No Director or officer of the Corporation
-----------------------
shall be liable to the Corporation or to its shareholders for monetary damages
for breach of his or her fiduciary duty as a director or officer, provided that
the foregoing provision shall not eliminate or limit the liability of a director
of officer for (1) any breach of the director's or officer's duty of loyalty to
the Corporation or its shareholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful distributions of the Corporation's assets to, or
redemption or repurchase of the Corporation's shares from, shareholders of the
Corporation, under and to the extent provided in LBCL Section 92(D); or (4) any
transaction from which the director or officer derived an improper personal
benefit.
B. Authorization of Further Actions. The Board of Directors may (1) cause
--------------------------------
the Corporation to enter into contracts with its directors and officers
providing for the limitation of liability set forth in this Article to the full
extent permitted by law, (2) adopt By-Laws or resolutions, or cause the
Corporation to enter into contracts, providing for indemnification of directors
and officers and other persons (including, without limitation, directors and
officers of the Corporation's direct and indirect subsidiaries) to the fall
extent permitted by law, and (3) cause the Corporation to exercise the powers
set forth in LBCL Section 83(F), notwithstanding that some or all of the members
of the Board of Directors acting with respect to the foregoing may be parties to
such contracts or beneficiaries of such By-Laws or resolutions or the exercise
of such powers.
C. Subsidiaries. The Board of Directors may cause the Corporation to
------------
approve for its direct and indirect subsidiaries limitation of liability and
indemnification provisions comparable to the foregoing, notwithstanding that
some or all of the directors of the Corporation are also directors or officers
of such subsidiaries.
D. Amendment of Article VI. Any amendment or repeal of this Article shall
-----------------------
not adversely affect any elimination or limitation of liability or any right to
indemnification under this Article with respect to any action or inaction
occurring prior to the time of such amendment or repeal.
Article VII.
Meetings of Shareholders
A. Special Meetings. Special meetings of shareholders, for any purpose or
----------------
purposes, may be called in any manner set forth in the By-Laws or on any
provisions of these Articles relating to preferred stock. In addition, at any
time, upon the written request of any shareholder or group of shareholders
holding in the aggregate at least (i) 60% of the total voting power of any
series or class, the Secretary of the Corporation shall call a special meeting
of shareholders of
8
<PAGE>
such series or class, or (ii) 60% of the total voting power of the Corporation,
the Secretary of the Corporation shall call a special meeting of all
shareholders of the Corporation. Any such special meeting shall be held at the
registered office of the Corporation at such time as the Secretary may fix, not
less than 15 nor more than 60 days after the receipt of said request, and if the
Secretary shall neglect or refuse to fix such time or to give notice of the
meeting, the shareholder or shareholders making the request may do so. Such
requests must state the specific purpose or purposes of the proposed special
meeting, and the business to be conducted thereat shall be limited to such
purpose or purposes. Except as set forth in this Article VII, shareholders of
the Corporation shall not have the right to call or have called special meetings
of the shareholders.
B. Written Consents. Whenever by any provision of law, these Articles, or
----------------
the Corporation's By-Laws, the affirmative vote of holders of Class A Common
Stock and Class B Common Stock, voting together as a single class, or holders of
preferred stock, Class A Common Stock and Class B Common Stock, voting together
as a single class is required to authorize or constitute corporate action, the
consent in writing to such corporate action signed by holders holding that
proportion of the total votes on the question which is required by these
Articles or by law, whichever requirement is higher, shall be sufficient,
without necessity for a meeting of holders of stock. Whenever by any provision
of law, these Articles, or the Corporation's By-Laws, the affirmative vote of
holders of preferred stock or Class B Common Stock, voting as a separate class,
is required to authorize or constitute corporate action, the consent in writing
to such corporate action signed by holders holding that proportion of the total
votes of the preferred stock or Class B Common Stock on the question which is
required by these Articles or by law, whichever requirement is higher, shall be
sufficient, without necessity for a meeting of holders of the preferred stock or
Class B Common Stock.
C. Quorum. A majority of the total votes of any class of Common Stock or
------
any series of preferred stock shall constitute a quorum with respect to any
matter requiring a vote of such class or series. A majority of the total votes
of any classes and/or series entitled to vote together as if a single class
shall constitute a quorum with respect to any matter requiring a vote of any
such classes and/or series voting as if a single class.
Article VIII
Reversion
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares, that are not claimed by the shareholders entitled thereto
within one year after the dividend or redemption price -became payable or the
shares became issuable, despite reasonable efforts by the Corporation to pay the
dividend or redemption price or deliver the certificates for the shares to such
shareholders within such time, shall, at the expiration of such time, revert in
full ownership to the Corporation, and the Corporation's obligation to pay such
dividend or redemption price or issue such shares, as the case may be, shall
thereupon cease; provided, however, that the Board of Directors may, at any
time, for any reason satisfactory to it, but need not, authorize (1) payment of
the amount of any
9
<PAGE>
cash or property dividend or redemption price or (2) issuance of any shares,
ownership of which has reverted to the Corporation pursuant to this Article, to
the person or entity who or which would be entitled thereto had such reversion
not occurred.
Article IX
By-Laws
A. Adoption, Amendment and Repeal. By-Laws of the Corporation may be
------------------------------
adopted, amended or repealed by the Board of Directors, subject to any power
granted by the LBCL to shareholders to change or repeal any By-Laws so adopted
or amended, which power (if granted by the LBCL) may only be exercised at any
annual or special meeting of shareholders, the notice of which expressly states
that the proposed change or repeal is to be considered at the meeting.
B. New Matters. Any purported amendment to the By-Laws which would add
-----------
thereto a matter not covered in the By-Laws prior to such purported amendment
shall be deemed to constitute the adoption of a By-Law provision and not an
amendment to the By-Laws.
Article X
Vote on Certain Transactions and Amendments to
Articles of Incorporation
A. Vote Required for Shareholder Action. If the Board of Directors has in
------------------------------------
advance approved and/or recommended any Proposal presented to the shareholders,
including but not limited to a proposal to approve a merger, consolidation,
share exchange, disposition of all or substantially all of the Corporation's
assets, dissolution or any amendment to these Articles of incorporation, by the
affirmative vote of three-fourths of the number of Directors constituting the
full Board of Directors, then, in addition to any other vote required by these
Articles or by the LBCL notwithstanding the provisions of these Articles, the
affirmative vote of holders of at least a majority of the voting power present,
with all classes and series voting together as if a single class, shall be
required to approve such proposal. Otherwise, the affirmative vote of holders
of at least 66 2/3% of the total voting power, with all classes and series
voting. together as if a single class, shall be required to constitute
shareholder approval of such proposal in addition to any other vote required by
these Articles or by the LBCL, notwithstanding the provisions of these Articles.
If a special vote of any class or series of shares is required under Section
31(C) of the LBCL (or any successor provisions) to amend the Articles of
Incorporation, the requisite vote shall be the affirmative vote of holders of at
least a majority of the voting power present of such class or series or such
other vote as may be required in the provisions of these Articles relating to
such class or series.
B. Business Combinations and Control Share Acquisitions. The provisions
----------------------------------------------------
of LBCL Sections 132 through 134 (as the same may hereafter be amended) shall
not apply to the
10
<PAGE>
Corporation. The provisions of LBCL Sections 135 through 140.2
(as the same may hereafter be amended) shall not apply to control share
acquisitions of shares of the Corporation.
THUS DONE AND SIGNED, at my office in the State, Parish and City aforesaid
on the day, month and year hereinabove set forth, in the presence of the
undersigned competent witnesses and me, Notar Public, after due reading of the
whole.
WITNESSES:
/s/ Debbie Sue Duhon /s/ Thomas G. Henning
___________________________ --------------------------------
DEBBIE SUE DUHON THOMAS G. HENNING
Incorporator
/s/ Lanee L. Blanchard
___________________________
LANEE L. BLANCHARD
/s/ Shelia King
- ---------------------------
SHELIA KING
NOTARY PUBLIC
My Commission Expires: at death
11
<PAGE>
INITIAL REPORT OF
US UNWIRED INC.
1. The location and address of the corporation's registered address is as
follows:
101 E. Thomas Street
Sulphur, Louisiana 70663
2. The name and address of the registered agent is as follows:
Thomas G. Henning
One Lakeshore Drive, Suite 1900
Lake Charles, LA 70629
3. The first directors are as follows:
Term Expires:
William L. Henning, Jr. 2000
One Lakeshore Drive, Suite 1900
Lake Charles, LA 70629
John A Henning 2001
1803 Beglis Parkway
Sulphur, LA 70663
Thomas G. Henning 2001
One Lakeshore Drive, Suite 1900
Lake Charles, LA 70629
William L. Henning 2002
101 E. Thomas Street
Sulphur, LA 70663
Robert Piper 2002
One Lakeshore Drive, Suite 1900
Lake Charles, LA 70629
Dated at Lake Charles, LA, on this 23d day of September, 1999.
/s/ Thomas G. Henning
-----------------------------------
THOMAS G. HENNING
12
<PAGE>
AFFIDAVIT OF ACCEPTANCE OF APPOINTMENT
BY DESIGNATED REGISTERED AGENT
ACT OF 769 OF 1987
To the State Corporation Department
State of Louisiana
STATE OF LOUISIANA
PARISH OF CALCASIEU
On this 23rd day of September, 1999, before me, Notary Public in and
for the State and Parish aforesaid, personally came and appeared Thomas G.
Henning, who is to me known to be the person, and who, being duly sworn,
acknowledged to me that he does hereby accept appointment as the Registered
Agent of US Unwired Inc. which is a Corporation authorized to transact business
in the State of Louisiana pursuant to the provisions of Title 12,
Chapter 1, 2 and 3.
/s/ Thomas G. Henning
-----------------------------------
Thomas G. Henning
REGISTERED AGENT
Subscribed and sworn to before
me on the day, month and year
first above set forth.
/s/ Shelia King
- ----------------------------
Shelia King
NOTARY PUBLIC
NOTE: If the Agent is a Corporation authorized to act as an agent then the
affidavit must be executed by an officer of the corporation.
13
<PAGE>
EXHIBIT 3.2
US UNWIRED INC.
ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION
US Unwired Inc., a Louisiana corporation (the "Corporation"), through
-----------
its undersigned President and Secretary, hereby certifies that:
1. On October 25, 1999, the Board of Directors of the Corporation
(the "Board of Directors") adopted, pursuant to Section 33A of the Business
------------------
Corporation Law of Louisiana (the "LBCL"), the following amendment to Article
----
III of its Articles of Incorporation (the "Articles of Incorporation") to
-------------------------
establish and fix the preferences, limitations and relative rights of a series
of preferred stock, and authorized the delivery of these Articles of Amendment
to the Secretary of State for filing pursuant to Section 32B of the LBCL.
2. Article III of the Articles of Incorporation is amended to add a
new Paragraph K to read in its entirety as follows:
"K. Of the 40,000,000 shares of authorized no par value per share Preferred
Stock, 500,000 shares shall constitute a separate series of Preferred Stock with
the voting powers and the preferences and rights hereinafter set forth.
Section 1. Designation and Number.
----------------------
(a) The shares of such series shall be designated as Senior
Redeemable Convertible Preferred Stock, Series A (the "Preferred Stock"). The
---------------
number of shares initially constituting the Preferred Stock shall be 500,000,
which number may be decreased (but not increased) by the Board of Directors
without a vote of stockholders; provided, however, that such number may not be
-------- -------
decreased below the number of then outstanding shares of Preferred Stock.
(b) The Preferred Stock shall, with respect to rights on liquidation,
dissolution or winding up, rank prior to all classes and series of Junior Stock
(as defined below) of the Corporation now or hereafter authorized including,
without limitation, the Common Stock.
(c) Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in Section 11 below.
Section 2. Dividends and Distributions.
---------------------------
Each holder of shares of Preferred Stock shall be entitled to receive
dividends and other distributions (including, without limitation, any options,
warrants
<PAGE>
2
or other rights to acquire capital stock of the Corporation whether or not
pursuant to a shareholder rights plan, "poison pill" or similar arrangement, or
other property or assets) on a parity with each holder of Common Stock. Such
dividends and distributions shall be payable on each share of Preferred Stock in
an amount equal to the dividends per share payable on the number of shares of
Common Stock into which such share of Preferred Stock would be convertible under
Section 8 hereof on the record date for determining eligibility to receive such
dividends, or if no record date is established, on the date such dividends are
actually paid.
Section 3. Voting Rights.
-------------
In addition to any voting rights provided by law, the holders of
shares of Preferred Stock shall have the following voting rights:
(a) So long as the Preferred Stock is outstanding, each share of
Preferred Stock shall entitle the holder thereof to vote, in person or by proxy,
at a special or annual meeting of stockholders, on all matters voted on by
holders of the class of Common Stock into which the Preferred Stock is then
convertible voting together as a single class with other shares of such class of
Common Stock entitled to vote thereon. With respect to any such vote, each share
of Preferred Stock shall entitle the holder thereof to cast that number of votes
per share as is equal to the number of votes that such holder would be entitled
to cast had such holder converted his shares of Preferred Stock into shares of
such class of Common Stock pursuant to Section 8 on the record date for
determining the stockholders of the Corporation eligible to vote on any such
matters.
(b) Unless the consent or approval of a greater number of shares
shall then be required by law, the affirmative vote of the holders of at least
two thirds of the outstanding shares of Preferred Stock, voting separately as a
single class, in person or by proxy, at a special or annual meeting of
stockholders called for the purpose, shall be necessary to:
(i) authorize, increase the number of shares of, or issue any
class of capital stock pari passu or senior to the Preferred Stock as to
---- -----
dividends or liquidation preference (including additional shares of Preferred
Stock) and including any other preferred stock (whether or not junior as to
dividends and liquidation preference) having mandatory or optional redemption
dates prior to January 31, 2010;
(ii) authorize, adopt or approve an amendment to the Charter
that would increase or decrease the par value of the shares of Preferred Stock,
or adversely alter or change the powers, preferences or special rights of the
shares of Preferred Stock, or otherwise affect the rights of the shares of the
Preferred Stock adversely, including, without limitation, the liquidation
preference provisions;
<PAGE>
3
(iii) approve any sale or merger of a Material Subsidiary;
(iv) approve any sale of the Corporation's equity interest in
Meretel, or approve any consent that the Corporation is entitled to give by vote
or otherwise in favor of any merger, reorganization, consolidation or
recapitalization (or similar transaction) of Meretel, or a sale of all or
substantially all of the assets of Meretel;
(v) approve any Change of Control in which a vote of the
Common Stock of the Company would be required; or
(vi) approve any merger, reorganization, consolidation or
recapitalization (or similar transaction) of the Corporation, or sale of all or
substantially all of the assets of the Corporation in which a vote of the Common
Stock of the Company would be required.
(c)(i) At each meeting of stockholders at which the holders of shares
of Preferred Stock shall have the right, voting separately as a single class, to
take any action, the presence in person or by proxy of the holders of record of
one third of the total number of shares of Preferred Stock then outstanding and
entitled to vote on the matter shall be necessary and sufficient to constitute a
quorum. At any such meeting or at any adjournment thereof:
(A) the absence of a quorum of the holders of shares of
Preferred Stock shall not prevent the election of directors, and the absence of
a quorum of the holders of shares of any other class or series of capital stock
shall not prevent the taking of any action as provided in this Section 3; and
(B) in the absence of a quorum of the holders of shares
of Preferred Stock, a majority of the holders of such shares present in person
or by proxy shall have the power to adjourn the meeting as to the actions to be
taken by the holders of shares of Preferred Stock from time to time and place to
place without notice other than announcement at the meeting until a quorum shall
be present.
(ii) For taking of any action as provided in Section 3(b) by
the holders of shares of Preferred Stock, each such holder shall have one vote
for each share of such stock standing in his name on the transfer books of the
Corporation as of any record date fixed for such purpose or, if no such date be
fixed, at the close of business on the Business Day next preceding the day on
which notice is given, or if notice is waived, at the close of business on the
Business Day next preceding the day on which the meeting is held; provided,
--------
however, that shares of Preferred Stock held by the Corporation or any Affiliate
- -------
of the Corporation shall not be deemed to be outstanding for purposes of taking
any action as provided in this Section 3.
<PAGE>
4
Section 4. Certain Restrictions.
--------------------
(a) Whenever the Corporation shall not have converted Preferred
Stock at a time required by Section 8 or 10, at such time and thereafter until
all conversion obligations provided in Section 8 or 10 that have come due shall
have been satisfied, or whenever the Corporation shall not have redeemed shares
of Preferred Stock at a time required by Section 5, at such time and thereafter
until all redemption obligations provided in Section 5 that have come due shall
have been satisfied or all necessary funds have been set apart for payment, the
Corporation shall not: (i) declare or pay dividends, or make any other
distributions, on any shares of Junior Stock or (ii) declare or pay dividends,
or make any other distributions, on any shares of Parity Stock.
(b) Whenever the Corporation shall not have converted shares of
Preferred Stock at a time required by Section 8 or 10 at such time and
thereafter until all conversion obligations provided in Section 8 or 10 that
have come due shall have been satisfied, or whenever the Corporation shall not
have redeemed shares of Preferred Stock at a time required by Section 5, at such
time and thereafter until all redemption obligations provided in Section 5 that
have come due shall have been satisfied or all necessary funds have been set
apart for payment, the Corporation shall not redeem, purchase or otherwise
acquire for consideration any shares of Junior Stock or Parity Stock; provided,
--------
however, that (A) the Corporation may accept shares of any Senior Stock, Parity
- -------
Stock or Junior Stock for conversion into Junior Stock, (B) the Corporation may
at any time redeem, purchase or otherwise acquire shares of any Parity Stock
pursuant to any mandatory redemption, put, sinking fund or other similar
obligation contained in such Parity Stock, pro rata with the Preferred Stock in
proportion to the total amount then required to be applied by the Corporation to
redeem, repurchase, or otherwise acquire shares of Preferred Stock and shares of
such Parity Stock, and (C) the Corporation may at any time redeem, purchase or
otherwise acquire shares of its capital stock in accordance with Article III(F)
of the Articles of Incorporation of the Corporation.
(c) The Corporation shall not permit any Subsidiary of the
Corporation, or cause any other Person, to purchase or otherwise acquire for
consideration any shares of capital stock of the Corporation unless the
Corporation could, pursuant to Section 4(b), purchase such shares at such time
and in such manner.
Section 5. Redemption.
----------
(a) On January 31, 2010 (the "Redemption Date"), the Corporation
---------------
shall redeem all of the shares of Preferred Stock then outstanding, at a price
per share (the "Redemption Price") equal to (A) the Stated Value, plus (B) an
----------------
amount per share
<PAGE>
5
equal to all declared and unpaid dividends thereon, to the Redemption Date, in
immediately available funds.
(b) Notice of any redemption of shares of Preferred Stock
pursuant to Section 5(a) shall be given by publication in a newspaper of general
circulation in the Borough of Manhattan, The City of New York (if such
publication shall be required by applicable law, rule, regulation or securities
exchange requirement), not less than 30, nor more than 60, days prior to the
date fixed for redemption. In any case, a similar notice shall be mailed at
least 30, but not more than 60, days prior to the date fixed for redemption to
each holder of shares of Preferred Stock to be redeemed, at such holder's
address as it appears on the transfer books of the Corporation. In order to
facilitate the redemption of shares of Preferred Stock, the Board of Directors
may fix a record date for the determination of shares of Preferred Stock to be
redeemed, or may cause the transfer books of the Corporation for the Preferred
Stock to be closed, not more than 60 days or less than 30 days prior to the date
fixed for such redemption.
(c) At any time after a notice of redemption shall have been
mailed and before the Redemption Date, the Corporation shall deposit for the
benefit of the holders of shares of Preferred Stock to be redeemed the funds
necessary for such redemption with a bank or trust company having a capital and
surplus of at least $200,000,000. Any moneys so deposited by the Corporation and
unclaimed at the end of one year from the date designated for such redemption
shall revert to the general funds of the Corporation. After such reversion, any
such bank or trust company, upon demand, shall pay over to the Corporation such
unclaimed amounts and thereupon such bank or trust company shall be relieved of
all responsibility in respect thereof and any holder of shares of Preferred
Stock to be redeemed shall look only to the Corporation for the payment of the
Redemption Price, subject to Article VIII of the Charter and applicable laws
relating to abandoned property. In the event that moneys are deposited pursuant
to this Section 5(c) in respect of shares of Preferred Stock that are converted
in accordance with the provisions of Section 8, such moneys shall, upon such
conversion, revert to the general funds of the Corporation and, upon demand,
such bank or trust company shall pay over to the Corporation such moneys and
shall be relieved of all responsibilities to the holders of such converted
shares in respect thereof. Any interest accrued on funds deposited pursuant to
this Section 5(c) shall be paid from time to time to the Corporation for its own
account.
(d) Notice of redemption having been given as aforesaid, upon the
deposit of funds pursuant to Section 5(c) in respect of shares of Preferred
Stock to be redeemed pursuant to Section 5(a), notwithstanding that any
certificates for such shares shall not have been surrendered for cancellation,
from and after the Redemption Date (i) the shares represented thereby shall no
longer be deemed outstanding, (ii) the rights to receive dividends thereon shall
cease to accrue, and (iii) all rights of the holders of shares of Preferred
Stock to be redeemed shall cease and terminate, excepting only the
<PAGE>
6
right to receive the Redemption Price therefor and the right to convert such
shares into shares of Common Stock until the close of business on the Redemption
Date, in accordance with Section 8; provided, however, that if the Corporation
-------- -------
shall default in the payment of the Redemption Price, the shares of Preferred
Stock that were to be redeemed shall thereafter be deemed to be outstanding and
the holders thereof shall have all of the rights of a holder of Preferred Stock
until such time as such default shall no longer be continuing or shall have been
waived by holders of at least a majority of the then outstanding shares of
Preferred Stock.
Section 6. Reacquired Shares.
-----------------
Any shares of Preferred Stock converted, exchanged, redeemed,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All such
shares of Preferred Stock shall upon their cancellation become authorized but
unissued shares of preferred stock, no par value, of the Corporation and, upon
the filing of an appropriate Certificate of Designation with the Secretary of
State of the State of Louisiana, may be reissued as part of another series of
preferred stock, no par value, of the Corporation, but in any event may not be
reissued as shares of Preferred Stock unless all of the shares of Preferred
Stock issued on the Issue Date shall have already been redeemed or converted.
Section 7. Liquidation, Dissolution or Winding Up.
--------------------------------------
(a) If the Corporation shall commence a voluntary case under the
United States bankruptcy laws or any applicable bankruptcy, insolvency or
similar law of any other country, or consent to the entry of an order for relief
in an involuntary case under any such law or to the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other similar
official) of the Corporation or of any substantial part of its property, or make
an assignment for the benefit of its creditors, or admit in writing its
inability to pay its debts generally as they become due or if a decree or order
for relief in respect of the Corporation shall be entered by a court having
jurisdiction in the premises in an involuntary case under the United States
bankruptcy laws or any applicable bankruptcy, insolvency or similar law of any
other country, or appointing a receiver, liquidator, assignee, custodian,
trustee, sequestrator (or other similar official) of the Corporation or of any
substantial part of its property, or ordering the winding up or liquidation of
its affairs, and on account of any such event the Corporation shall liquidate,
dissolve or wind up, or if the Corporation shall otherwise liquidate, dissolve
or wind up (any such event, a "Liquidation"), no distribution shall be made to
-----------
the holders of shares of Junior Stock unless, prior thereto, the holders of
shares of Preferred Stock shall have received an amount per share of Preferred
Stock equal to the greater of (i) the Stated Value, plus all declared and unpaid
dividends to the date of distribution, or (ii) the proceeds in Liquidation that
the holders of Preferred
<PAGE>
7
Stock would have received in respect of all shares of Common Stock issuable to
such holders upon conversion of a share of Preferred Stock owned by such
holders, assuming that such share of Preferred Stock owned by such holders had
been converted into shares of Common Stock in accordance with Section 8
immediately prior to the Liquidation (such greater amount being the "Preferred
---------
Stock Liquidation Amount").
- ------------------------
(b) Notwithstanding the foregoing, if the assets distributable
upon a Liquidation shall be insufficient to pay in full the Preferred Stock
Liquidation Amount on all shares of Preferred Stock outstanding and any amount
payable to the holders of Parity Stock, then all of the assets available after
payment of any amounts payable on the Senior Stock shall be distributed among
the holders of the Preferred Stock and the Parity Stock ratably in proportion to
the respective amounts of the assets to which they would otherwise be entitled.
(c) Neither the consolidation or merger of the Corporation with
or into any other Person nor the sale or other distribution to another Person of
all or substantially all the assets, property or business of the Corporation,
shall be deemed to be a liquidation, dissolution or winding up of the
Corporation for purposes of this Section 7.
Section 8. Voluntary Conversion.
--------------------
(a) Any holder of Preferred Stock shall have the right, at its
option, at any time and from time to time, to convert, subject to the terms and
provisions of this Section 8, any or all of such holder's shares of Preferred
Stock into such number of fully paid and non-assessable shares of Class B Common
Stock as is equal, subject to Section 8(g), to the product of the number of
shares of Preferred Stock being so converted multiplied by the quotient of (i)
Stated Value divided by (ii) the Conversion Price (as defined below) then in
effect, except that with respect to any shares which shall be called for
redemption, such right shall terminate at the close of business on the date of
redemption for such shares, unless in any such case the Corporation shall
default in payment due upon redemption thereof. The "Conversion Price" shall be
----------------
$26.55, subject to adjustment as set forth in Section 8(d). Such conversion
right shall be exercised by the surrender of the shares to be converted to the
Corporation at any time during usual business hours at its principal place of
business to be maintained by it, accompanied by written notice that the holder
elects to convert such shares and specifying the name or names (with address) in
which a certificate or certificates for shares of Class B Common Stock are to be
issued and (if so required by the Corporation) by a written instrument or
instruments of transfer in form reasonably satisfactory to the Corporation duly
executed by the holder or its duly authorized legal representative and transfer
tax stamps or funds therefor, if required pursuant to Section 8(k). All shares
of Preferred Stock surrendered for conversion shall be
<PAGE>
8
delivered to the Corporation for cancellation and canceled by it and no shares
of Preferred Stock shall be issued in lieu thereof.
If a holder of Preferred Stock Transfers (as defined in Article IV(B)
of the Corporation's Articles of Incorporation) any or all of such holder's
shares of Preferred Stock other than (i) to the Corporation or to a Qualified
Holder or Holders, (ii) pursuant to any merger, consolidation, share exchange or
disposition of all or substantially all of the Corporation's assets that is
approved in the manner provided in Article X(A) of the Corporation's Articles of
Incorporation or (iii) by any bona fide pledge or hypothecation of shares to
secure an obligation of such holder, this Section 8 shall apply to the holder or
holders of shares of Preferred Stock that have been Transferred, except that any
reference herein to "Class B Common Stock" shall mean "Class A Common Stock".
In the event that a holder of Preferred Stock Transfers any or all of such
holder's shares of Preferred Stock other than in accordance with clauses (i),
(ii) or (iii) of the preceding sentence, the Company shall not be obligated with
respect to such Transferred Shares to issue shares of Class B Common Stock on
its books, pay dividends on shares of Class B Common Stock to the transferee
thereof or otherwise regard the transferee thereof as a Class B stockholder. If
any Transfer shall not cause the transferee holder or holders of Preferred Stock
to have the right to convert the Transferred shares of Preferred Stock to Class
A Common Stock (instead of Class B Common Stock), then any subsequent Transfer
by the holder or pledgor, as the case may be, of such Preferred Stock shall be
subject to the terms and conditions set forth herein, including exceptions.
(b) As promptly as practicable after the surrender, as herein
provided, of any shares of Preferred Stock for conversion pursuant to Section
8(a), the Corporation shall deliver to the holder of such shares so surrendered,
a certificate or certificates representing the number of fully paid and non-
assessable shares of Class B Common Stock into which such shares of Preferred
Stock may be or have been converted in accordance with the provisions of this
Section 8. Subject to the following provisions of this paragraph and of Section
8(d), such conversion shall be deemed to have been made immediately prior to the
close of business on the date that such shares of Preferred Stock shall have
been surrendered in satisfactory form for conversion, and the Person or Persons
entitled to receive the Class B Common Stock deliverable upon conversion of such
shares of Preferred Stock shall be treated for all purposes as having become the
record holder or holders of such Class B Common Stock at such time, and such con
version shall be at the Conversion Price in effect at such time; provided,
--------
however, that no surrender shall be effective to constitute the Person or
- -------
Persons entitled to receive the Class B Common Stock deliverable upon such
conversion as the record holder or holders of such Class B Common Stock while
the share transfer books of the Corporation shall be closed (but not for any
period in excess of five days), but such surrender shall be effective to
constitute the Person or Persons entitled to receive such Class B Common Stock
as the record holder or holders thereof for all purposes
<PAGE>
9
immediately prior to the close of business on the next succeeding day on which
such share transfer books are open, and such conversion shall be deemed to have
been made at, and shall be made at the Conversion Price in effect at, such time
on such next succeeding day.
(c) To the extent permitted by law, when shares of Preferred Stock
are converted, all dividends which have been declared and are unpaid on the
Preferred Stock so converted to the date of conversion shall be immediately due
and payable and must accompany the shares of Class B Common Stock issued upon
such conversion.
(d) The Conversion Price shall be subject to adjustment as follows:
(i) If the Corporation shall, at any time or from time to time,
(A) pay a dividend or make a distribution (other than a dividend or distribution
paid to holders of Preferred Stock in the manner provided in Section 2) on the
outstanding shares of Common Stock in capital stock (which, for purposes of this
Section 8(d) shall include, without limitation, any options, warrants or other
rights to acquire capital stock) of the Corporation, (B) subdivide the
outstanding shares of Common Stock into a larger number of shares, (C) combine
the outstanding shares of Common Stock into a smaller number of shares, or (D)
issue any shares of its capital stock in a reclassification of any or all
classes of Common Stock, then, and in each such case, the Conversion Price in
effect immediately prior to such event shall be adjusted (and any other
appropriate actions shall be taken by the Corporation) so that the holder of any
share of Preferred Stock thereafter surrendered for conversion shall be entitled
to receive the number of shares of Class B Common Stock or other securities of
the Corporation that such holder would have owned or would have been entitled to
receive upon or by reason of any of the events described above, had such share
of Preferred Stock been converted immediately prior to the occurrence of such
event. An adjustment made pursuant to this Section 8(d)(i) shall become
effective retroactively (A) in the case of any such dividend or distribution, to
a date immediately following the close of business on the record date for the
determination of holders of Common Stock entitled to receive such dividend or
distribution, or (B) in the case of any such subdivision, combination or
reclassification, to the close of business on the day upon which such corporate
action becomes effective.
(ii) If the Corporation shall, at any time or from time to time,
issue shares of Common Stock (or securities convertible into or exchangeable for
Common Stock, or any options, warrants or other rights to acquire shares of
Common Stock) for a consideration per share less than the Conversion Price per
share of Common Stock then in effect at the record date or Issuance Date (as
defined below), as the case may be (the "Date"), referred to in the following
----
sentence (treating the price per share of any security convertible or
exchangeable or exercisable into Common Stock as equal to (A) the sum of the
price for such security convertible, exchangeable
<PAGE>
10
or exercisable into Common Stock plus any additional consideration payable
(without regard to any anti-dilution adjustments) upon the conversion, exchange
or exercise of such security into Common Stock divided by (B) the number of
shares of Common Stock initially under lying such convertible, exchangeable or
exercisable security), then, and in each such case, the Conversion Price then in
effect shall be adjusted by dividing the Conversion Price in effect on the day
immediately prior to the Date by a fraction (x) the numerator of which shall be
the sum of the number of shares of Common Stock outstanding on the Date plus the
number of additional shares of Common Stock issued or to be issued (or the
maximum number into which such convertible or exchangeable securities initially
may convert or exchange or for which such options, warrants or other rights
initially may be exercised) and (y) the denominator of which shall be the sum of
the number of shares of Common Stock outstanding on the Date plus the number of
shares of Common Stock which the aggregate consideration for the total number of
such additional shares of Common Stock so issued or be issued upon the
conversion, exchange or exercise of such convertible or exchangeable securities
or options, warrants or other rights (plus the aggregate amount of any
additional consideration initially payable upon such conversion, exchange or
exercise of such security) would purchase at the Conversion Price on the Date.
Such adjustment shall be made whenever such shares, securities, options,
warrants or other rights are issued, and shall become effective retroactively to
a date immediately following the close of business (1) in the case of issuance
to stockholders of the Corporation, as such, on the record date for the
determination of stockholders entitled to receive such shares, securities,
options, warrants or other rights and (2) in all other cases, on the date of
such issuance ("Issuance Date"); provided that:
------------- --------
(A) the determination as to whether an adjustment is
required to be made pursuant to this Section 8(d)(ii) shall be made upon the
issuance of such shares or such convertible or exchangeable securities, options,
warrants or other rights;
(B) if any convertible or exchangeable securities, options,
warrants or other rights (or any portions thereof) which shall have given rise
to an adjustment pursuant to this Section 8(d)(ii) shall have expired or
terminated without the exercise thereof and/or if by reason of the terms of such
convertible or exchangeable securities, options, warrants or other rights there
shall have been an increase or increases, with the passage of time or otherwise,
in the price payable upon the exercise or conversion thereof, then the
Conversion Price hereunder shall be readjusted (but to no greater extent than
originally adjusted) on the basis of (x) eliminating from the computation any
additional shares of Common Stock corresponding to such convertible or
exchangeable securities, options, warrants or other rights as shall have expired
or terminated, (y) treating the additional shares of Common Stock, if any,
actually issued or issuable pursuant to the previous exercise of such
convertible or exchangeable securities, options, warrants or other rights as
having
<PAGE>
11
been issued for the consideration actually received and receivable therefor, and
(z) treating any of such convertible or exchangeable securities, options,
warrants or other rights which remain outstanding as being subject to exercise
or conversion on the basis of such exercise or conversion price as shall be in
effect at this time; and
(C) no adjustment in the Conversion Price shall be made
pursuant to this Section 8(d)(ii) as a result of any issuance of securities by
the Corporation in respect of which an adjustment to the Conversion Price is
made pursuant to Section 8(d)(i).
(ii) If the Corporation shall, at any time or from time to time,
distribute to all holders of shares of its Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the resulting or surviving corporation and the Common Stock is
not changed or exchanged) cash, evidences of indebtedness of the Corporation or
another issuer, securities of the Corporation or another issuer or other assets
(excluding (A) dividends or distributions paid or made to holders of shares of
Preferred Stock in the manner provided in Section 2, and (B) dividends payable
in shares of Common Stock for which adjustment is made under Section 8(d)(i)) or
rights or warrants to subscribe for or purchase securities of the Corporation
(excluding those referred to in Section 8(d)(ii) or those in respect of which an
adjustment in the Conversion Price is made pursuant to Section 8(d)(i) or (ii)),
then, and in each such case, the Conversion Price then in effect shall be
adjusted by dividing the Conversion Price in effect immediately prior to the
date of such distribution by a fraction (x) the numerator of which shall be the
Market Price of the Common Stock on the record date referred to below and (y)
the denominator of which shall be such Market Price of the Common Stock less the
then Fair Market Value (as determined by the Board of Directors of the
Corporation) of the portion of the cash, evidences of indebtedness, securities
or other assets so distributed or of such subscription rights or warrants
applicable to one share of Common Stock (but such denominator not to be less
than one). Such adjustment shall be made whenever any such distribution is made
and shall become effective retroactively to a date immediately following the
close of business on the record date for the determination of stockholders
entitled to receive such distribution.
(iv) If the Corporation, at any time or from time to time, shall
take any action affecting its Common Stock similar to or having an effect
similar to any of the actions described in any of Section 8(d)(i) through
Section 8(d)(iii), inclusive, or Section 8(h) (but not including any action
described in any such Section) and the Board of Directors of the Corporation in
good faith determines that it would be equitable in the circumstances to adjust
the Conversion Price as a result of such action, then, and in each such case,
the Conversion Price shall be adjusted in such manner and at such time as the
Board of Directors of the Corporation in good faith determines would be
<PAGE>
12
equitable in the circumstances (such determination to be evidenced in a
resolution, a certified copy of which shall be mailed to the holders of the
Preferred Stock).
(v) Notwithstanding anything herein to the contrary, no
adjustment under this Section 8(d) need be made to the Conversion Price unless
such adjustment would require an increase or decrease equal to at least 1% of
the Conversion Price then in effect. Any lesser adjustment shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment, which, together with any adjustment or adjustments so carried
forward, shall amount to an increase or decrease equal to at least 1% of such
Conversion Price. Any adjustment to the Conversion Price carried forward and not
theretofore made shall be made immediately prior to the conversion of any shares
of Preferred Stock pursuant hereto.
(vi) Notwithstanding anything to the contrary contained
herein, no adjustment under this Section 8(d) shall be made upon the issuance of
shares of Common Stock upon the exercise of up to 2,000 options with respect to
Common Stock with an exercise price of $6.00 per share.
(e) If the Corporation shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the Conversion Price then in
effect shall be required by reason of the taking of such record.
(f) Upon any increase or decrease in the Conversion Price, then,
and in each such case, the Corporation promptly shall deliver to each registered
holder of Pre ferred Stock at least five Business Days prior to effecting any of
the foregoing transactions, a certificate, signed by the President or a Vice-
President and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary of the Corporation, setting forth in reasonable detail the
event requiring the adjustment and the method by which such adjustment was
calculated and specifying the increased or decreased Conversion Price then in
effect following such adjustment.
(g) No fractional shares or scrip representing fractional shares
shall be issued upon the conversion of any shares of Preferred Stock. If more
than one share of Preferred Stock shall be surrendered for conversion at one
time by the same holder, the number of full shares of Common Stock issuable upon
conversion thereof shall be computed on the basis of the aggregate Stated Value
of the shares of Preferred Stock so surrendered. If the conversion of any share
or shares of Preferred Stock results in a fraction, an amount equal to such
fraction multiplied by the Current Market Price of the Common Stock on the
Business Day preceding the day of conversion shall be paid to such holder in
cash by the Corporation.
<PAGE>
13
(h) In case of any capital reorganization or reclassification or
other change of outstanding shares of Common Stock (other than a change in par
value, or from par value to no par value, or from no par value to par value), or
in case of any consolidation or merger of the Corporation with or into another
Person (other than a consolidation or merger in which the Corporation is the
resulting or surviving Person and which does not result in any reclassification
or change of outstanding Common Stock) (any of the foregoing, a "Transaction"),
-----------
the Corporation, or such successor or purchasing Person, as the case may be,
shall execute and deliver to each holder of Preferred Stock at least ten
Business Days prior to effecting any of the foregoing Transactions a certificate
that the holder of each share of Preferred Stock then outstanding shall have the
right thereafter to convert such share of Preferred Stock into the kind and
amount of shares of stock or other securities (of the Corporation or another
issuer) or property or cash receivable upon such Transaction by a holder of the
number of shares of Common Stock into which such share of Preferred Stock could
have been converted immediately prior to such Transaction. Such certificate
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 8. If, in the case
of any such Transaction, the stock, other securities, cash or property
receivable thereupon by a holder of Common Stock includes shares of stock or
other securities of a Person other than the successor or purchasing Person and
other than the Corporation, which controls or is controlled by the successor or
purchasing Person or which, in connection with such Transaction, issues stock,
securities, other property or cash to holders of Common Stock, then such
certificate also shall be executed by such Person, and such Person shall, in
such certificate, specifically acknowledge the obligations of such successor or
purchasing Person to issue such stock, securities, other property or cash to the
holders of Preferred Stock upon conversion of the shares of Preferred Stock as
provided above. The provisions of this Section 8(h) and any equivalent thereof
in any such certificate similarly shall apply to successive Transactions.
(i) In case at any time or from time to time:
(i) the Corporation shall declare a dividend (or any other
distribution) on its Common Stock;
(ii) the Corporation shall authorize the granting to the
holders of its Common Stock of rights or warrants to subscribe for or purchase
any shares of stock of any class or of any other rights or warrants;
(iii) there shall be any reclassification of the Common
Stock, or any consolidation or merger to which the Corporation is a party and
for which approval of any shareholders of the Corporation is required, or any
sale or other disposition of all or substantially all of the assets of the
Corporation; or
<PAGE>
14
(iv) there shall be any voluntary or involuntary
dissolution, liquidation or winding up of the Corporation;
then the Corporation shall mail to each holder of shares of Preferred Stock at
such holder's address as it appears on the transfer books of the Corporation, as
promptly as possible but in any event at least ten days prior to the applicable
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution or rights or warrants
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution or rights are to
be determined, or (y) the date on which such reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up is expected to
become effective. Such notice also shall specify the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their Common Stock for shares of stock or other securities or property or cash
deliverable upon such reclassification, consolidation, merger, sale, conveyance,
dissolution, liquidation or winding up.
(j) The Corporation shall at all times reserve and keep
available for issuance upon the conversion of the Preferred Stock pursuant to
Section 8(a) or 10(a), such number of its authorized but unissued shares of
Common Stock as will from time to time be sufficient to permit the conversion of
all outstanding shares of Preferred Stock, and shall take all action required to
increase the authorized number of shares of Common Stock if at any time there
shall be insufficient authorized but unissued shares of Common Stock to permit
such reservation or to permit the conversion of all outstanding shares of
Preferred Stock.
(k) The issuance or delivery of certificates for Common Stock
upon the conversion of shares of Preferred Stock pursuant to Section 8(a) or
10(a) or other securities shall be made without charge to the converting holder
of shares of Preferred Stock for such certificates or for any tax in respect of
the issuance or delivery of such certificates or the securities represented
thereby, and such certificates shall be issued or delivered in the respective
names of, or (subject to compliance with the applicable provisions of federal
and state securities laws) in such names as may be directed by, the holders of
the shares of Preferred Stock converted; provided, however, that the Corporation
-------- -------
shall not be required to pay any transfer tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificate in a
name other than that of the holder of the shares of Preferred Stock converted,
and the Corporation shall not be required to issue or deliver such certificate
unless or until the Person or Persons requesting the issuance or delivery
thereof shall have paid to the Corporation the amount of such transfer tax or
shall have established to the reasonable satisfaction of the Corporation that
such transfer tax has been paid.
<PAGE>
15
Section 9. Certain Remedies.
----------------
Any registered holder of Preferred Stock shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this
Certificate of Designation and to enforce specifically the terms and provisions
of this Certificate of Designation in any court of the United States or any
state thereof having jurisdiction, this being in addition to any other remedy to
which such holder may be entitled at law or in equity.
Section 10. Mandatory Conversion.
--------------------
(a) If (i) on the IPO Date, the initial offering price to the
public of the Common Stock exceeds an amount which would result in the Fund
achieving at least a 20% per annum Internal Rate of Return, or, (ii at any time
after the IPO Date, for at least 30 consecutive Trading Days the Market Price of
the Common Stock at the end of each Trading Day during such 30-day period
exceeds an amount which would result in the Fund achieving at least a 20% per
annum Internal Rate of Return, then within 10 Business Days after the IPO Date
or such 30-day period, as the case may be, the Corporation shall have the right,
at its sole option and election, to require all the holders of Preferred Stock
to convert all (but not less than all) of their shares of Preferred Stock into
such number of fully paid and non-assessable shares of Class B Common Stock as
is equal, subject to Section 8(g), to the product of the number of shares of
Preferred Stock being so converted multiplied by the quotient of (i) the Stated
Value per share divided by (ii) the Conversion Price in effect on the date of
conversion pursuant to this Section 10 (the "Mandatory Conversion").
--------------------
(b) To the extent permitted by law, when shares of Preferred
Stock are converted, all dividends declared and unpaid on the Preferred Stock so
converted to the date of conversion shall be immediately due and payable and
must accompany the shares of Common Stock issued upon such conversion.
(c) Notice of a conversion of shares of Preferred Stock pursuant
to Section 10(a) shall be given by publication in a newspaper of general
circulation in the Borough of Manhattan, The City of New York (if such
publication shall be required by applicable law, rule, regulation or securities
exchange requirement), not less than 30, nor more than 60, days prior to the
date fixed by the Corporation for such mandatory conversion (the "Mandatory
---------
Conversion Date") and a similar notice shall be mailed at least 30, but not more
- ---------------
than 60 days prior to the Mandatory Conversion Date to each holder at such
holder's address as it appears on the transfer books of the Corporation. In
order to facilitate the conversion of shares of Preferred Stock hereunder the
Board of Directors may fix a record date for the determination of shares of
Preferred Stock to be converted, or may cause the transfer books of the
Corporation for the Preferred Stock
<PAGE>
16
to be closed, not more than 60 or less than 30 days prior to the Mandatory
Conversion Date.
(d) Unless otherwise agreed, on or prior to the Mandatory
Conversion Date, the Corporation shall deposit for the benefit of the holders of
shares of Preferred Stock to be converted the shares of Common Stock and cash in
the amount of declared and unpaid dividends (the "Dividends") necessary for such
---------
conversion with a bank or trust company having a capital and surplus of at least
$200,000,000. Any shares of Common Stock and Dividends so deposited by the
Corporation and unclaimed at the end of one year from the date designated for
such conversion shall revert to the Corporation. After such reversion, any such
bank or trust company shall, upon demand, return to the Corporation such
unclaimed shares of Common Stock and Dividends and thereupon such bank or trust
company shall be relieved of all responsibility in respect thereof and any
holder of shares of Preferred Stock to be converted shall look only to the
Corporation for the delivery of the shares of Common Stock and Dividends,
subject to Article VIII of the Charter and applicable laws relating to abandoned
property. In the event that shares of Common Stock and Dividends are deposited
pursuant to this Section 10(e) in respect of shares of Preferred Stock that are
converted prior to the Mandatory Conversion Date in accordance with the
provisions of Section 8, such shares of Common Stock and Dividends shall, upon
such conversion, revert to the Corporation and, upon demand, such bank or trust
company shall return to the Corporation such shares of Common Stock and
Dividends and shall be relieved of all responsibilities to the holders of such
converted shares in respect thereof. Any dividends accrued on shares of Common
Stock deposited pursuant to this Section 10(e) shall accrue for the accounts of,
and be payable to, the holders of shares of Preferred Stock to be exchanged
therefor. Any interest accruing on the Dividends shall be for the benefit and be
payable to the Corporation.
(e) Notice of Mandatory Conversion having been given as
aforesaid, upon the deposit of shares of Common Stock and Dividends pursuant to
Section 10(e) in respect of shares of Preferred Stock to be converted pursuant
to Section 10(a), notwithstanding that any certificates for such shares shall
not have been surrendered for cancellation, from and after the Mandatory
Conversion Date (i) the shares represented thereby shall no longer be deemed
outstanding, (ii) the rights to receive dividends thereon shall cease to accrue,
and (iii) all rights of the holders of shares of Preferred Stock to be converted
shall cease and terminate, excepting only the right to receive the shares of
Common Stock and Dividends and the right to convert such Preferred Stock into
shares of Common Stock until the close of business on the Mandatory Conversion
Date, in accordance with Section 8; provided, however, that if the Corporation
-------- -------
shall in the execution and delivery of the shares of Common Stock or Dividends,
the shares of Preferred Stock that were to be converted shall thereafter be
deemed to be outstanding and the holders thereof shall have all of the rights of
a holder of Preferred Stock until such time as such default shall no longer be
continuing or shall have been
<PAGE>
17
waived by holders of at least a majority of the then outstanding shares of
Preferred Stock.
Section 11. Definitions.
-----------
For the purposes of this Amendment, the following terms shall
have the meanings indicated:
"Affiliate" shall have the meaning ascribed to such term in Rule
---------
12b-2 of the General Rules and Regulations under the Exchange Act; provided that
--------
"Affiliate" shall not include the Purchaser or any Affiliate of the Purchaser.
"Business Day" shall mean any day other than a Saturday, Sunday
------------
or other day on which commercial banks in The City of New York, New
York are authorized or required by law or executive order to close.
"Change of Control" shall mean:
-----------------
(a) any Person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act), other than a Principal Shareholder, becoming the
beneficial owner, directly or indirectly, of outstanding shares of stock of the
Corporation entitling such Person or Persons to exercise 50% or more of the
total votes entitled to be cast at a regular or special meeting, or by action by
written consent, of the stockholders of the Corporation in the election of
directors (the term "beneficial owner" shall be determined in accordance with
Rule 13d-3 of the Exchange Act);
(b) a majority of the Board of Directors of the Corporation
consisting of Persons other than Continuing Directors;
(c) the sale or other disposition of all or substantially all
the assets of the Corporation in one transaction or in a series of related
transactions; or
(d) any transaction occurring, the result of which is that the
Common Stock is not required to be registered under Section 12 of the Exchange
Act and that the holders of Common Stock do not receive common stock of the
Person surviving such transaction which is required to be registered under
Section 12 of the Exchange Act.
"Charter" shall mean the Articles of Incorporation of the
-------
Corporation.
"Class A Common Stock" shall mean the Class A common stock, par
--------------------
value $0.01 per share, of the Corporation.
<PAGE>
18
"Class B Common Stock" shall mean the Class B common stock, par
--------------------
value $0.01 per share, of the Corporation.
"Common Stock" shall mean the Class A Common Stock, the Class B
------------
Common Stock and each other class of capital stock, of the Corporation that does
not have a preference over any other class of capital stock of the Corporation
as to dividends or upon liquidation, dissolution or winding up of the
Corporation and, in each case, shall include any other class of capital stock of
the Corporation into which such stock is reclassified or reconstituted.
"Continuing Director" shall mean any member of the Board of
-------------------
Directors as of the date hereof and any other member of the Board of Directors
who shall be recommended or elected to succeed a Continuing Director by a
majority of Continuing Directors who are the members of the Board of Directors
or by the holders of the Preferred Stock.
"Current Market Price" per share shall mean, on any date
--------------------
specified herein for the determination thereof, (a) the average daily Market
Price of the Common Stock for those days during the period of 20 days, ending on
such date, which are Trading Days, and (b) if the Common Stock is not then
listed or admitted to trading on any national securities exchange or quoted in
the over-the-counter market, the Market Price on such date. For purposes of this
definition, the Class A and Class B shares will be treated as one class of
Common Stock having no distinctions between them.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder.
"Fair Market Value" shall mean the amount which a willing buyer,
-----------------
under no compulsion to buy, would pay a willing seller, under no
compulsion to sell, in an arm's-length transaction.
"Fund" means The 1818 Fund III, L.P., a Delaware limited
----
partnership.
"Internal Rate of Return" means, as of a particular date, an
-----------------------
internal rate of return calculated by determining the discount rate that equates
the present value of all cash flows of the Fund's investment in the Preferred
Stock to zero and which is derived by taking into account (i) the amount
invested in the Preferred Stock by the Fund as of the Issue Date net of any
facility fee received by the Fund, (ii) the amount of any proceeds received by
the Fund upon the sale or other disposition prior to such date of all or any
portion of the Preferred Stock or the Common Stock issuable upon conversion of
the Preferred Stock (as of the date received), (iii) the amount of any dividends
or the Fair Market Value of any other distributions on the shares of Preferred
<PAGE>
19
Stock received by the Fund, and (iv) the IPO Price or the Market Price, as the
case may be, of the Common Stock issued or issuable to the Fund upon conversion
of the Preferred Stock held by the Fund.
"IPO Date" shall mean the date on which the Corporation (i) becomes a
--------
"reporting company," as defined under Section 12(g) of the Exchange Act, with
all of its filings with the Securities and Exchange Commission being current,
and (ii) has completed one or more underwritten offerings of Common Stock
registered under Securities Act of 1933, as amended, with at least $50 million,
in the aggregate, of gross proceeds to the Corporation.
"Issue Date" shall mean the original date of issuance of shares of
----------
Preferred Stock to the holders pursuant to the Securities Purchase Agreement.
"Junior Stock" shall mean any capital stock of the corporation ranking
------------
junior (either as to dividends or upon liquidation, dissolution or winding up)
to the Preferred Stock including, without limitation, the Common Stock.
"LA Unwired" means Louisiana Unwired, LLC, a Louisiana limited
----------
liability company.
"LEC Unwired" means LEC Unwired, LLC, a Louisiana limited liability
-----------
company.
"Material Subsidiary" shall mean LA Unwired, LEC Unwired, Unwired
-------------------
Telecom or Texas Unwired or any other Subsidiaries of the Corporation that are
"material subsidiaries" as that term is defined in Regulation S-X promulgated
under the Securities Act of 1933, as amended.
"Market Price" shall mean, per share of Common Stock on any date
------------
specified herein: (a) the closing price per share of the Common Stock on such
date published in The Wall Street Journal or, if no such closing price on such
-----------------------
date is published in The Wall Street Journal, the average of the closing bid and
-----------------------
asked prices on such date, as officially reported on the principal national
securities exchange on which the Common Stock is then listed or admitted to
trading; (b) if the Common Stock is not then listed or admitted to trading on
any national securities exchange but is designated as a national market system
security, the last trading price of the Common Stock on such date; or (c) if
there shall have been no trading on such date or if the Common Stock is not so
designated, the average of the reported closing bid and asked prices of the
Common Stock on such date as shown by NASDAQ and reported by any member firm of
the NYSE, selected by the Corporation. If neither (a), (b) or (c) is
applicable, Market Price shall mean the Fair Market Value per share determined
in good faith by the Board of Directors of the Corporation which shall be deemed
to be Fair Market
<PAGE>
20
Value unless holders of at least 15% of the outstanding shares of Preferred
Stock request that the Corporation obtain an opinion of a nationally recognized
investment banking firm chosen by such holders (at the Corporation's expense),
in which event Fair Market Value shall be as determined by such investment
banking firm. For purposes of this definition, the Class A and Class B shares
will be treated as one class of Common Stock having no distinctions between
them.
"Meretel" means Meretel Communications Limited Partnership, a
-------
Louisiana partnership in commendam.
"NASDAQ" shall mean the National Market System of the NASDAQ Stock
------
Market.
"NYSE" shall mean the New York Stock Exchange, Inc.
----
"Parity Stock" shall mean any capital stock of the corporation,
------------
including the Preferred Stock, ranking on a par (either as to dividends or upon
liquidation, dissolu tion or winding up) with the Preferred Stock.
"Person" shall mean any individual, firm, corporation, partnership,
------
trust, incorporated or unincorporated association, joint venture, joint stock
company, government (or an agency or political subdivision thereof) or other
entity of any kind, and shall include any successor (by merger) of such entity.
"Principal Shareholder" means any one or more of William L. Henning,
---------------------
Sr., William L. Henning, Jr., John A. Henning and Thomas G. Henning, and their
respective heirs and any trust, corporation, partnership or limited liability
company, all of the beneficial interests in which shall be held by any of the
foregoing.
"Securities Purchase Agreement" shall mean the Securities Purchase
-----------------------------
Agreement, dated October 29, 1999, between the Corporation and The 1818 Fund
III, L.P., as the same may be amended from time to time.
"Senior Stock" shall mean any capital stock of the Corporation ranking
------------
senior (either as to dividends or upon liquidation, dissolution or winding up)
to the Preferred Stock.
"Stated Value" shall mean $100 per share of Preferred Stock.
------------
"Subsidiary" shall mean, with respect to any Person, a corporation or
----------
other entity of which 50% or more of the voting power of the voting equity
securities or equity interest in owned, directly or indirectly, by such Person.
<PAGE>
21
"Texas Unwired" means Texas Unwired, a Louisiana general partnership.
-------------
"Trading Days" shall mean a day on which the national securities
------------
exchanges are open for trading.
"Unwired Telecom" means Unwired Telecom Corp., a Louisiana
---------------
corporation.
Section 12. Modification or Amendment.
-------------------------
Except as specifically set forth herein, modifications or amendments
to this Paragraph K may be made by the Corporation with the consent of the
holders of at least a majority of the outstanding shares of Preferred Stock."
3. Except as amended by these Articles of Amendment, the
Articles of Incorporation of the Corporation remain in full force and effect.
IN WITNESS WHEREOF, the undersigned President and Secretary have
executed these Articles of Amendment on October 25, 1999 at Lake Charles,
Louisiana.
US UNWIRED INC.
By: /s/ Robert W. Piper
------------------------------------
Name: Robert W. Piper
Title: President
By: /s/ Thomas G. Henning
------------------------------------
Name: Thomas G. Henning
Title: Secretary
<PAGE>
22
ACKNOWLEDGMENT
--------------
STATE OF LOUISIANA
PARISH OF CALCASIEU
BEFORE ME, the undersigned authority, personally appeared Robert W. Piper
and Thomas G. Henning to me known to be the persons who signed the foregoing
instrument as President and Secretary, respectively, of US Unwired Inc., and
who, having been duly sworn, acknowledged and declared in the presence of the
witnesses whose names are subscribed below, that they signed that instrument as
their free act and deed for the purposes mentioned therein.
IN WITNESS WHEREOF, the appearers and witnesses and I have signed below on
this 25 day of October, 1999.
WITNESSES:
/s/ Neil Prejean
____________________________
/s/ Melanie Mobile /s/ Robert W. Piper
____________________________ -------------------------------
/s/ Tamalyn Hendry Robert W. Piper, President
____________________________
/s/ Sue Duhon /s/ Thomas G. Henning
____________________________ -------------------------------
Thomas G. Henning, Secretary
/s/ Sheila King
____________________________
Notary Public
<PAGE>
EXHIBIT 3.3
Adopted
September 30, 1999
BY-LAWS
OF
US UNWIRED INC.
* * *
SECTION 1
Offices
1.1 Principal Office. The principal office of the Corporation shall be
located at Hibernia Tower, Suite 1900, One Lakeshore Drive, Lake Charles,
Louisiana.
1.2 Additional Offices. The Corporation may have such offices at such
other places as the Board of Directors may from time to time determine or the
business of the Corporation may require.
SECTION 2
Shareholders' Meetings
2.1 Place of Meetings. Unless otherwise required by law, the Articles of
Incorporation ("Articles") or these By-Laws, all meetings of the shareholders
shall be held at the principal office of the Corporation or at such other place,
within or without the State of Louisiana, as may be designated by the Board of
Directors.
2.2 Annual Meetings; Notice Thereof. An annual meeting of the
shareholders shall be held each year on the date and at the time as the Board of
Directors shall designate, for the purpose of electing directors and for the
transaction of such other business as may be properly brought before the
meeting. If no annual shareholders' meeting is held for a period of eighteen
months, any shareholder may call such meeting to be held at the registered
office of the Corporation as shown on the records of the Secretary of State of
the State of Louisiana.
2.3 Special Meetings. Special meetings of shareholders, for any purpose
or purposes, may be called in any manner set forth in the Articles or By-Laws.
In addition, at any time, upon the written request of any shareholder or group
of shareholders holding in the aggregate at least (i) 60% of the total voting
power of any series or class, the Secretary of the Corporation shall call a
special meeting of shareholders of such series or class, or (ii) 60% of the
total voting power of the Corporation, the Secretary of the Corporation shall
call a special meeting of all shareholders of the
<PAGE>
Corporation. Any such special meeting shall be held at the registered office of
the Corporation at such time as the Secretary may fix, not less than 15 nor more
than 60 days after the receipt of said request, and if the Secretary shall
neglect or refuse to fix such time or to give notice of the meeting, the
shareholder or shareholders making the request may do so. Such requests must
state the specific purpose or purposes of the proposed special meeting, and the
business to be conducted thereat shall be limited to such purpose or purposes.
Except as set forth in the Articles or this Section 2.3, shareholders of the
Corporation shall not have the right to call or have called special meetings of
the shareholders.
2.4 Notice of Meetings. Except as otherwise provided by the Articles or
by law, the authorized person or persons calling a shareholders' meeting shall
cause written notice of the time, place and purpose of the meeting to be given
to all shareholders entitled to vote at such meeting, at least 10 days and not
more than 60 days prior to the day fixed for the meeting. Notice of the annual
meeting need not state the purpose or purposes thereof, unless action is to be
taken at the meeting as to which notice is required by law or the By-Laws.
Notice of a special meeting shall state the purpose or purposes thereof, and the
business conducted at any special meeting shall be limited to the purpose or
purposes stated in the notice.
2.5 List of Shareholders. At every meeting of shareholders, a list of
shareholders entitled to vote, arranged alphabetically and certified by the
Secretary or by the agent of the Corporation having charge of transfers of
shares, showing the number and class of shares held by each such shareholder on
the record date for the meeting and confirming the number of votes per share as
to which each such shareholder is entitled, shall be produced on the request of
any shareholder.
2.6 Quorum. Except as may be otherwise provided in the Articles, a
majority of the total votes of any class of Common Stock or any series of
preferred stock shall constitute a quorum with respect to any matter requiring a
vote of such class or series, and a majority of the total votes of any classes
and/or series entitled to vote together as if a single class shall constitute a
quorum with respect to any matter requiring a vote of any such classes and/or
series voting as if a single class.
2.7 Voting. Except as otherwise provided by the Articles or as may be
required by law, the Class A Common Stock and Class B Common Stock shall vote
together as a single class in the election of Directors and with respect to any
other matter for which shareholder action or approval is required by the
Articles or by law, even if action or approval of the Class A or Class B Common
Stock voting on such matter as a separate class is also required. Whether voting
together as a single class or voting by class, as the case may be, the Class A
Common Stock shall have one vote per share, and the Class B Common Stock shall
have ten votes per share.
2.8 Proxies. At any meeting of the shareholders, every shareholder having
the right to vote shall be entitled to vote in person, or by proxy appointed by
an instrument in writing executed by such shareholder and bearing a date not
more than eleven months prior to said meeting, unless said instrument provides
for a longer period, but in no case will an outstanding proxy be valid for
longer than three years from the date of its execution, provided, however, that
in no event may a proxy be voted at a meeting called pursuant to La. R.S. 12:138
unless it is executed and dated by the
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<PAGE>
shareholder within 30 days of the date of such meeting. The person appointed as
a proxy need not be a shareholder of the Corporation.
2.9 Adjournments. Adjournments of any annual or special meeting of
shareholders may be taken without new notice being given unless a new record
date is fixed for the adjourned meeting, but any meeting at which directors are
to be elected shall be adjourned only from day to day until such directors shall
have been elected.
2.10 Withdrawal. If a quorum is present or represented at a duly
organized shareholders' meeting, such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum as fixed in Section 2.6 of these By-Laws, or the refusal of any
shareholders to vote.
2.11 Lack of Quorum. If a meeting cannot be organized because a quorum
has not attended, those present may adjourn the meeting to such time and place
as they may determine, subject, however, to the provisions of Section 2.9
hereof. In the case of any meeting called for the election of directors, those
who attend the second of such adjourned meetings, although less than a quorum as
fixed in Section 2.6 hereof, shall nevertheless be deemed to constitute a quorum
for the purpose of electing directors.
SECTION 3
Directors
3.1 Number. All of the corporate powers shall be vested in, and the
business and affairs of the Corporation shall be managed by a Board of
Directors. Except as otherwise fixed by or pursuant to Article V of the Articles
relating to the rights of the holders of any class or series of stock having a
preference over the Common Stock as to dividends or upon liquidation to elect
additional directors by class vote, the Board of Directors shall consist of
seven natural persons, provided that, if after proxy materials for any meeting
of shareholders at which directors are to be elected are mailed to shareholders
any person or person named therein to be nominated at the direction of the Board
of Directors becomes unable or unwilling to serve, the foregoing number of
authorized directors shall be automatically reduced by a number equal to the
number of such persons unless the Board of Directors selects an additional
nominee or nominees to replace such persons. No director need be a shareholder.
The Secretary shall have the power to certify at any time as to the number of
directors authorized and as to the class to which each director has been elected
or assigned.
3.2 Powers. The Board may exercise all such powers of the Corporation and
do all such lawful acts and things which are not by law, the Articles or these
By-Laws directed or required to be done by the shareholders.
3.3 Classes. The Board of Directors shall be divided, with respect to the
time during which they shall hold office, into three classes as nearly equal in
number as possible, with the initial term of office of Class III directors
expiring at the annual meeting of shareholders to be held in 2000, of Class I
directors expiring at the next succeeding annual meeting of shareholders and of
Class II
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<PAGE>
directors expiring at the second succeeding annual meeting of shareholders, with
all such directors to hold office until their successors are elected and
qualified. Any increase or decrease in the number of directors shall be
apportioned by the Board of Directors so that all classes of directors shall be
as nearly equal in number as possible. At each annual meeting of shareholders,
directors chosen to succeed those whose terms then expire shall be elected to
hold office for a term expiring at the annual meeting of shareholders held in
the third year following the year of their election and until successors are
duly elected and qualified.
3.4 General Election. At each annual meeting of shareholders, directors
shall be elected to succeed those directors whose terms then expire. No decrease
in the number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
3.5 Vacancies. Except as otherwise provided in the Articles or these By-
Laws, (a) the office of a director shall become vacant if he dies, resigns or is
duly removed from office and (b) the Board of Directors may declare vacant the
office of a director if he (i) is interdicted or adjudicated an incompetent,
(ii) is adjudicated a bankrupt, (iii) in the sole opinion of the Board of
Directors becomes incapacitated by illness or other infirmity so that he is
unable to perform his duties for a period of six months or longer, or (iv)
ceases at any time to have the qualifications required by law, the Articles or
these By-Laws.
3.6 Filling Vacancies. Except as otherwise provided in the Articles or
Section 3.8 of these By-Laws, any vacancy on the Board (including any vacancy
resulting from an increase in the authorized number of directors or from failure
of the shareholders to elect the full number of authorized directors) may,
notwithstanding any resulting absence of a quorum of directors, be filled by a
majority vote of the Board of Directors remaining in office, provided that the
shareholders shall have the right, at any special meeting called for such
purpose prior to any such action by the Board, to fill the vacancy. A director
elected pursuant to this section shall serve until the next shareholders'
meeting held for the election of directors of the class to which he shall have
been appointed and until his successor is elected and qualified.
3.7 Notice of Shareholder Nominees. Except as otherwise provided in the
Articles, only persons who are nominated in accordance with the procedures set
forth in this section shall be eligible as directors. Nominations of persons for
election to the Board of Directors may be made at a meeting of shareholders by
or at the direction of the Board of Directors or by any shareholder of record of
the Corporation entitled to vote for the election of directors at the meeting
who complies with the notice procedures set forth in this section. Such
nominations, other than those made by or at the direction of the Board of
Directors, shall be made pursuant to timely notice in writing to the Secretary
of the Corporation. To be timely, a shareholder's notice must be delivered or
mailed and received at the principal office of the Corporation not less than 45
days nor more than 90 days prior to the meeting, provided, however, that in the
event that less than 55 days notice or prior public disclosure of the date of
the meeting is given or made to shareholders, notice by the shareholder to be
timely must be received no later than the close of business on the tenth day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such shareholder's notice shall set forth or
include the following:
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<PAGE>
a. as to each person whom the shareholder proposes to nominate for
election or re-election as a director (i) the name, age, business address
and residential address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of capital
stock of the Corporation of which such person is the beneficial owner (as
defined in Rule 13d-3 promulgated under the Securities Exchange Act of
1934), (iv) such person's written consent to being named in the proxy
statement as a nominee and to serve as a director if elected and (v) any
other information relating to such person that would be required to be
disclosed in solicitations of proxies for election of directors, or would
be otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934; and
b. as to the shareholder of record giving the notice, (i) the name
and address of such shareholder and (b) the class and number of shares of
capital stock of the Corporation of which such shareholder is the
beneficial owner (as defined in Rule 13d-3 promulgated under the Securities
Exchange Act of 1934). If requested in writing by the Secretary of the
Corporation at least 15 days in advance of the meeting, such shareholder
shall disclose to the Secretary, within 10 days of such request, whether
such person is the sole beneficial owner of the shares held of record by
him, and, if not, the name and address of each other person known by the
shareholder of record to claim or have a beneficial interest in such
shares.
At the request of the Board of Directors, any person nominated by or at the
direction of the Board of Directors for election as a director shall furnish to
the Secretary of the Corporation that information required to be set forth in a
shareholder's notice of nomination which pertains to the nominee. If a
shareholder seeks to nominate one or more persons as directors, the Secretary
shall appoint two inspectors, who shall not be affiliated with the Corporation,
to determine whether the shareholder has complied with this section. If the
inspectors shall determine that the shareholder has not complied with this
section, the defective nomination shall be disregarded and the inspectors shall
direct the Chairman of the meeting to declare at the meeting that such
nomination was not made in accordance with the procedures prescribed by the
Articles and these By-Laws.
3.8 Compensation of Directors. Directors shall receive such compensation
for their services, in their capacity as directors, as may be fixed by
resolution of the Board of Directors, provided, however, that nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
SECTION 4
Meetings of The Board
4.1 Place of Meetings. The meetings of the Board of Directors may be held
at such place within or without the State of Louisiana as a majority of the
directors may from time to time appoint.
4.2 Initial Meetings. The first meeting of each newly elected Board shall
be held immediately following the annual shareholders' meeting at which the
Board or any class thereof, is
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<PAGE>
elected and at the same place as the annual meeting, and no notice of such first
meeting shall be necessary for the newly elected directors in order legally to
constitute the meeting.
4.3 Regular Meetings; Notice. Regular meetings of the Board may be held
at such times as the Board may from time to time determine. Notice of regular
meetings of the Board of Directors shall be required, but no special form of
notice or time of notice shall be necessary.
4.4 Special meetings; Notice. Special meetings of the Board may be called
by the Chairman of the Board or the President on reasonable notice given to each
director, either personally or by telephone, mail, telex, telecopy or any other
comparable form of facsimile communication. Special meetings shall be called by
the Secretary in like manner and on like notice on the written request of a
majority of the directors and if the officer fails or refuses, or is unable
within 24 hours to call a meeting when requested, then the directors making the
request may call the meeting on two days' written notice given to each director.
The notice of a special meeting of directors need not state its purpose or
purposes. But if the notice states a purpose or purposes and does not state a
further purpose to consider such other business as may properly come before the
meeting, the business to be conducted at the special meeting shall be limited to
the purpose or purposes stated in the notice.
4.5 Waiver of Notice. Directors present at any regular or special meeting
shall be deemed to have received, or to have waived, due notice thereof,
provided that a director who participates in a meeting by telephone (as
permitted by Section 4.9 hereof) shall not be deemed to have received or waived
due notice if, at the beginning of the meeting, he objects to the transaction of
any business because the meeting is not lawfully called.
4.6 Quorum. A majority of the Board shall be necessary to constitute a
quorum for the transaction of business, and except as otherwise provided by law,
the Articles or these By-Laws, the acts of a majority of the directors present
at a duly called meeting at which a quorum is present shall be the acts of the
Board. If a quorum is not present at any meeting of the Board of Directors, the
directors present may adjourn the meeting from time to time without notice other
than announcement at the meeting until a quorum is present.
4.7 Withdrawal. If a quorum was present when the meeting convened, the
directors present may continue to do business, taking action by vote of a
majority of a quorum as fixed in Section 4.6 hereof, until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum
as fixed in Section 4.6 hereof or the refusal of any director present to vote.
4.8 Action by Consent. Any action that may be taken at a meeting of the
Board, or any committee thereof, may be taken by a consent in writing signed by
all of the directors or by all members of the committee, as the case may be, and
filed with the records of proceedings of the Board or committee.
4.9 Meetings by Telephone or Similar Communications. Members of the Board
may participate at and be present at any meeting of the Board or any committee
thereof by means of conference telephone or similar communications equipment if
all persons participating in such meeting can hear and communicate with each
other.
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<PAGE>
SECTION 5
Committees of The Board
5.1 General. The Board may designate one or more committees, each
committee to consist of two or more of the directors of the Corporation (and one
or more directors may be named as alternate members to replace any absent or
disqualified regular members), which, to the extent provided by resolution of
the Board or these By-Laws, shall have and may exercise the powers of the Board
in the management of the business and affairs of the Corporation, and may have
power to authorize the seal of the Corporation to be affixed to documents, but
no such committee shall have power or authority to amend the Articles, adopt an
agreement of merger, consolidation or share exchange, recommend to the
shareholders the sale, lease or exchange of all or substantially all of the
Corporation's assets, recommend to the shareholders a dissolution of the
Corporation or a revocation of dissolution, remove or indemnify directors, or
amend these By-Laws; and unless the resolution expressly so provides, no such
committee shall have the power of authority to declare a dividend or authorize
the issuance of stock. Such committee or committees shall have such name or
names as may be stated in these By-Laws, or as may be determined, from time to
time by the Board. Any vacancy occurring in any such committee shall be filled
by the Board, but the President may designate another director to serve on the
committee pending action by the Board. Each such committee shall hold office
during the term of the Board.
5.2 Compensation Committee. The Board shall establish and maintain a
Compensation Committee consisting of three or more directors, none of whom shall
be an employee of the Company or any of its subsidiaries, and each of whom shall
meet any further qualifications designated by the Board. The Compensation
Committee shall perform such services as may be designated by the Board.
5.3 Audit Committee. The Board shall establish an Audit Committee
consisting of at least three directors, a majority of whom are not officers or
employees of the Corporation or any of its subsidiaries. The Audit Committee
shall (i) serve as a focal point for communications between the Corporation's
directors, management, independent accountants and internal auditing personnel,
as their duties relate to financial accounting, reporting and controls, (ii)
assist the Board of Directors in fulfilling its fiduciary responsibilities as to
accounting policies and reporting practices of the Corporation and all
subsidiaries and the sufficiency of auditing practices with respect thereto, in
part, by reviewing the scope of audit coverage, including consideration of the
Corporation's accounting practices and procedures and system of internal
accounting controls and reporting to the Board with respect thereto, (iii)
operate as the Board's principal agent in ensuring the independence of the
Corporation's independent accountants, the integrity of management and the
adequacy of disclosure to shareholders, and (iv) perform such other services as
may be designated by the Board.
SECTION 6
Removal of Board Member
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<PAGE>
The shareholders, by vote of a majority of the shares that would be
entitled to elect the successor to the removed director, may remove from office
any one or more of the directors, notwithstanding that his or their terms of
office may not have expired, and may at such meeting elect one or more
successors, as the case may be, for the unexpired term.
SECTION 7
Notices
7.1 Form of Delivery. Whenever under the provisions of law, the Articles
or these By-Laws notice is required to be given to any shareholder or director,
it shall not be construed to mean personal notice unless otherwise specifically
provided in the Articles or these By-Laws, but such notice may be given by mail,
addressed to such shareholder or director at his address as it appears on the
records of the Corporation, with postage thereon prepaid, or in such other
manner as may be specified in these By-Laws. Notices given by mail shall be
deemed to have been given at the time they are deposited in the United States
mail, and all other notices shall be deemed to have been given upon receipt.
7.2 Waiver. Whenever any notice is required to be given by law, the
Articles or these By-Laws, a waiver thereof in writing signed by the person or
persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto. In addition, notice shall be
deemed to have been given to, or waived by, any shareholder or director who
attends a meeting of shareholders or directors in person, or is represented at
such meeting by proxy, without protesting at the commencement of the meeting the
transaction of any business because the meeting is not lawfully called or
convened.
SECTION 8
Officers
8.1 Designations. The officers of the Corporation shall be elected by the
directors and shall be the Chairman of the Board, President, Secretary and
Treasurer. The Board of Directors may appoint a Chief Executive Officer, one or
more Vice Presidents and such other officers as it shall deem necessary, who
shall hold their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by the Board. More
than one office maybe may be held by one person, provided that no person holding
more than one office may sign, in more than one capacity, any certificate or
other instrument required by law to be signed by two officers.
8.2 Term of Office. The officers of the Corporation shall hold office at
the pleasure of the Board of Directors. Except as otherwise provided in the
resolution of the Board of Directors electing any officer, each officer shall
hold office until the first meeting of the Board of Directors after the annual
meeting of shareholders next succeeding his or her election and until his or her
successor is elected and qualified or until his or her earlier resignation or
removal. Any officer may resign at any time upon written notice to the Board,
Chairman of the Board, President or Secretary of
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<PAGE>
the Corporation. Such resignation shall take effect at the time specified
therein and acceptance of such resignation shall not be necessary to make it
effective. The Board may remove any officer with or without cause at any time.
Any such removal shall be without prejudice to the contractual rights of such
officers, if any, with the Corporation, but the election of an officer shall not
in and of itself create contractual rights. Any vacancy occurring in any office
of the Corporation by death, resignation, removal or otherwise may be filled for
the unexpired portion of the term by the Board at any regular or special
meeting.
8.3 The Chairman of the Board. The Chairman of the Board shall preside at
meetings of the Board of Directors and the shareholders and perform such other
duties as may be designated by the Board of Directors or these By-Laws. He shall
be an ex-officio member of all committees of the Board of Directors, except that
he shall be a full member entitled to all the rights and privileges appertaining
thereto with respect to committees on which he is named a full member.
8.4 The President. The President shall, subject to the powers of the
Chairman of the Board, shall have general and active management of the business
of the Corporation, shall, unless otherwise provided by the Board, be the chief
executive and chief operating officer of the Corporation, shall supervise the
daily operations of the business of the Corporation and shall ensure that all
orders, policies and resolutions of the Board are carried out.
8.5 The Vice Presidents. The Vice-Presidents (if any) shall perform such
duties as the President or the Board of Directors shall prescribe.
8.6 The Secretary. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the shareholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose. He shall
give, or cause to be given, notice of all meetings of the shareholders and
regular and special meetings of the Board, and shall perform such other duties
as may be prescribed by the Board or President. He shall keep in safe custody
the seal of the Corporation, if any, and affix the same to any instrument
requiring it.
8.7 The Treasurer. The Treasurer shall have the custody of the corporate
funds and shall keep or cause to be kept full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
He shall keep a proper accounting of all receipts and disbursements and shall
disburse the funds of the Corporation only for proper corporate purposes or as
may be ordered by the Board and shall render to the President and the Board at
the regular meetings of the Board, or whenever they may require it, an account
of all his transactions as Treasurer and of the financial condition and results
of operations of the Corporation.
SECTION 9
Stock
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<PAGE>
9.1 Certificates. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by the President or a Vice President and
the Secretary or an Assistant Secretary evidencing the number and class (and
series, if any) of shares owned by him, containing such information as required
by law and bearing the seal of the Corporation. If any stock certificate is
manually signed by a transfer agent or registrar other than the Corporation
itself or an employee of the Corporation, the signature of any such officer may
be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been place upon a certificate shall have ceased
to be an officer, transfer agent or registrar of the Corporation before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such person or entity were an officer, transfer agent or registrar of the
Corporation on the date of issue.
9.2 Missing Certificates. The President or any Vice President may direct a
new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the Corporation's receipt of an affidavit of that fact
from the person claiming the certificate of stock to be lost, stolen or
destroyed. As a condition precedent to the issuance of a new certificate or
certificates, the officers of the Corporation shall, unless dispensed with by
the President, require the owner of such lost, stolen or destroyed certificate
or certificates, or his legal representative, to (i) give the Corporation a bond
or (ii) enter into a written indemnity agreement, in each case in an amount
appropriate to indemnify the Corporation against any claim that may be made
against the Corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
9.3 Transfers. Upon compliance with the transfer restrictions contained in
the Articles of Incorporation and surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 10
Determination of Shareholders
10.1 Record Date. For the purpose of determining shareholders entitled to
notice of and to vote at a meeting, or to receive a dividend, or to receive or
exercise subscription or other rights, or to participate in a reclassification
of stock, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors may fix in advance a record date for
determination of shareholders for such purpose, such date to be not more than 60
days and, if fixed for the purpose of determining shareholders entitled to
notice of and to vote at a meeting, not less than 10 days, prior to the date on
which the action requiring the determination of shareholders is to be taken.
10.2 Registered Shareholders. Except as otherwise provided by law, the
Corporation and its directors, officers and agents may recognize and treat a
person registered on its records as the owner of shares, as the owner in fact
thereof for all purposes, and as the person exclusively entitled to have and to
exercise all rights and privileges incident to the ownership of such shares, and
the
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Corporation's rights under this section shall not be affected by any actual or
constructive notice which the Corporation, or any of its directors, officers or
agents, may have to the contrary.
SECTION 11
Indemnification
11.1 Definitions. As used in this section the following terms shall have
the meanings set forth below:
(a) "Board" - the Board of Directors of the Corporation.
(b) "Claim" - any threatened, pending or completed claim, action, suit, or
proceeding, whether civil, criminal, administrative or investigative and whether
made judicially or extra-judicially, or any separate issue or matter therein, as
the context requires.
(c) "Determining Body" - (i) those members of the Board who are not named
as parties to the Claim for which indemnification is being sought ("Impartial
Directors") if there are at least three Impartial Directors, (ii) a committee of
at least three Impartial Directors appointed by the Board (regardless whether
the members of the Board of Directors voting on such appointment are Impartial
Directors) or (iii) if there are fewer than three Impartial Directors or if the
Board of Directors or the committee appointed pursuant to clause (ii) of this
paragraph so directs (regardless whether the members thereof are Impartial
Directors), independent legal counsel, which may be the regular outside counsel
of the Corporation.
(d) "Disbursing Officer" - the President of the Corporation or, if the
President is a party to the Claim for which indemnification is being sought, any
officer not a party to such Claim who is designated by the President to be the
Disbursing Officer with respect to indemnification requests related to the
Claim, which designations shall be made promptly after receipt of the initial
request for indemnification with respect to such Claim.
(e) "Expenses" - any expenses or costs (including, without limitation,
attorney's fees, judgments, punitive or exemplary damages, fines and amounts
paid in settlement).
(f) "Indemnitee" - each person who is or was a director or officer of the
Corporation.
11.2 Indemnity.
(a) To the extent such Expenses exceed the amounts reimbursed or paid
pursuant to policies of liability insurance maintained by the Corporation, the
Corporation shall indemnify each Indemnitee against any Expenses actually and
reasonably incurred by him (as they are incurred) in connection with any Claim
either against him or as to which he is involved solely as a witness or person
required to give evidence, by reason of his position (i) as director or officer
of the Corporation, (ii) as a director or officer of any subsidiary of the
Corporation or as a fiduciary with respect to any employee benefit plan of the
Corporation, or (iii) as a director, officer, partner,
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employee or agent of another Corporation, partnership, joint venture, trust or
other for-profit or not-for-profit entity or enterprise, if such position is or
was held at the request of the Corporation, whether relating to service in such
position before or after the effective date of this Section, if he (i) is
successful in his defense of the Claim on the merits or otherwise or (ii) has
been found by the Determining Body (acting in good faith) to have met the
Standard of Conduct (defined below); provided that (A) the amount otherwise
payable by the Corporation may be reduced by the Determining Body to such amount
as it deems proper if it determines that the Claim involved the receipt of a
personal benefit by Indemnitee, and (B) no indemnification shall be made in
respect of any Claim as to which Indemnitee shall have been adjudged by a court
of competent jurisdiction, after exhaustion of all appeals therefrom, to be
liable for willful or intentional misconduct in the performance of his duty to
the Corporation or to have obtained an improper personal benefit, unless, and
only to the extent that, a court shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as
the court deems proper.
(b) The Standard of Conduct is met when the conduct by an Indemnitee with
respect to which a Claim is asserted was conduct that was in good faith and that
he reasonably believed to be in, or not opposed to, the best interest of the
Corporation, and, in the case of a criminal action or proceeding, that he had no
reasonable cause to believe was unlawful. The termination of any Claim by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that Indemnitee did
not meet the Standard of Conduct. (c) Promptly upon becoming aware of the
existence of any Claim as to which he may be indemnified hereunder, Indemnitee
shall notify the President of the Corporation of the Claim and whether he
intends to seek indemnification hereunder. If such notice indicates that
Indemnitee does so intend, the President shall promptly advise the Board thereof
and notify the Board that the establishment of the Determining Body with respect
to the Claim will be a matter presented at the next regularly scheduled meeting
of the Board. After the Determining Body has been established the President
shall inform the Indemnitee thereof and Indemnitee shall immediately provide the
Determining Body with all facts relevant to the Claim known to him. Within 60
days of the receipt of such information, together with such additional
information as the Determining Body may request of Indemnitee, the Determining
Body shall determine, and shall advise Indemnitee of its determination, whether
Indemnitee has met the Standard of Conduct.
(d) During such 60-day period, Indemnitee shall promptly inform the
Determining Body upon his becoming aware of any relevant facts not theretofore
provided by him to the Determining Body, unless the Determining Body has
obtained such facts by other means.
(e) In the case of any Claim not involving a proposed, threatened or
pending criminal proceeding,
(i) if Indemnitee has, in the good faith judgment of the Determining
Body, met the Standard of Conduct, the Corporation may, in its sole discretion
after notice to Indemnitee, assume all responsibility for the defense of the
Claim, and, in any event, the Corporation and the Indemnitee each shall keep the
other informed as to the progress of the defense, including prompt disclosure of
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any proposals for settlement; provided that if the Corporation is a party to the
Claim and Indemnitee reasonably determines that there is a conflict between the
positions of the Corporation and Indemnitee with respect to the Claim, then
Indemnitee shall be entitled to conduct his defense, with counsel of his choice;
and provided further that Indemnitee shall in any event be entitled at his
expense to employ counsel chosen by him to participate in the defense of the
Claim; and
(ii) the Corporation shall fairly consider any proposals by Indemnitee
for settlement of the Claim. If the Corporation (A) proposes a settlement
acceptable to the person asserting the Claim, or (B) believes a settlement
proposed by the person asserting the Claim should be accepted, it shall inform
Indemnitee of the terms thereof and shall fix a reasonable date by which
Indemnitee shall respond. If Indemnitee agrees to such terms, he shall execute
such documents as shall be necessary to effect the settlement. If he does not
agree he may proceed with the defense of the Claim in any manner he chooses, but
if he is not successful on the merits or otherwise, the Corporation's obligation
to indemnify him for any Expenses incurred following his disagreement shall be
limited to the lesser of (A) the total Expenses incurred by him following his
decision not to agree to such proposed settlement or (B) the amount the
Corporation would have paid pursuant to the terms of the proposed settlement.
If, however, the proposed settlement would impose upon indemnitee any
requirement to act or refrain from acting that would materially interfere with
the conduct of his affairs, Indemnitee may refuse such settlement and proceed
with the defense of the Claim, if he so desires, at the Corporation's expense
without regard to the limitations imposed by the preceding sentence. In no
event, however, shall the Corporation be obligated to indemnify Indemnitee for
any amount paid in a settlement that the Corporation has not approved.
(f) In the case of a Claim involving a proposed, threatened or pending
criminal proceeding, Indemnitee shall be entitled to conduct the defense of the
Claim, and to make all decisions with respect thereto, with counsel of his
choice, provide, however, that the Corporation shall not be obligated to
indemnify Indemnitee for an amount paid in settlement that the Corporation has
not approved.
(g) After notifying the Corporation of the existence of a Claim, Indemnitee
may from time to time request the Corporation to pay the Expenses (other than
judgments, fines, penalties or amounts paid in settlement) that he incurs in
pursuing a defense of the Claim prior to the time that the Determining Body
determines whether the Standard of Conduct has been met. If the Disbursing
Officer believes the amount requested to be reasonable, he shall pay to
Indemnitee the amount requested (regardless of Indemnitee's apparent ability to
repay such amount) upon receipt of an undertaking by or on behalf of Indemnitee
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation under the circumstances. If the
Disbursing Officer does not believe such amount to be reasonable, the
Corporation shall pay the amount deemed by him to be reasonable and Indemnitee
may apply directly to the Determining Body for the remainder of the amount
requested.
(h) After the Determining Body has determined that the Standard of Conduct
was met, for so long as and to the extent that the Corporation is required to
indemnify Indemnitee under this Agreement, the provisions of Paragraph (g) shall
continue to apply with respect to Expenses incurred after such time except that
(i) no undertaking shall be required of Indemnitee and (ii) the Disbursing
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Officer shall pay to Indemnitee such amount of any fines, penalties or judgments
against him which have become final as the Corporation is obligated to indemnify
him.
(i) Any determination by the Corporation with respect to settlements of a
Claim shall be made by the Determining Body.
(j) The Corporation and Indemnitee shall keep confidential, to the extent
permitted by law and their fiduciary obligations, all facts and determinations
provided or made pursuant to or arising out of the operation of this Section,
and the Corporation and Indemnitee shall instruct its or his agents and
employees to do likewise.
11.3 Enforcement.
(a) The rights provided by this Section shall be enforceable by Indemnitee
in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his rights under this
Section, Indemnitee shall be entitled to recover from the Corporation, and shall
be indemnified by the Corporation against any and all Expenses actually and
reasonably incurred by him in connection with such proceeding but only if he
prevails therein. If it shall be determined that Indemnitee is entitled to
receive part but not all of the relief sought, then the Indemnitee shall be
entitled to be reimbursed for all Expenses incurred by him in connection with
such judicial adjudication if the amount to which he is determined to be
entitled exceeds 50% of the amount of his claim. Otherwise, the Expenses
incurred by Indemnitee in connection with such judicial adjudication shall be
appropriately prorated.
(c) In any judicial proceeding described in this subsection, the
Corporation shall bear the burden of proving that Indemnitee is not entitled to
any Expenses sought with respect to any Claim.
11.4 Saving Clause.
If any provision of this Section is determined by a court having
jurisdiction over the matter to require the Corporation to do or refrain from
doing any act that is in violation of applicable law, the court shall be
empowered to modify or reform such provision so that, as modified or reformed,
such provision provides the maximum indemnification permitted by law, and such
provision, as so modified or reformed, and the balance of this Section, shall be
applied in accordance with their terms. Without limiting the generality of the
foregoing, if any portion of this Section shall be invalidated on any ground,
the Corporation shall nevertheless indemnify an Indemnitee to the full extent
permitted by any applicable portion of this Section that shall not have been
invalidated and to the full extent permitted by law with respect to that portion
that has been invalidated.
11.5 Non-Exclusivity.
(a) The indemnification and advancement of Expenses provided by or granted
pursuant to this Section shall not be deemed exclusive of any other rights to
which Indemnitee is or may become
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entitled under any statute, article of incorporation, by-law, authorization of
shareholders or directors, agreement, or otherwise.
(b) It is the intent of the Corporation by this Section to indemnify and
hold harmless Indemnitee to the fullest extent permitted by law, so that if
applicable law would permit the Corporation to provide broader indemnification
rights than are currently permitted, the Corporation shall indemnify and hold
harmless Indemnitee to the fullest extent permitted by applicable law
notwithstanding that the other terms of this Section would provide for lesser
indemnification.
11.6 Successors and Assigns. This Section shall be binding upon the
Corporation, its successors and assigns, and shall inure to the benefit of the
Indemnitee's heirs, personal representatives, and assigns and to the benefit of
the Corporation, its successors and assigns.
11.7 Indemnification of Other Persons. The Corporation may indemnify any
person not covered by Sections 11.1 through 11.6 to the extent provided in a
resolution of the Board or a separate section of these By-Laws.
SECTION 12
Amendments
12.1 Adoption of By-Laws; Amendments Thereof. By-Laws of the Corporation
may be adopted only by a majority vote of the Board of Directors. By-Laws may be
amended or repealed only by (i) a two-thirds vote of the Board of Directors, or
(ii) the affirmative vote of the holders of at least two-thirds of the total
voting power, voting together as a single class, that is present or represented
at any regular or special meeting of shareholders, the notice of which expressly
states that the proposed amendment or repeal is to be considered at the meeting.
12.2 New By-Laws; Amendments. Any purported amendment to these By-Laws
which would add hereto a matter not expressly covered herein prior to such
purported amendment shall be deemed to constitute the adoption of a By-law
provision and not an amendment to the By-Laws.
SECTION 13
Preferred Shareholders
Notwithstanding anything in these By-Laws to the contrary, whenever the
holders of any one or more classes or series of stock having a preference over
the Common Stock as to dividends or upon liquidation shall have rights specified
in the Articles, the provisions of the Articles (as they may be duly amended
from time to time fixing the rights and preferences of such preferred stock)
shall govern to the extent inconsistent with these By-Laws.
SECTION 14
Miscellaneous
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14.1 Dividends. Except as otherwise provided by law or the Articles,
dividends upon the stock of the Corporation may be declared by the Board of
Directors at any regular or special meeting. Dividends may be paid in cash,
property, or in shares of stock, subject to the limitations specified in the
Articles.
14.2 Voting of Shares Owned by Corporation. Unless otherwise directed by
the Board, any shares of capital stock issued by a wholly-owned subsidiary of
the Corporation may be voted by the President of the Corporation at any
shareholders' meeting of the subsidiary (or in connection with any written
consent in lieu thereof).
14.3 Checks. All checks or demands for money and notes of the Corporation
shall be signed by such officer or officers or such other person or persons as
the Board of Directors may from time to time designate. Signatures of the
authorized signatories may be by facsimile.
14.4 Fiscal Year. The Board of Directors may adopt for and on behalf of
the Corporation a fiscal or a calendar year.
14.5 Seal. The Board of Directors may adopt a corporate seal, which shall
have inscribed thereon the name of the Corporation. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise. Failure to affix the seal shall not, however, affect the validity of
any instrument.
14.6 Gender. All pronouns and variations thereof used in these By-Laws
shall be deemed to refer to the masculine, feminine or neuter gender, singular
or plural, as the identity of the person, persons, entity or entities referred
to may require.
14.7 Family Employment Policy
(a.) Purpose
This policy defines the procedures, process, and criteria that govern
how members of the "Family" enter and exit from the company. "Family"
is defined as all lineal descendants of William T. Henning and their
spouses. This Employment Policy is intended to remove any ambiguity
that currently exists due to lack of a comprehensive policy so that
interested Family members can make the necessary choice concerning
education and professional skills and shape their career paths
accordingly. However, this Employment Policy shall not be applicable
now or in the future to any Family members who are employed by a
Company on a full-time basis on February 1, 1999.
(b.) Philosophy
US Unwired Inc., Cameron Communications Corporation, and related
companies (the "Company" or "Companies") and the Family owners of the
Companies are committed to members of the Family and descendants
being responsible, productive, and well-educated citizens who
practice a strong work ethic and make constructive contributions to
the local community and the world at large. Each member is encouraged
to develop
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and use self-supporting, marketable skills that contribute to the
enhancement of his/her self-esteem and independence. In order for a
Family member to be employed in a Company, there must be a legitimate job
and the skill to match.
Family and management subscribe to the philosophy that the opportunity to
be employed in the Companies must be earned; it is not a birthright. It
is the policy of the Companies to search out and employ, at all levels,
individuals who have the ability to manage relationships, who show
evidence of ability and willingness to take initiative, who exhibit self-
confidence and high self-esteem, and who are both independent and
responsible in managing their lives and their jobs. The Companies will
succeed best when professional and technical competence is the criterion
for entrance to employment. Further, high-level competence must be
supported by a sustained performance record. All Family members may not
be happy working in the lines of business a Company pursues and each
should seek employment that uses their skills to the maximum of their
ability. This can be within a Company or elsewhere. Family members who
remain in the business should do so because their talents, interests and
abilities fit with the needs of a Company. Family who cannot meet these
standards will be happiest when employed elsewhere.
(c.) General Conditions:
1. With respect to Family employment, there are generally two levels
recognized:
1) Part-time and summer employment; 2) Full time employment.
2. Part-time or summer jobs will be generally available to all Family
members attending school. Positions will be commensurate with skills
and Company needs.
3. For full time employment, employment outside of the Companies is
required for all Family prior to working for a Company. Such
employment is the desired method of developing the qualifications for
employment with a Company. A minimum of three to five years outside
employment is required along with positive job reviews.
4. Immediately prior to working for a Company, a Family member must have
been employed by the same employer (or its successor in interest) for
a minimum of three consecutive years.
5. General requirements for any job will be the same for Family as with
other applicants (college degree, work experience, favorable work
references, etc.).
6. All Family applying for a job will be offered a position with the
Company if they meet the qualifications for the particular position
in question. The Family member will be selected over other
candidates for the position only if they are equal to or superior in
their qualifications.
7. All Family are expected to meet the same level of performance
required of non-
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Family employees. They will be subject to the same performance
reviews and rules as other employees or promotion or termination.
Promotion will be based strictly on merit.
8. Before any Family is hired for any position, other than part-time or
summer, the executive committee of the Company (or the Board of
Directors if there is no executive committee) hiring the Family
member must be consulted and give their approval.
9. Compensation for Family will be the same as for a non-Family member
of equal skill and performance holding the same position.
10. Whenever possible, Family will be evaluated and supervised by non-
Family members.
(d.) Applying for a Position
Family who wish to apply for a position must make their interest known in
writing to the President or Human Relations Director of the Company. When
a position becomes available, only Family who have expressed an interest
in employment in writing will be informed of the opportunity. They may
then complete the normal application forms and submit the application for
appropriate processing and consideration.
(e.) Succession
The size of the company necessitates that many key management positions
be filled by non-Family executives. To provide incentive for these
employees to remain with the firm and to excel in their positions,
opportunity for advancement must be available to them. No key management
positions are reserved for family members. All positions in the firm,
including President/CEO, will be filled by the most qualified person
available without regard to their Family status.
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EXHIBIT 4.1
- --------------------------------------------------------------------------------
US UNWIRED INC.
SERIES A AND SERIES B
13/3/8/% SENIOR SUBORDINATED DISCOUNT NOTES DUE 2009
____________________________
INDENTURE
Dated as of October 29, 1999
____________________________
State Street Bank and Trust Company
Trustee
____________________________
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<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Indenture Section
Act Section
<S> <C>
310(a)(1).................................................................. 7.10
(a)(2).................................................................. 7.10
(a)(3).................................................................. N.A.
(a)(4).................................................................. N.A.
(a)(5).................................................................. 7.10
(b)..................................................................... 7.10
(c)..................................................................... N.A.
311(a)..................................................................... 7.11
(b)..................................................................... 7.11
(c)..................................................................... N.A.
312(a)..................................................................... 2.05
(b)..................................................................... 14.03
(c)..................................................................... 14.03
313(a)..................................................................... 7.06
(b)(1).................................................................. 12.03
(b)(2).................................................................. 7.07
(c)..................................................................... 7.06;14.02
(d)..................................................................... 7.06
314(a)..................................................................... 4.03;14.02
(b)..................................................................... 12.02
(c)(1).................................................................. 14.04
(c)(2).................................................................. 14.04
(c)(3).................................................................. N.A.
(d)..................................................................... 12.03, 12.04, 12.05
(e)..................................................................... 14.05
(f)..................................................................... N.A.
315(a)..................................................................... 7.01
(b)..................................................................... 7.05,14.02
(c)..................................................................... 7.01
(d)..................................................................... 7.01
(e)..................................................................... 6.11
316(a) (last sentence)..................................................... 2.09
(a)(1)(A)............................................................... 6.05
(a)(1)(B)............................................................... 6.04
(a)(2).................................................................. N.A.
(b)..................................................................... 6.07
(c)..................................................................... 2.12
317(a)(1).................................................................. 6.08
(a)(2).................................................................. 6.09
(b)..................................................................... 2.04
318(a)..................................................................... 14.01
(b)..................................................................... N.A.
(c)..................................................................... 14.01
</TABLE>
N.A. means not applicable.
* This Cross Reference Table is not part of the Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........................................................ 1
Section 1.01. Definitions................................................................................... 1
Section 1.02. Other Definitions............................................................................. 15
Section 1.03. Incorporation by Reference of Trust Indenture Act............................................. 16
Section 1.04. Rules of Construction......................................................................... 16
ARTICLE 2. THE NOTES.......................................................................................... 17
Section 2.01. Form and Dating............................................................................... 17
Section 2.02. Execution and Authentication.................................................................. 18
Section 2.03. Registrar and Paying Agent.................................................................... 18
Section 2.04. Paying Agent to Hold Money in Trust........................................................... 18
Section 2.05. Holder Lists.................................................................................. 19
Section 2.06. Transfer and Exchange......................................................................... 19
Section 2.07. Replacement Notes............................................................................. 30
Section 2.08. Outstanding Notes............................................................................. 30
Section 2.09. Treasury Notes................................................................................ 31
Section 2.10. Temporary Notes............................................................................... 31
Section 2.11. Cancellation.................................................................................. 31
Section 2.12. Defaulted Interest............................................................................ 31
ARTICLE 3. REDEMPTION AND PREPAYMENT......................................................................... 32
Section 3.01. Notices to Trustee............................................................................ 32
Section 3.02. Selection of Notes to Be Redeemed............................................................. 32
Section 3.03. Notice of Redemption.......................................................................... 32
Section 3.04. Effect of Notice of Redemption................................................................ 33
Section 3.05. Deposit of Redemption Price................................................................... 33
Section 3.06. Notes Redeemed in Part........................................................................ 33
Section 3.07. Optional Redemption........................................................................... 34
Section 3.08. Mandatory Redemption.......................................................................... 34
Section 3.09. Offer to Purchase by Application of Excess Proceeds........................................... 34
ARTICLE 4. COVENANTS.......................................................................................... 36
Section 4.01. Payment of Notes.............................................................................. 36
Section 4.02. Maintenance of Office or Agency............................................................... 36
Section 4.03. Reports....................................................................................... 36
Section 4.04. Compliance Certificate........................................................................ 37
Section 4.05. Taxes......................................................................................... 38
Section 4.06. Stay, Extension and Usury Laws................................................................ 38
Section 4.07. Restricted Payments........................................................................... 38
Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries................................ 40
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.................................... 40
Section 4.10. Asset Sales................................................................................... 42
Section 4.11. Transactions with Affiliates.................................................................. 43
Section 4.12. Liens......................................................................................... 44
Section 4.13. Business Activities........................................................................... 44
Section 4.14. Corporate Existence........................................................................... 44
Section 4.15. Offer to Repurchase Upon Change of Control.................................................... 44
Section 4.16. No Senior Subordinated Debt................................................................... 45
Section 4.17. Designation of Restricted and Unrestricted Subsidiaries....................................... 45
Section 4.18. Payments for Consent.......................................................................... 46
</TABLE>
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<TABLE>
<S> <C>
Section 4.19. Additional Note Guarantees................................................................... 46
ARTICLE 5. SUCCESSORS......................................................................................... 46
Section 5.01. Merger, Consolidation, or Sale of Assets..................................................... 46
Section 5.02. Successor Corporation Substituted............................................................ 47
ARTICLE 6. DEFAULTS AND REMEDIES.............................................................................. 47
Section 6.01. Events of Default............................................................................ 47
Section 6.02. Acceleration................................................................................. 49
Section 6.03. Other Remedies............................................................................... 49
Section 6.04. Waiver of Past Defaults...................................................................... 50
Section 6.05. Control by Majority.......................................................................... 50
Section 6.06. Limitation on Suits.......................................................................... 50
Section 6.07. Rights of Holders of Notes to Receive Payment................................................ 50
Section 6.08. Collection Suit by Trustee................................................................... 51
Section 6.09. Trustee May File Proofs of Claim............................................................. 51
Section 6.10. Priorities................................................................................... 51
Section 6.11. Undertaking for Costs........................................................................ 52
ARTICLE 7. TRUSTEE............................................................................................ 52
Section 7.01. Duties of Trustee............................................................................ 52
Section 7.02. Rights of Trustee............................................................................ 53
Section 7.03. Individual Rights of Trustee................................................................. 53
Section 7.04. Trustee's Disclaimer......................................................................... 54
Section 7.05. Notice of Defaults........................................................................... 54
Section 7.06. Reports by Trustee to Holders of the Notes................................................... 54
Section 7.07. Compensation and Indemnity................................................................... 54
Section 7.08. Replacement of Trustee....................................................................... 55
Section 7.09. Successor Trustee by Merger, etc............................................................. 56
Section 7.10. Eligibility; Disqualification................................................................ 56
Section 7.11. Preferential Collection of Claims Against Company............................................ 56
ARTICLE 8. LEGAL DEFEASANCE AND COVENANT DEFEASANCE.......................................................... 56
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance..................................... 56
Section 8.02. Legal Defeasance and Discharge............................................................... 56
Section 8.03. Covenant Defeasance.......................................................................... 57
Section 8.04. Conditions to Legal or Covenant Defeasance................................................... 57
Section 8.05. Deposited Money and Government Securities to be Held in Trust; Other
Miscellaneous Provisions..................................................................... 58
Section 8.06. Repayment to Company......................................................................... 59
Section 8.07. Reinstatement................................................................................ 59
ARTICLE 9. AMENDMENT, SUPPLEMENT AND WAIVER.................................................................. 60
Section 9.01. Without Consent of Holders of Notes.......................................................... 60
Section 9.02. With Consent of Holders of Notes............................................................. 60
Section 9.03. Compliance with Trust Indenture Act.......................................................... 61
Section 9.04. Revocation and Effect of Consents............................................................ 62
Section 9.05. Notation on or Exchange of Notes............................................................. 62
Section 9.06. Trustee to Sign Amendments, etc.............................................................. 62
ARTICLE 10. SUBORDINATION..................................................................................... 62
Section 10.01. Agreement to Subordinate..................................................................... 62
Section 10.02. Liquidation; Dissolution; Bankruptcy......................................................... 62
Section 10.03. Default on Designated Senior Debt............................................................ 63
Section 10.04. Acceleration of Notes........................................................................ 64
Section 10.05. When Distribution Must Be Paid Over.......................................................... 64
</TABLE>
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<TABLE>
<S> <C>
Section 10.06. Notice by Company............................................................................ 64
Section 10.07. Subrogation.................................................................................. 64
Section 10.08. Relative Rights.............................................................................. 64
Section 10.09. Subordination May Not Be Impaired by Company................................................. 65
Section 10.10. Distribution or Notice to Representative..................................................... 65
Section 10.11. Rights of Trustee and Paying Agent........................................................... 65
Section 10.12. Authorization to Effect Subordination........................................................ 65
Section 10.13. Amendments................................................................................... 66
ARTICLE 11. NOTE GUARANTEES..................................................................................... 66
Section 11.01. Guarantee.................................................................................... 66
Section 11.02. Subordination of Note Guarantee.............................................................. 67
Section 11.03. Limitation on Guarantor Liability............................................................ 67
Section 11.04. Execution and Delivery of Note Guarantee..................................................... 67
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms........................................... 68
Section 11.06. Releases Following Sale of Assets............................................................ 68
ARTICLE 12. COLLATERAL AND SECURITY............................................................................ 69
Section 12.01. Pledge Agreement............................................................................. 69
Section 12.02. Recording and Opinions....................................................................... 69
Section 12.03. Release of Collateral........................................................................ 70
Section 12.04. Certificates of the Company.................................................................. 70
Section 12.05. Certificates of the Trustee.................................................................. 71
Section 12.06. Authorization of Actions to Be Taken by the Trustee Under the Pledge Agreement............... 71
Section 12.07. Authorization of Receipt of Funds by the Trustee Under the Pledge Agreement.................. 71
Section 12.08. Termination of Security Interest............................................................. 71
ARTICLE 13. SATISFACTION AND DISCHARGE......................................................................... 71
Section 13.01. Satisfaction and Discharge................................................................... 71
Section 13.02. Application of Trust Money................................................................... 72
ARTICLE 14. MISCELLANEOUS....................................................................................... 73
Section 14.01. Trust Indenture Act Controls................................................................. 73
Section 14.02. Notices...................................................................................... 73
Section 14.03. Communication by Holders of Notes with Other Holders of Notes................................ 74
Section 14.04. Certificate and Opinion as to Conditions Precedent........................................... 74
Section 14.05. Statements Required in Certificate or Opinion................................................ 74
Section 14.06. Rules by Trustee and Agents.................................................................. 74
Section 14.07. No Personal Liability of Directors, Officers, Employees and Stockholders..................... 75
Section 14.08. Governing Law................................................................................ 75
Section 14.09. No Adverse Interpretation of Other Agreements................................................ 75
Section 14.10. Successors................................................................................... 75
Section 14.11. Severability................................................................................. 75
Section 14.12. Counterpart Originals........................................................................ 75
Section 14.13. Table of Contents, Headings, etc............................................................. 75
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Exhibit A1 FORM OF NOTE
Exhibit A2 FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B FORM OF CERTIFICATE OF TRANSFER
Exhibit C FORM OF CERTIFICATE OF EXCHANGE
Exhibit D FORM OF CERTIFICATE OF ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Exhibit E FORM OF NOTE GUARANTEE
</TABLE>
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<TABLE>
<S> <C>
Exhibit F FORM OF SUPPLEMENTAL INDENTURE
Exhibit G FORM OF PLEDGE AGREEMENT
</TABLE>
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INDENTURE dated as of October 29, 1999 among US Unwired Inc., a Louisiana
corporation (the "Company"), the Guarantors (as defined herein) and State Street
Bank and Trust Company, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 13 3/8% Series A Senior Subordinated Discount Notes due 2009 (the "Series A
Notes") and the 13 3/8% Series B Senior Subordinated Discount Notes due 2009
(the "Series B Notes" and, together with the Series A Notes, the "Notes"):
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions.
"144A Global Note" means a permanent global note substantially in the form
of Exhibit A1 hereto that is deposited with and registered in the name of the
Depositary or its nominee, representing a series of Notes sold in reliance on
Rule 144A.
"Accreted Value" means, for each $1,000 face amount of Notes, as of any
date of determination prior to November 1, 2004, the sum of: (a) the initial
offering price of each Note; and (b) that portion of the excess of the principal
amount of each Note over such initial offering price which shall have been
accreted thereon through such date, such amount to be so accreted on a daily
basis and compounded semi-annually on each May 1 and November 1 at the rate of
13 3/8% per year from the date of issuance of the Notes through the date of
determination, as calculated by the Company. The Accreted Value of any Note on
or after November 1, 2004 shall be 100% of the principal amount thereof.
"Acquired Debt" means, with respect to any specified Person: (a)
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, whether or
not such Indebtedness is incurred in connection with, or in contemplation of,
such other Person merging with or into, or becoming a Subsidiary of, such
specified Person; and (b) Indebtedness secured by a Lien encumbering any asset
acquired by such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control,"
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. For purposes of this
definition, the terms "controlling," "controlled by" and "under common control
with" shall have correlative meanings.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Annualized Operating Cash Flow" on any date, means with respect to any
Person the Operating Cash Flow for the Reference Period multiplied by four.
"Annualized Operating Cash Flow Ratio" on any date (the "Transaction Date")
means, with respect to any Person and its Restricted Subsidiaries, the ratio of:
(a) consolidated Indebtedness of such Person and its Restricted Subsidiaries
(other than LEC Unwired, LLC) on the Transaction Date (after giving pro forma
effect to the incurrence of such Indebtedness) divided by (b) the aggregate
amount of
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Annualized Operating Cash Flow of such Person (determined on a pro forma basis
after giving effect to all dispositions of businesses made by such Person and
its Restricted Subsidiaries from the beginning of the Reference Period through
the Transaction Date as if such disposition has occurred at the beginning of
such Reference Period); provided, that for purposes of such computation, in
calculating Annualized Operating Cash Flow and consolidated Indebtedness: (i)
the transaction giving rise to the need to calculate the Annualized Operating
Cash Flow Ratio will be assumed to have occurred (on a pro forma basis) on the
first day of the Reference Period; (ii) the incurrence of any Indebtedness
during the Reference Period or subsequent thereto and on or prior to the
Transaction Date (and the application of the proceeds therefrom to the extent
used to retire Indebtedness) will be assumed to have occurred (on a pro forma
basis) on the first day of such Reference Period; (iii) Consolidated Interest
Expense attributable to any Indebtedness (whether existing or being incurred)
bearing a floating interest rate shall be computed as if the rate in effect on
the Transaction Date had been the applicable rate for the entire period; and
(iv) all members of the consolidated group of such Person on the Transaction
Date that were acquired during the Reference Period shall be deemed to be
members of the consolidated group of such Person for the entire Reference
Period.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Cedel that apply to such transfer or exchange.
"Asset Sale" means: (a) the sale, lease, conveyance or other disposition
of any assets or rights, other than sales of inventory in the ordinary course of
business consistent with past practices; provided that the sale, conveyance or
other disposition of all or substantially all of the assets of the Company and
its Restricted Subsidiaries taken as a whole will be governed by the provisions
of Section 4.15 hereof and/or the provisions of Section 5.01 hereof and not by
the provisions of Section 4.10 hereof; and (b) the issuance of Equity Interests
in any of the Company's Restricted Subsidiaries or the sale of Equity Interests
in any of its Subsidiaries. Notwithstanding the preceding, the following items
shall not be deemed to be Asset Sales: (i) any single transaction or series of
related transactions that involves assets having a fair market value of less
than $1.0 million; (ii) a transfer of assets to the Company or any of its
Restricted Subsidiaries that are at least 90%-owned by the Company (other than
LEC Unwired, LLC); (iii) an issuance of Equity Interests by a Restricted
Subsidiary to the Company or to another Restricted Subsidiary that is at least
90%-owned by the Company (other than LEC Unwired, LLC) to the Company or to
another Restricted Subsidiary (other than LEC Unwired, LLC); (iv) the sale or
lease of equipment, inventory, accounts receivable or other assets in the
ordinary course of business; (v) the sale or other disposition of cash or Cash
Equivalents; and (vi) a Restricted Payment or Permitted Investment that is
permitted by the provisions of Section 4.07 hereof.
"Bankruptcy Law" means Title 11, U.S. Code or any similar federal or state
law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act, except that in calculating the beneficial
ownership of any particular "person" (as that term is used in Section 13(d)(3)
of the Exchange Act), such "person" shall be deemed to have beneficial ownership
of all securities that such "person" has the right to acquire by conversion or
exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms
"Beneficially Owns" and "Beneficially Owned" shall have a corresponding meaning.
"Board of Directors" means: (a) with respect to a corporation, the board
of directors of the corporation; (b) with respect to a partnership, the Board of
Directors of the general partner of the
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partnership; and (c) with respect to any other Person, the board or committee
of such Person serving a similar function.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Legal Holiday.
"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 that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" means: (a) in the case of a corporation, corporate stock;
(b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock; (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited); and (d) 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: (a) United States dollars; (b) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof having maturities of not more than twelve
months from the date of acquisition; (c) certificates of deposit and eurodollar
time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six months and
overnight bank deposits, in each case, with any lender party to the Credit
Agreement or with any domestic commercial bank having capital and surplus in
excess of $500.0 million and a Thomson Bank Watch Rating of "B" or better; (d)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (b) and (c) above entered into with
any financial institution meeting the qualifications specified in clause (c)
above; (e) commercial paper having the highest rating obtainable from Moody's
Investors Service, Inc. or Standard & Poor's Rating Services and in each case
maturing within six months after the date of acquisition; and (f) money market
funds at least 95% of the assets of which constitute Cash Equivalents of the
kinds described in clauses (a) through (e) of this definition.
"Cedel" means Cedel Bank, SA.
"Change of Control" means the occurrence of any of the following: (a) the
direct or indirect sale, 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 properties or assets of the Company and its
Restricted Subsidiaries taken as a whole to any "person" (as that term is used
in Section 13(d)(3) of the Exchange Act) other than the Principal or a Related
Party of the Principal; (b) the adoption of a plan relating to the liquidation
or dissolution of the Company; (c) 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 any
Related Parties of the Principal, becomes the Beneficial Owner, directly or
indirectly, of more than 35% of the Voting Stock of the Company, measured by
voting power rather than number of shares; or (d) the first day on which a
majority of the members of the Board of Directors of the Company are not
Continuing Directors; provided, however, that changes in specific
representatives of existing investors that are entitled to nominate board
representatives shall be excluded from consideration for purposes of this clause
(d).
"Collateral Agent" shall have the meaning set forth in the Pledge
Agreement.
"Company" means US Unwired Inc., and any and all successors thereto.
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"Consolidated Interest Expense" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of: (a) interest expensed or capitalized, paid, accrued, or
scheduled to be paid or accrued (including interest attributable to Capitalized
Lease Obligations) of such Person and its Restricted Subsidiaries (other than
LEC Unwired, LLC) during such period, on a consolidated basis, including: (i)
original issue discount and non-cash interest payments or accruals on any
Indebtedness; (ii) the interest portion of all deferred payment obligations; and
(iii) all commissions, discounts and other fees and charges owed with respect to
bankers' acceptances and letters of credit financings and currency and Hedging
Obligations, in each case to the extent attributable to such period; plus (b)
the amount of dividends accrued or payable by such Person or any of its
consolidated Subsidiaries in respect of preferred stock (other than by
Restricted Subsidiaries (other than LEC Unwired, LLC) of such Person to such
Person or such Person's Wholly Owned Subsidiaries). For purposes of this
definition: (A) interest on a Capitalized Lease Obligation shall be deemed to
accrue at an interest rate reasonably determined by the Company to be the rate
of interest implicit in such Capitalized Lease Obligation in accordance with
GAAP; and (B) interest expense attributable to any Indebtedness represented by
the guaranty by such Person or a Subsidiary of such Person or an obligation of
another Person shall be deemed to be the interest expense attributable to the
Indebtedness guaranteed.
"Consolidated Net Income" of any Person for any period means the aggregate
of the net income (or loss) of such Person and its Restricted Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP,
adjusted to exclude (only to the extent included in computing such net income
(or loss)), and without duplication: (a) all extraordinary gains and losses and
gains and losses that are nonrecurring (including as a result of Asset Sales
outside the ordinary course of business); (b) the net income or loss of LEC
Unwired, LLC or of any Unrestricted Subsidiary or any Person that is not a
Restricted Subsidiary in which such Person or any of its Restricted Subsidiaries
has an interest; (c) except as provided in the definition of "Annualized
Operating Cash Flow Ratio," the net income (or loss) of any Subsidiary acquired
in a pooling of interests transaction for any period prior to the date of such
acquisition; and (d) the net income, (but not loss), of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions is not at the time permitted by operation of the terms of its
charter or any agreement or instrument applicable to such Subsidiary.
"Consolidated Net Worth" means, with respect to any specified Person as of
any date, the sum of: (a) the consolidated equity of the common stockholders of
such Person and its Restricted Subsidiaries (other than LEC Unwired, LLC) as of
such date; plus (b) the respective amounts reported on such Person's balance
sheet as of such date with respect to any series of preferred stock (other than
Disqualified Stock) that by its terms is not entitled to the payment of
dividends unless such dividends may be declared and paid only out of net
earnings in respect of the year of such declaration and payment, but only to the
extent of any cash received by such Person upon issuance of such preferred
stock.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of the Company who: (a) was a member of such Board of
Directors on the date of this Indenture; or (b) 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.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 14.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"Credit Agreement" means that certain Credit Agreement, dated as of
October 1, 1999, by and among the Company and CoBank, ACB, as administrative
agent and a lender; The Bank of New York, a documentation agent and a lender;
BNY Capital Markets, Inc., a co-arranger; First Union Securities, Inc.,
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a syndication agent and a co-arranger; First Union National Bank, a lender; and
the other lenders party thereto, providing for up to $130.0 million of term and
revolving credit borrowings, 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 from
time to time.
"Credit Facilities" means, one or more debt facilities (including, without
limitation, the Credit Agreement) or commercial paper facilities, in each case
with banks or other institutional lenders providing for revolving credit loans,
term loans, receivables financing (including through the sale of receivables to
such lenders or to special purpose entities formed to borrow from such lenders
against such receivables) or letters of credit, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time.
"Custodian" means the Trustee, as custodian with respect to the Notes in
global form, or any successor entity thereto.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.06 hereof, substantially
in the form of Exhibit A1 hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the Person specified in Section 2.03 hereof as the
Depositary with respect to the Notes, and any and all successors thereto
appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Designated Senior Debt" means (a) any Indebtedness outstanding under or
with respect to the Credit Agreement (whether outstanding on the date of
issuance of the Notes or thereafter incurred), including fees, brokerage costs
and related Hedging Agreements); and (b) after payment in full of all
Obligations under the Credit Agreement, any other Senior Debt permitted under
this Indenture the principal amount of which is $25.0 million or more and that
has been designated by the Company as "Designated Senior Debt."
"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. Notwithstanding the preceding sentence, 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 provisions of
Section 4.07 hereof.
"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).
"Euroclear" means Morgan Guaranty Trust Company of New York, Brussels
office, as operator of the Euroclear system.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the Notes issued in the Exchange Offer pursuant to
Section 2.06(f) hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the date of this Indenture, until such amounts are repaid.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"Global Notes" means, individually and collectively, each of the Restricted
Global Notes and the Unrestricted Global Notes, substantially in the form of
Exhibit A1 hereto issued in accordance with Sections 2.01, 2.06(b)(iv),
2.06(d)(ii) or 2.06(f) hereof.
"Global Note Legend" means the legend set forth in Section 2.06(g)(ii),
which is required to be placed on all Global Notes issued under this Indenture.
"Government Securities" means direct obligations of, or obligations
guaranteed by, the United States of America, and the payment for which the
United States pledges its full faith and credit.
"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.
"Guarantor" means each of Louisiana Unwired, LLC, Unwired Telecom Corp. and
any Subsidiary that executes a Note Guarantee in accordance with the provisions
of this Indenture, and its respective successors and assigns.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under: (a) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements; and (b) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"IAI Global Note" means the global Note substantially in the form of
Exhibit A1 hereto bearing the Global Note Legend and the Private Placement
Legend and deposited with or on behalf of and registered in the name of the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Notes sold to Institutional Accredited
Investors.
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"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent, in respect of: (a)
borrowed money; (b) evidenced by bonds, notes, debentures or similar instruments
or letters of credit (or reimbursement agreements in respect thereof); (c)
banker's acceptances; (d) representing Capital Lease Obligations; (e) the
balance deferred and unpaid of the purchase price of any property, except any
such balance that constitutes an accrued expense or trade payable; or (f)
representing any Hedging Obligations; if and to the extent any of the preceding
items (other than letters of credit and Hedging Obligations) would appear as a
liability upon a balance sheet of the specified Person prepared in accordance
with GAAP. In addition, the term "Indebtedness" includes all Indebtedness of
others secured by a Lien on any asset of the specified Person (whether or not
such Indebtedness is assumed by the specified Person) and, to the extent not
otherwise included, the Note Guarantee by the specified Person of any
indebtedness of any other Person. The amount of any Indebtedness outstanding as
of any date shall be: (i) the accreted value thereof, in the case of any
Indebtedness issued with original issue discount; and (ii) the principal amount
thereof, together with any interest thereon that is more than 30 days past due,
in the case of any other Indebtedness.
"Indenture" means this Indenture, as amended or supplemented from time to
time.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who are not also QIBs.
"Intercreditor Agreement" means the Intercreditor Agreement dated the date
hereof between CoBank ACB and Trustee.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Note Guarantees 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 any
Equity Interests of any direct or indirect Restricted Subsidiary of the Company
such that, 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 Restricted Subsidiary not sold
or disposed of in an amount determined as provided in the final paragraph of
Section 4.07 hereof. The acquisition by the Company or any Restricted
Subsidiary of the Company of a Person that holds an Investment in a third Person
shall be deemed to be an Investment by the Company or such Restricted Subsidiary
in such third Person in an amount equal to the fair market value of the
Investment held by the acquired Person in such third Person in an amount
determined as provided in the final paragraph of Section 4.07 hereof.
"Issue Date" means the time and date of the first issuance of the Notes
under this Indenture.
"Legal Holiday" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue on
such payment for the intervening period.
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"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Notes for use by such Holders in
connection with the Exchange Offer.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidated Damages" means all liquidated damages then owing pursuant to
Section 5 of the Registration Rights Agreement.
"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, (a) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (i) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions), or (ii)
the disposition of any securities by such Person or any of its Subsidiaries or
the extinguishment of any Indebtedness of such Person or any of its
Subsidiaries, and (b) any extraordinary gain (but not loss), together with any
related provision for taxes on such extraordinary gain (but not loss).
"Net Pops" of any Person with respect to any system means the Pops of the
Metropolitan Statistical Area ("MSA") or Rural Service Area ("RSA") served by
such system multiplied by the direct and/or indirect percentage interest of such
Person in the entity licensed or designated to receive an authorization by the
Federal Communications Commission to construct or operate a system in that MSA
or RSA.
"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 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, taxes paid or payable as a result thereof, in each
case, after taking into account any available tax credits or deductions and any
tax sharing arrangements, and amounts required to be applied to the repayment of
Indebtedness, other than Senior Debt, secured by a Lien on the asset or assets
that were the subject of such Asset Sale and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance with
GAAP.
"Non-Recourse Debt" means Indebtedness: (a) as to which neither the
Company nor any Guarantor (i) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness), (ii)
is directly or indirectly liable as a Guarantor or otherwise, or (c) constitutes
the lender; (b) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against LEC Unwired, LLC or
an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any
holder of any other Indebtedness (other than the Notes) of the Company or any
Guarantor to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity; and (c) as to
which the lenders have been notified in writing that they will not have any
recourse to the stock or assets of the Company or any Guarantor.
"Non-U.S. Person" means a Person who is not a U.S. Person.
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"Note Guarantee" means the Guarantee by each Guarantor of the Company's
payment obligations under this Indenture and on the Notes, executed pursuant to
the provisions of this Indenture.
"Notes" has the meaning assigned to it in the preamble to this Indenture.
"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed on behalf of the Company
by two Officers of the Company, one of whom must be the principal executive
officer, the principal financial officer, the treasurer or the principal
accounting officer of the Company, that meets the requirements of Section 14.05
hereof.
"Operating Cash Flow" means, with respect to any specified Person for any
period, the Consolidated Net Income of such Person for such period plus: (a)
provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries (other than LEC Unwired, LLC) for such period, to the extent that
such provision for taxes was deducted in computing such Consolidated Net Income;
plus (b) consolidated interest expense of such Person and its Restricted
Subsidiaries (other than LEC Unwired, LLC) for such period, 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, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers' acceptance financings, and net of the
effect of all payments made or received pursuant to Hedging Obligations), to the
extent that any such expense was deducted in computing such Consolidated Net
Income; plus (c) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses that
were paid in a prior period) 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 or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted Subsidiaries
(other than LEC Unwired, LLC) for such period to the extent that such
depreciation, amortization and other non-cash expenses were deducted in
computing such Consolidated Net Income; minus (d) the amount of all cash
payments made during such period by such Person and its Restricted Subsidiaries
(other than LEC Unwired, LLC) to the extent such payments relate to non-cash
items increasing such Consolidated Net Income for such period, other than the
accrual of revenue in the ordinary course of business, in each case, on a
consolidated basis and determined in accordance with GAAP; minus (e) any
extraordinary gain (but not loss) of such Person and its Restricted Subsidiaries
(other than LEC Unwired, LLC) during such period, together with any related
provision for taxes on such extraordinary gain (but not loss) to the extent such
gains increased Consolidated Net Income. Notwithstanding the preceding, the
provision for taxes based on the income or profits of, and the depreciation and
amortization and other non-cash expenses of, a Restricted Subsidiary of the
Company (other than LEC Unwired, LLC) shall be added to Consolidated Net Income
to compute Operating Cash Flow of the Company only to the extent that a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Restricted Subsidiary without prior
governmental approval (that has not been obtained), and without direct or
indirect restriction pursuant to the terms of its charter and all agreements,
instruments,
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<PAGE>
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to that Restricted Subsidiary or its stockholders.
"Opinion of Counsel" means an opinion from legal counsel who is reasonably
acceptable to the Trustee, that meets the requirements of Section 14.05 hereof.
The counsel may be an employee of or counsel to the Company, any Subsidiary of
the Company or the Trustee.
"Participant" means, with respect to the Depositary, Euroclear or Cedel, a
Person who has an account with the Depositary, Euroclear or Cedel, respectively
(and, with respect to DTC, shall include Euroclear and Cedel).
"Permitted Acquisition Indebtedness" means, with respect to any Person,
Indebtedness incurred in connection with the acquisition of property, businesses
or assets which, or Capital Stock of a Person all or substantially all of whose
assets, are of a type generally used in a Permitted Business; provided that, in
the case of the Company or its Restricted Subsidiaries, as applicable, (a) the
Company's Annualized Operating Cash Flow Ratio, after giving effect to such
acquisition and such incurrence on a pro forma basis, is no greater than such
ratio prior to giving pro forma effect to such acquisition and such incurrence,
(b) the Company's consolidated Indebtedness, divided by the Net Pops of the
Company and its Restricted Subsidiaries, in each case giving pro forma effect to
the acquisition and such incurrence, does not exceed $50, (c) the Company's
consolidated Indebtedness divided by the Net Pops of the Company and its
Restricted Subsidiaries does not increase as a result of the acquisition and
such incurrence and (d) after giving effect to such acquisition and such
incurrence the acquired property, businesses or assets or such Capital Stock is
owned directly by the Company or a Wholly Owned Restricted Subsidiary of the
Company.
"Permitted Business" means any business primarily involved in the
ownership, design, construction, development, acquisition, installation,
management or provision of wireless communications systems, including any
business conducted by US Unwired or any Restricted Subsidiary on the closing
date.
"Permitted Investments" means: (a) any Investment in a Restricted
Subsidiary of the Company that is at least 90%-owned by the Company (other than
LEC Unwired, LLC); (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: (i) such Person becomes a Restricted Subsidiary of
the Company that is at least 90%-owned by the Company; (other than LEC Unwired,
LLC); or (ii) 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 that is at least
90%-owned by the Company (other than LEC Unwired, LLC); (d) any 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 provisions of Section 4.10 hereof;
(e) any acquisition of assets solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Company; (f) Hedging
Obligations; and (g) Permitted Texas Unwired Investments.
"Permitted Junior Securities" means (a) Equity Interests in the Company or
any Guarantor; or (b) debt securities that are subordinated to all Senior Debt
and any debt securities issued in exchange for Senior Debt to substantially the
same extent as, or to a greater extent than, the Notes and the Note Guarantees
are subordinated to Senior Debt under this Indenture.
"Permitted Liens" means: (a) Liens securing the Credit Facilities
permitted by this Indenture to be incurred; (b) Liens in favor of the Company or
the Guarantors (other than with respect to intercompany Indebtedness); (c) Liens
on property of a Person existing at the time such Person is merged with or into
or
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<PAGE>
consolidated with the Company or any Subsidiary of the Company; provided that
such Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with the Company or the Subsidiary; (d) Liens on
property existing at the time of acquisition thereof by the Company or any
Subsidiary of the Company, provided that such Liens were in existence prior to
the contemplation of such acquisition; (e) Liens to secure the performance of
statutory obligations, surety or appeal bonds, performance bonds or other
obligations of a like nature incurred in the ordinary course of business; (f)
Liens to secure Indebtedness (including Capital Lease Obligations) permitted by
clause (v) of the second paragraph of Section 4.09 hereof covering only the
assets acquired with such Indebtedness; (g) Liens existing on the date of this
Indenture; (h) 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; and (i) Liens incurred in
the ordinary course of business of the Company or any Subsidiary of the Company
with respect to obligations that do not exceed $2.0 million at any one time
outstanding; (j) Liens securing Non-Recourse Debt of LEC Unwired, LLC; and (k)
Liens securing Indebtedness, in an aggregate amount not to exceed $7.0 million,
permitted by clause (viii) of the second paragraph of Section 4.09 hereof for
the purpose of financing the construction or acquisition of a headquarters
building and associated rights in real estate and covering only the assets
acquired with such Indebtedness; and (l) Liens under the Pledge Agreement.
"Permitted Refinancing Indebtedness" means any Indebtedness of the Company
or any of its 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 Subsidiaries (other than intercompany
Indebtedness); provided that: (a) the principal amount (or accreted value, if
applicable) of such Permitted Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus all accrued
interest thereon and the amount of all expenses and premiums incurred in
connection therewith, including any market premium required to repurchase such
Indebtedness in a transaction where the repurchase price does not exceed the
fair market value of such Indebtedness); (b) 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; (c) if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded is
subordinated in right of payment to the Notes, such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and 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 (d) such Indebtedness is incurred either by the
Company or by the Subsidiary who is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded.
"Permitted Texas Unwired Investments" means the initial contribution of the
customer base, assets and rights and obligations related to the Beaumont-Port
Arthur and Lufkin-Nacagdoches markets to Texas Unwired and the extension of an
intercompany loan by the Company of up to $20.0 million to Texas Unwired.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company or government or other entity.
"Pledge Agreement" means the Pledge Agreement dated as of the date of this
Indenture and substantially in the form attached as Exhibit G hereto, as such
agreement may be amended, modified or supplemented from time to time.
11
<PAGE>
"Pledged Collateral" means any assets of the Company defined as Pledged
Collateral in the Pledge Agreement.
"Pops" means the estimate of the population of a Metropolitan Statistical
Area ("MSA") or Rural Service Area ("RSA") as derived from the most recent
Donnelly Market Service or if such statistics are no longer printed in the
Donnelly Market Service or the Donnelly Market Service is no longer published,
the most recent Rand McNally Commercial Atlas, or if such statistics are no
longer printed in the Rand McNally Commercial Atlas or if the Rand McNally
Commercial Atlas is no longer published, such other nationally recognized source
or such information.
"Principal" means William Henning, Sr.
"Private Placement Legend" means the legend set forth in Section 2.06(g)(i)
to be placed on all Notes issued under this Indenture except where otherwise
permitted by the provisions of this Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Reference Period" with regard to any Person means the last full fiscal
quarter of such Person for which financial information (which the Company shall
use its best efforts to compile in a timely manner) in respect thereof is
available ended on or immediately preceding any date upon which any
determination is to be made pursuant to the terms of the Notes or this
Indenture.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of October 29, 1999, by and among the Company and the other parties
named on the signature pages thereof, as such agreement may be amended, modified
or supplemented from time to time.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a global Note bearing the Private
Placement Legend and deposited with or on behalf of the Depositary and
registered in the name of the Depositary or its nominee, issued in a
denomination equal to the outstanding principal amount of the Notes initially
sold in reliance on Rule 903 of Regulation S or a Regulation S Temporary Global
Note or Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in the
form of Exhibit A1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in the
form of Exhibit A2 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903 of Regulation S.
"Related Party" means: (a) any controlling stockholder, 80% (or more)
owned Subsidiary, or immediate family member (in the case of an individual) of
the Principal; or (b) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or Persons beneficially holding an
80% or more controlling interest of which consist of the Principal and/or such
other Persons referred to in the immediately preceding clause (a).
12
<PAGE>
"Responsible Officer," when used with respect to the Trustee, means any
officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" of Persons means any Subsidiary of the referenced
Persons that is not an Unrestricted Subsidiary.
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Debt" means (a) all Indebtedness of the Company or any Guarantor
outstanding under Credit Facilities and all Hedging Obligations with respect
thereto; (b) any other Indebtedness of the Company or any Guarantor permitted to
be incurred under the terms of this Indenture, unless the instrument under which
such Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes or any Note Guarantee; and (c) all
Obligations with respect to the items listed in the preceding clauses (a) and
(b). Notwithstanding anything to the contrary in the preceding, Senior Debt,
including Senior Debt described in the preceding clause (b), will not include:
(i) any liability for federal, state, local or other taxes owed or owing by the
Company; (ii) any Indebtedness of the Company or any Guarantor to any of their
Subsidiaries or other Affiliates (other than the Company or a Guarantor); (iii)
any trade payables; or (iv) the portion of any Indebtedness that is incurred in
violation of this Indenture.
"Senior Guarantees" means the Guarantees by the Guarantors of Obligations
under the Credit Facilities.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"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
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<PAGE>
repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person: (a) 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 (b) any partnership (i) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (ii) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. (S)(S) 77aaa-77bbbb)
as in effect on the date on which this Indenture is qualified under the TIA.
"Trustee" means the party named as such above until a successor replaces it
in accordance with the applicable provisions of this Indenture and thereafter
means the successor serving hereunder.
"Unrestricted Global Note" means a permanent global Note substantially in
the form of Exhibit A1 attached hereto that bears the Global Note Legend and
that has the "Schedule of Exchanges of Interests in the Global Note" attached
thereto, and that is deposited with or on behalf of and registered in the name
of the Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary of the Company (other than
Louisiana Unwired, LLC and Unwired Telecom Corp. or any successor to any of
them) 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; (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 (i) to subscribe for additional Equity Interests or (ii)
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 designation of a
Subsidiary of the Company as an Unrestricted Subsidiary 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 preceding conditions and was permitted by the
provisions of Section 4.07 hereof. If, at any time, any Unrestricted Subsidiary
would fail to meet the preceding requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary shall be deemed to be incurred
by a Restricted Subsidiary of the Company as of such date and, if such
Indebtedness is not permitted to be incurred as of such date under the
provisions of Section 4.09 hereof, 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
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<PAGE>
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 (A) such Indebtedness is permitted under
the provisions of Section 4.09 hereof, and (B) no Default or Event of Default
would be in existence following such designation.
"U.S. Person" means a U.S. person as defined in Rule 902(o) under the
Securities Act.
"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: (a) the sum of the
products obtained by multiplying (x) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (y) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment; by (b) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Pops" of any Person means the Pops of the Metropolitan
Statistical Areas ("MSA") or Rural Service Areas ("RSA") where such Person holds
a majority ownership interest in an entity that (a) is licensed by the Federal
Communications Commission to construct or operate a PCS system in that MSA or
RSA or (b) has been granted the rights to construct or operate a PCS system in
that MSA or RSA by another Person licensed by the Federal Communications
Commission.
"Wholly Owned Restricted Subsidiary" of any specified 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 and one or more Wholly Owned Restricted
Subsidiaries of such Person.
"Wholly Owned Subsidiary" of any Person means a 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 Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Affiliate Transaction"............................................................ 4.11
"Asset Sale Offer"................................................................. 3.09
"Authentication Order"............................................................. 2.02
"Bankruptcy Law"................................................................... 4.01
"Change of Control Offer".......................................................... 4.15
"Change of Control Payment"........................................................ 4.15
"Change of Control Payment Date"................................................... 4.15
"Covenant Defeasance".............................................................. 8.03
"Event of Default"................................................................. 6.01
"Excess Proceeds".................................................................. 4.10
"incur"............................................................................ 4.09
"Legal Defeasance"................................................................. 8.02
"Offer Amount"..................................................................... 3.09
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Defined in
Term Section
---- -------
<S> <C>
"Offer Period"..................................................................... 3.09
"Paying Agent"..................................................................... 2.03
"Permitted Debt"................................................................... 4.09
"Purchase Date".................................................................... 3.09
"Registrar"........................................................................ 2.03
"Restricted Payments".............................................................. 4.07
</TABLE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes and the Note Guarantees means the Company and the
Guarantors, respectively, and any successor obligor upon the Notes and the Note
Guarantees, respectively.
All other terms used in this Indenture that are defined by the TIA, defined
by TIA reference to another statute or defined by SEC rule under the TIA have
the meanings so assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(c) "or" is not exclusive;
(d) words in the singular include the plural, and in the plural include
the singular;
(e) provisions apply to successive events and transactions; and
(f) references to sections of or rules under the Securities Act shall be
deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
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ARTICLE 2.
THE NOTES
Section 2.01. Form and Dating.
(a) General. The Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A1 hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
usage. Each Note shall be dated the date of its authentication. The Notes shall
be in denominations of $1,000 and integral multiples thereof except that Notes
used to pay Liquidated Damages may be in other denominations.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Guarantors
and the Trustee, by their execution and delivery of this Indenture, expressly
agree to such terms and provisions and to be bound thereby. However, to the
extent any provision of any Note conflicts with the express provisions of this
Indenture, the provisions of this Indenture shall govern and be controlling.
(b) Global Notes. Notes issued in global form shall be substantially in
the form of Exhibits A1 or A2 attached hereto (including the Global Note Legend
thereon and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A1 attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
(c) Temporary Global Notes. Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of the Regulation S Temporary
Global Note, which shall be deposited on behalf of the purchasers of the Notes
represented thereby with the Trustee, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of Euroclear or Cedel Bank,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The Restricted Period shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Cedel Bank certifying that they have received
certification of non-United States beneficial ownership of 100% of the aggregate
principal amount of the Regulation S Temporary Global Note (except to the extent
of any beneficial owners thereof who acquired an interest therein during the
Restricted Period pursuant to another exemption from registration under the
Securities Act and who will take delivery of a beneficial ownership interest in
a 144A Global Note bearing a Private Placement Legend, all as contemplated by
Section 2.06(a)(ii) hereof), and (ii) an Officers' Certificate from the Company
certifying that the Restricted Period has terminated. Following the termination
of the Restricted Period, beneficial interests in the Regulation S Temporary
Global Note shall be exchanged for beneficial interests in Regulation S
Permanent Global Notes pursuant to the Applicable Procedures. Simultaneously
with the authentication of Regulation S Permanent Global Notes, the Trustee
shall cancel the Regulation S Temporary Global Note. The aggregate principal
amount of the Regulation S Temporary Global Note and the Regulation S Permanent
Global Notes may from time to time be increased or decreased by adjustments made
on the records of the Trustee and the Depositary or its nominee, as the case may
be, in connection with transfers of interest as hereinafter provided.
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<PAGE>
(d) Euroclear and Cedel Procedures Applicable. The provisions of the
"Operating Procedures of the Euroclear System" and "Terms and Conditions
Governing Use of Euroclear" and the "General Terms and Conditions of Cedel Bank"
and "Customer Handbook" of Cedel Bank shall be applicable to transfers of
beneficial interests in the Regulation S Global Notes that are held by
Participants through Euroclear or Cedel Bank.
Section 2.02. Execution and Authentication.
Two Officers shall sign the Notes for the Company by manual or facsimile
signature. The Company's seal shall be reproduced on the Notes and may be in
facsimile form.
If an Officer whose signature is on a Note no longer holds that office at
the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature of
the Trustee. The signature shall be conclusive evidence that the Note has been
authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by two
Officers (an "Authentication Order"), authenticate Notes for original issue up
to the aggregate principal amount stated in paragraph 4 of the Notes. The
aggregate principal amount of Notes outstanding at any time may not exceed such
amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. An authenticating agent may authenticate Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with Holders or an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Registrar") and an office or
agency where Notes may be presented for payment ("Paying Agent"). The Registrar
shall keep a register of the Notes and of their transfer and exchange. The
Company may appoint one or more co-registrars and one or more additional paying
agents. The term "Registrar" includes any co-registrar and the term "Paying
Agent" includes any additional paying agent. The Company may change any Paying
Agent or Registrar without notice to any Holder. The Company shall notify the
Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Custodian with respect to the Global Notes.
Section 2.04. Paying Agent to Hold Money in Trust.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that the Paying Agent will hold in trust for the benefit of Holders
or the Trustee all money held by the Paying Agent for the payment of principal,
premium or Liquidated Damages, if any, or interest on the Notes, and
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will notify the Trustee of any default by the Company in making any such
payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.
Section 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA (S) 312(a). If the Trustee is
not the Registrar, the Company shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA (S) 312(a).
Section 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Global Notes. A Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary,
by a nominee of the Depositary to the Depositary or to another nominee of the
Depositary, or by the Depositary or any such nominee to a successor Depositary
or a nominee of such successor Depositary. All Global Notes will be exchanged by
the Company for Definitive Notes if (i) the Company delivers to the Trustee
notice from the Depositary that it is unwilling or unable to continue to act as
Depositary or that it is no longer a clearing agency registered under the
Exchange Act and, in either case, a successor Depositary is not appointed by the
Company within 120 days after the date of such notice from the Depositary or
(ii) the Company in its sole discretion determines that the Global Notes (in
whole but not in part) should be exchanged for Definitive Notes and delivers a
written notice to such effect to the Trustee; provided that in no event shall
the Regulation S Temporary Global Note be exchanged by the Company for
Definitive Notes prior to (x) the expiration of the Restricted Period and (y)
the receipt by the Registrar of any certificates required pursuant to Rule
903(b)(3)(ii)(B) under the Securities Act. Upon the occurrence of either of the
preceding events in (i) or (ii) above, Definitive Notes shall be issued in such
names as the Depositary shall instruct the Trustee. Global Notes also may be
exchanged or replaced, in whole or in part, as provided in Sections 2.07 and
2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu
of, a Global Note or any portion thereof, pursuant to this Section 2.06 or
Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form
of, and shall be, a Global Note. A Global Note may not be exchanged for another
Note other than as provided in this Section 2.06(a), however, beneficial
interests in a Global Note may be transferred and exchanged as provided in
Section 2.06(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall be
effected through the Depositary, in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Restricted Global Note may be transferred to
Persons who take delivery thereof in the form
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of a beneficial interest in the same Restricted Global Note in accordance
with the transfer restrictions set forth in the Private Placement Legend;
provided, however, that prior to the expiration of the Restricted Period,
transfers of beneficial interests in the Temporary Regulation S Global Note
may not be made to a U.S. Person or for the account or benefit of a U.S.
Person (other than an Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery
thereof in the form of a beneficial interest in an Unrestricted Global
Note. No written orders or instructions shall be required to be delivered
to the Registrar to effect the transfers described in this Section
2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests in
Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor
of such beneficial interest must deliver to the Registrar either (A) (1) a
written order from a Participant or an Indirect Participant given to the
Depositary in accordance with the Applicable Procedures directing the
Depositary to credit or cause to be credited a beneficial interest in
another Global Note in an amount equal to the beneficial interest to be
transferred or exchanged and (2) instructions given in accordance with the
Applicable Procedures containing information regarding the Participant
account to be credited with such increase or (B) (1) a written order from a
Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to cause
to be issued a Definitive Note in an amount equal to the beneficial
interest to be transferred or exchanged and (2) instructions given by the
Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer
or exchange referred to in (1) above; provided that in no event shall
Definitive Notes be issued upon the transfer or exchange of beneficial
interests in the Regulation S Temporary Global Note prior to (x) the
expiration of the Restricted Period and (y) the receipt by the Registrar of
any certificates required pursuant to Rule 903 under the Securities Act.
Upon consummation of an Exchange Offer by the Company in accordance with
Section 2.06(f) hereof, the requirements of this Section 2.06(b)(ii) shall
be deemed to have been satisfied upon receipt by the Registrar of the
instructions contained in the Letter of Transmittal delivered by the Holder
of such beneficial interests in the Restricted Global Notes. Upon
satisfaction of all of the requirements for transfer or exchange of
beneficial interests in Global Notes contained in this Indenture and the
Notes or otherwise applicable under the Securities Act, the Trustee shall
adjust the principal amount of the relevant Global Note(s) pursuant to
Section 2.06(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global
Note. A beneficial interest in any Restricted Global Note may be
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in another Restricted Global Note if the transfer
complies with the requirements of Section 2.06(b)(ii) above and the
Registrar receives the following:
(A) if the transferee will take delivery in the form of a
beneficial interest in the 144A Global Note, then the transferor must
deliver a certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a
beneficial interest in the Regulation S Temporary Global Note or the
Regulation S Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted
Global Note for Beneficial Interests in the Unrestricted Global Note. A
beneficial interest in any Restricted Global Note may be exchanged by any
holder thereof for a beneficial interest in an Unrestricted Global Note or
transferred to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted
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Global Note or transferred to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note if the
exchange or transfer complies with the requirements of Section 2.06(b)(ii)
above and:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
holder of the beneficial interest to be transferred, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the Exchange
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
beneficial interest in an Unrestricted Global Note, a certificate
from such holder in the form of Exhibit C hereto, including the
certifications in item (1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of a beneficial
interest in an Unrestricted Global Note, a certificate from such
holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D)
above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a Restricted
Definitive Note or to transfer such beneficial interest to a
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Person who takes delivery thereof in the form of a Restricted Definitive
Note, then, upon receipt by the Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Restricted Definitive Note, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item (2)(a)
thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (1) thereof;
(C) if such beneficial interest is being transferred to a Non-
U.S. Person in an offshore transaction in accordance with Rule 903 or
Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such beneficial interest is being transferred pursuant to
an exemption from the registration requirements of the Securities Act
in accordance with Rule 144 under the Securities Act, a certificate to
the effect set forth in Exhibit B hereto, including the certifications
in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to an
Institutional Accredited Investor in reliance on an exemption from the
registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such beneficial interest is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(G) if such beneficial interest is being transferred pursuant to
an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof,
and the Company shall execute and the Trustee shall authenticate and
deliver to the Person designated in the instructions a Definitive Note in
the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.06(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
deliver such Definitive Notes to the Persons in whose names such Notes are
so registered. Any Definitive Note issued in exchange for a beneficial
interest in a Restricted Global Note pursuant to this Section 2.06(c)(i)
shall bear the Private Placement Legend and shall be subject to all
restrictions on transfer contained therein.
(ii) Beneficial Interests in Regulation S Temporary Global Note to
Definitive Notes. Notwithstanding Sections 2.06(c)(i)(A) and (C) hereof, a
beneficial interest in the Regulation S Temporary Global Note may not be
exchanged for a Definitive Note or transferred to a Person
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who takes delivery thereof in the form of a Definitive Note prior to (x)
the expiration of the Restricted Period and (y) the receipt by the
Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B)
under the Securities Act as certified to the Registrar by the person
requesting such exchange or transfer, except in the case of a transfer
pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 903 or Rule 904.
(iii) Beneficial Interests in Restricted Global Notes to
Unrestricted Definitive Notes. A holder of a beneficial interest in a
Restricted Global Note may exchange such beneficial interest for an
Unrestricted Definitive Note or may transfer such beneficial interest to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the holder of such beneficial interest, in the case of an
exchange, or the transferee, in the case of a transfer, certifies in
the applicable Letter of Transmittal that it is not (1) a broker-
dealer, (2) a Person participating in the distribution of the Exchange
Notes or (3) a Person who is an affiliate (as defined in Rule 144) of
the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the holder of such beneficial interest in a
Restricted Global Note proposes to exchange such beneficial
interest for a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit C hereto, including the certifications in item
(1)(b) thereof; or
(2) if the holder of such beneficial interest in a
Restricted Global Note proposes to transfer such beneficial
interest to a Person who shall take delivery thereof in the
form of a Definitive Note that does not bear the Private
Placement Legend, a certificate from such holder in the form
of Exhibit B hereto, including the certifications in item (4)
thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
(iv) Beneficial Interests in Unrestricted Global Notes to
Unrestricted Definitive Notes. If any holder of a beneficial interest in an
Unrestricted Global Note proposes to exchange such beneficial interest for
a Definitive Note or to transfer such beneficial interest to a Person who
takes delivery thereof in the form of a Definitive Note, then, upon
satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the
Trustee shall cause the aggregate principal amount of the applicable Global
Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the
Company shall execute and the Trustee shall authenticate and deliver to the
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Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.06(c)(iv) shall be registered in such
name or names and in such authorized denomination or denominations as the
holder of such beneficial interest shall instruct the Registrar through
instructions from the Depositary and the Participant or Indirect
Participant. The Trustee shall deliver such Definitive Notes to the Persons
in whose names such Notes are so registered. Any Definitive Note issued in
exchange for a beneficial interest pursuant to this Section 2.06(c)(iv)
shall not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global Note or
to transfer such Restricted Definitive Notes to a Person who takes delivery
thereof in the form of a beneficial interest in a Restricted Global Note,
then, upon receipt by the Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a
QIB in accordance with Rule 144A under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
Non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904 under the Securities Act, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (2)
thereof;
(D) if such Restricted Definitive Note is being transferred
pursuant to an exemption from the registration requirements of the
Securities Act in accordance with Rule 144 under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(a) thereof;
(E) if such Restricted Definitive Note is being transferred to
an Institutional Accredited Investor in reliance on an exemption from
the registration requirements of the Securities Act other than those
listed in subparagraphs (B) through (D) above, a certificate to the
effect set forth in Exhibit B hereto, including the certifications,
certificates and Opinion of Counsel required by item (3) thereof, if
applicable;
(F) if such Restricted Definitive Note is being transferred to
the Company or any of its Subsidiaries, a certificate to the effect
set forth in Exhibit B hereto, including the certifications in item
(3)(b) thereof; or
(G) if such Restricted Definitive Note is being transferred
pursuant to an effective registration statement under the Securities
Act, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (3)(c) thereof,
the Trustee shall cancel the Restricted Definitive Note, increase or cause
to be increased the aggregate principal amount of, in the case of clause
(A) above, the appropriate Restricted Global
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Note, in the case of clause (B) above, the 144A Global Note, in the case of
clause (C) above, the Regulation S Global Note, and in all other cases, the
IAI Global Note.
(ii) Restricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note
or transfer such Restricted Definitive Note to a Person who takes delivery
thereof in the form of a beneficial interest in an Unrestricted Global Note
only if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to
exchange such Notes for a beneficial interest in the
Unrestricted Global Note, a certificate from such Holder in the
form of Exhibit C hereto, including the certifications in item
(1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof
in the form of a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein
and in the Private Placement Legend are no longer required in order to
maintain compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in
this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in
Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may
exchange such Note for a beneficial interest in an Unrestricted Global Note or
transfer such Definitive Notes to a Person who takes delivery thereof in the
form of a beneficial interest in an Unrestricted Global Note at any time. Upon
receipt of a request for such an exchange or transfer, the Trustee shall cancel
the applicable Unrestricted Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Unrestricted Global
Notes.
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If any such exchange or transfer from a Definitive Note to a
beneficial interest is effected pursuant to subparagraphs (ii)(B), (ii)(D)
or (iii) above at a time when an Unrestricted Global Note has not yet been
issued, the Company shall issue and, upon receipt of an Authentication
Order in accordance with Section 2.02 hereof, the Trustee shall
authenticate one or more Unrestricted Global Notes in an aggregate
principal amount equal to the principal amount of Definitive Notes so
transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon
request by a Holder of Definitive Notes and such Holder's compliance with the
provisions of this Section 2.06(e), the Registrar shall register the transfer or
exchange of Definitive Notes. Prior to such registration of transfer or
exchange, the requesting Holder shall present or surrender to the Registrar the
Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. In addition, the requesting Holder
shall provide any additional certifications, documents and information, as
applicable, required pursuant to the following provisions of this Section
2.06(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name
of Persons who take delivery thereof in the form of a Restricted Definitive
Note if the Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A under the
Securities Act, then the transferor must deliver a certificate in the
form of Exhibit B hereto, including the certifications in item (1)
thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule
904, then the transferor must deliver a certificate in the form of
Exhibit B hereto, including the certifications in item (2) thereof;
and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the
Exchange Offer in accordance with the Registration Rights Agreement
and the Holder, in the case of an exchange, or the transferee, in the
case of a transfer, certifies in the applicable Letter of Transmittal
that it is not (1) a broker-dealer, (2) a Person participating in the
distribution of the Exchange Notes or (3) a Person who is an affiliate
(as defined in Rule 144) of the Company;
(B) any such transfer is effected pursuant to the Shelf
Registration Statement in accordance with the Registration Rights
Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant to
the Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
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(D) the Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes
proposes to exchange such Notes for an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes
proposes to transfer such Notes to a Person who shall take
delivery thereof in the form of an Unrestricted Definitive
Note, a certificate from such Holder in the form of Exhibit B
hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the
Registrar so requests, an Opinion of Counsel in form reasonably
acceptable to the Company to the effect that such exchange or
transfer is in compliance with the Securities Act and that the
restrictions on transfer contained herein and in the Private
Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes.
A Holder of Unrestricted Definitive Notes may transfer such Notes to a
Person who takes delivery thereof in the form of an Unrestricted Definitive
Note. Upon receipt of a request to register such a transfer, the Registrar
shall register the Unrestricted Definitive Notes pursuant to the
instructions from the Holder thereof.
(f) Exchange Offer. Upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the Company shall issue and,
upon receipt of an Authentication Order in accordance with Section 2.02, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes in an
aggregate principal amount equal to the principal amount of the beneficial
interests in the Restricted Global Notes tendered for acceptance by Persons that
certify in the applicable Letters of Transmittal that (x) they are not broker-
dealers, (y) they are not participating in a distribution of the Exchange Notes
and (z) they are not affiliates (as defined in Rule 144) of the Company, and
accepted for exchange in the Exchange Offer and (ii) Definitive Notes in an
aggregate principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer. Concurrently with
the issuance of such Notes, the Trustee shall cause the aggregate principal
amount of the applicable Restricted Global Notes to be reduced accordingly, and
the Company shall execute and the Trustee shall authenticate and deliver to the
Persons designated by the Holders of Definitive Notes so accepted Definitive
Notes in the appropriate principal amount.
(g) Legends. The following legends shall appear on the face of all Global
Notes and Definitive Notes issued under this Indenture unless specifically
stated otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each
Global Note and each Definitive Note (and all Notes issued in
exchange therefor or substitution thereof) shall bear the legend in
substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE
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UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL
INTEREST HEREIN, THE HOLDER: (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A
"QIB"), (B) IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A) (1), (2), (3) OR (7) OR
REGULATION D UNDER THE SECURITIES ACT (AN "IAI"), (2) AGREES THAT IT WILL NOT
RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING
THE REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) TO AN IAI
THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE TRANSFER OF THIS NOTE
(THE FORM OF WHICH CAN BE OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN
RESPECT OF AN AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION
OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH
THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST
HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE
MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.
THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
(B) Notwithstanding the foregoing, any Global Note or
Definitive Note issued pursuant to subparagraphs (b)(iv),
(c)(iii), (c)(iv), (d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to
this Section 2.06 (and all Notes issued in exchange therefor or
substitution thereof) shall not bear the Private Placement
Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE
EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE,
(III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT
TO SECTION 2.11 OF THE INDENTURE AND
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(IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE
PRIOR WRITTEN CONSENT OF US UNWIRED INC."
(iii) Regulation S Temporary Global Note Legend. The Regulation S
Temporary Global Note shall bear a legend in substantially the following
form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON."
(iv) Original Issue Discount Legend. Each Note shall bear a legend
in substantially the following form:
"FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT;
FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $523.06,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $1,145.69, THE ISSUE DATE IS OCTOBER
29, 1999 AND THE YIELD TO MATURITY IS 13 3/8% PER ANNUM."
(h) Cancellation and/or Adjustment of Global Notes. At such time as
all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed,
repurchased or canceled in whole and not in part, each such Global Note
shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.11 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest
in another Global Note or for Definitive Notes, the principal amount of
Notes represented by such Global Note shall be reduced accordingly and an
endorsement shall be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such reduction; and
if the beneficial interest is being exchanged for or transferred to a
Person who will take delivery thereof in the form of a beneficial interest
in another Global Note, such other Global Note shall be increased
accordingly and an endorsement shall be made on such Global Note by the
Trustee or by the Depositary at the direction of the Trustee to reflect
such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Global Notes
and Definitive Notes upon the Company's order or at the Registrar's
request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive
Note for any registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any transfer tax or
similar governmental charge payable in connection therewith (other
than any such transfer taxes or similar governmental charge payable
upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10,
4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or
in part, except the unredeemed portion of any Note being redeemed in
part.
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(iv) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period
beginning at the opening of business 15 days before the day of any
selection of Notes for redemption under Section 3.02 hereof and ending
at the close of business on the day of selection, (B) to register the
transfer of or to exchange any Note so selected for redemption in
whole or in part, except the unredeemed portion of any Note being
redeemed in part or (C) to register the transfer of or to exchange a
Note between a record date and the next succeeding Interest Payment
Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes,
and none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02
hereof.
(viii) All certifications, certificates and Opinions of Counsel
required to be submitted to the Registrar pursuant to this Section
2.06 to effect a registration of transfer or exchange may be submitted
by facsimile.
Section 2.07. Replacement Notes.
If any mutilated Note is surrendered to the Trustee or the Company and the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, the Company shall issue and the Trustee, upon receipt of an
Authentication Order, shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.
The provisions of this Section 2.07 are exclusive and shall preclude (to
the extent lawful) all the rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes.
Section 2.08. Outstanding Notes.
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof, and those described in this Section as
not outstanding. Except as set forth in Section 2.09 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note; however, Notes held by the
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Company or a Subsidiary of the Company shall not be deemed to be outstanding for
purposes of Section 3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 4.01
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
Section 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that the Trustee knows are so owned shall be so disregarded.
Section 2.10. Temporary Notes.
Until certificates representing Notes are ready for delivery, the Company
may prepare and the Trustee, upon receipt of an Authentication Order, shall
authenticate temporary Notes. Temporary Notes shall be substantially in the
form of certificated Notes but may have variations that the Company considers
appropriate for temporary Notes and as shall be reasonably acceptable to the
Trustee. Without unreasonable delay, the Company shall prepare and the Trustee
shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of this
Indenture.
Section 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall destroy
canceled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all canceled Notes shall be delivered
to the Company. The Company may not issue new Notes to replace Notes that it
has paid or that have been delivered to the Trustee for cancellation.
Section 2.12. Defaulted Interest.
If the Company defaults in a payment of interest on the Notes, it shall pay
the defaulted interest in any lawful manner plus, to the extent lawful, interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.01 hereof. The Company shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. The Company shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall
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be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, the Company (or, upon
the written request of the Company, the Trustee in the name and at the expense
of the Company) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3.
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to the optional redemption
provisions of Section 3.07 hereof, it shall furnish to the Trustee, at least 30
days but not more than 60 days before a redemption date, an Officers'
Certificate setting forth (i) the clause of this Indenture pursuant to which the
redemption shall occur, (ii) the redemption date, (iii) the principal amount of
Notes to be redeemed and (iv) the redemption price.
Section 3.02. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed or purchased in an offer
to purchase at any time, the Trustee shall select the Notes to be redeemed or
purchased among the Holders of the Notes in compliance with the requirements of
the principal national securities exchange, if any, on which the Notes are
listed or, if the Notes are not so listed, on a pro rata basis, by lot or in
accordance with any other method the Trustee considers fair and appropriate. In
the event of partial redemption by lot, the particular Notes to be redeemed
shall be selected, unless otherwise provided herein, not less than 30 nor more
than 60 days prior to the redemption date by the Trustee from the outstanding
Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the principal amount thereof to be redeemed. Notes and portions of
Notes selected shall be in amounts of $1,000 or whole multiples of $1,000;
except that if all of the Notes of a Holder are to be redeemed, the entire
outstanding amount of Notes held by such Holder, even if not a multiple of
$1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
Subject to the provisions of Section 3.09 hereof, at least 30 days but not
more than 60 days before a redemption date, the Company shall mail or cause to
be mailed, by first class mail, a notice of redemption to each Holder whose
Notes are to be redeemed at its registered address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the principal
amount of such Note to be redeemed and that, after the redemption date upon
surrender of such Note, a new Note or Notes in principal amount equal to the
unredeemed portion shall be issued upon cancellation of the original Note;
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(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(f) that, unless the Company defaults in making such redemption payment,
interest on Notes called for redemption ceases to accrue on and after the
redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture pursuant
to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or accuracy of
the CUSIP number, if any, listed in such notice or printed on the Notes.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at its expense; provided, however, that the Company
shall have delivered to the Trustee, at least 45 days prior to the redemption
date, an Officers' Certificate requesting that the Trustee give such notice and
setting forth the information to be stated in such notice as provided in the
preceding paragraph.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.03 hereof,
Notes called for redemption become irrevocably due and payable on the redemption
date at the redemption price. A notice of redemption may not be conditional.
Section 3.05. Deposit of Redemption Price.
One Business Day prior to the redemption date, the Company shall deposit
with the Trustee or with the Paying Agent money sufficient to pay the redemption
price of and accrued interest on all Notes to be redeemed on that date. The
Trustee or the Paying Agent shall promptly return to the Company any money
deposited with the Trustee or the Paying Agent by the Company in excess of the
amounts necessary to pay the redemption price of, and accrued interest on, all
Notes to be redeemed.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest shall cease to accrue on the Notes or
the portions of Notes called for redemption. If a Note is redeemed on or after
an interest record date but on or prior to the related interest payment date,
then any accrued and unpaid interest shall be paid to the Person in whose name
such Note was registered at the close of business on such record date. If any
Note called for redemption shall not be so paid upon surrender for redemption
because of the failure of the Company to comply with the preceding paragraph,
interest shall be paid on the unpaid principal, from the redemption date until
such principal is paid, and to the extent lawful on any interest not paid on
such unpaid principal, in each case at the rate provided in the Notes and in
Section 4.01 hereof.
Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Company shall issue
and, upon the Company's written request, the Trustee shall authenticate for the
Holder at the expense of the Company a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
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Section 3.07. Optional Redemption.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to November 1, 2004. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest and Liquidated Damages if any, thereon, to the applicable redemption
date, if redeemed during the twelve-month period beginning on November 1 of the
years indicated below:
Year Percentage
---- ----------
2004........................................................... 106.688%
2005........................................................... 104.458%
2006........................................................... 102.229%
2007 and thereafter............................................ 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section 3.07, at
any time prior to November 1, 2002, the Company may, on any one or more
occasions, redeem up to 35% of the originally issued aggregate principal amount
of Notes with the net cash proceeds of one or more public equity offerings of
its stock at a redemption price equal to 113 3/8% of the Accreted Value
thereof as of the redemption date, and Liquidated Damages, if any, to the
redemption date; provided that at least 65% in aggregate principal amount of the
Notes originally issued remain outstanding immediately after the occurrence of
such redemption (excluding Notes held by the Company and its Subsidiaries) and
that such redemption occurs within 45 days of the date of the closing of such
public equity offering.
(c) Any redemption pursuant to this Section 3.07 shall be made pursuant
to the provisions of Section 3.01 through 3.06 hereof.
Section 3.08. Mandatory Redemption.
The Company shall not be required to make mandatory redemption or sinking
fund payments with respect to the Notes.
Section 3.09. Offer to Purchase by Application of Excess Proceeds.
In the event that, pursuant to Section 4.10 hereof, the Company shall be
required to commence an offer to all Holders to purchase Notes (an "Asset Sale
Offer"), it shall follow the procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "Offer Period"). No later than five
Business Days after the termination of the Offer Period (the "Purchase Date"),
the Company shall purchase the principal amount of Notes required to be
purchased pursuant to Section 4.10 hereof (the "Offer Amount") or, if less than
the Offer Amount has been tendered, all Notes tendered in response to the Asset
Sale Offer. Payment for any Notes so purchased shall be made in the same manner
as interest payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a Note is registered at the close of
business on such record date, and no additional interest shall be payable to
Holders who tender Notes pursuant to the Asset Sale Offer.
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Upon the commencement of an Asset Sale Offer, the Company shall send, by
first class mail, a notice to the Trustee and each of the Holders, with a copy
to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section 3.09
and Section 4.10 hereof and the length of time the Asset Sale Offer shall remain
open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall continue to
accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any Note
accepted for payment pursuant to the Asset Sale Offer shall cease to accrete or
accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an Asset
Sale Offer may elect to have Notes purchased in integral multiples of $1,000
only;
(f) that Holders electing to have a Note purchased pursuant to any Asset
Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the Company, a depositary, if appointed by
the Company, or a Paying Agent at the address specified in the notice at least
three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note the Holder delivered for purchase and a statement that such
Holder is withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Trustee shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Trustee so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, the Offer
Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer,
or if less than the Offer Amount has been tendered, all Notes tendered, and
shall deliver to the Trustee an Officers' Certificate stating that such Notes or
portions thereof were accepted for payment by the Company in accordance with the
terms of this Section 3.09. The Company, the Depositary or the Paying Agent, as
the case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal to
the purchase price of the Notes tendered by such Holder and accepted by the
Company for purchase, and the Company shall promptly issue a new Note, and the
Trustee, upon written request from the Company shall authenticate and mail or
deliver such new Note to such Holder, in a principal amount equal to any
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unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Asset Sale Offer on the Purchase
Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay or cause to be paid the principal of, premium, if
any, and interest on the Notes on the dates and in the manner provided in the
Notes. Principal, premium, if any, and interest shall be considered paid on the
date due if the Paying Agent, if other than the Company or a Subsidiary thereof,
holds as of 10:00 a.m. Eastern Time on the due date money deposited by the
Company in immediately available funds and designated for and sufficient to pay
all principal, premium, if any, and interest then due. The Company shall pay
all Liquidated Damages, if any, in the same manner on the date and in the amount
set forth in the Registration Rights Agreement.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace period) at the same
rate to the extent lawful.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency (which may be an office of the Trustee or an affiliate
of the Trustee, Registrar or co-registrar) where Notes may be surrendered for
registration of transfer or for exchange and where notices and demands to or
upon the Company in respect of the Notes and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and any
change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
the City of New York for such purposes. The Company shall give prompt written
notice to the Trustee of any such designation or rescission and of any change in
the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of the Trustee as
one such office or agency of the Company in accordance with Section 2.03.
Section 4.03. Reports.
Whether or not required by the SEC, so long as any Notes are outstanding,
the Company shall furnish to the Holders of Notes, within the time periods
specified in the SEC's rules and regulations:
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(a) all quarterly and annual financial information that would be required to be
contained in a filing with the SEC on Forms 10-Q and 10-K if the Company were
required to file such Forms, including a "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, with respect to the
annual information only, a report on the annual financial statements by the
Company's certified independent accountants, and (b) all current reports that
would be required to be filed with the SEC on Form 8-K if the Company were
required to file such reports.
If the Company has designated any of its Subsidiaries as Unrestricted
Subsidiaries, then the quarterly and annual financial information required by
the preceding paragraph shall include a reasonably detailed presentation, either
on the face of the financial statements or in the footnotes thereto, and in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, of 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.
In addition, following the consummation of the Exchange Offer contemplated
by the Registration Rights Agreement, whether or not required by the SEC, the
Company shall file a copy of all of the information and reports referred to in
clauses (a) and (b) above with the SEC for public availability within the time
periods specified in the SEC's rules and regulations (unless the SEC will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request. The Company shall at all times comply
with TIA (S) 314(a). In addition, the Company and the Guarantors have agreed
that, for so long as any Notes remain outstanding, they will furnish to the
Holders and to securities analysts and prospective investors, upon their
request, the information required to be delivered pursuant to Rule 144A(d)(4)
under the Securities Act.
Section 4.04. Compliance Certificate.
(a) The Company and each Guarantor (to the extent that such Guarantor
is so required under the TIA) shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and the Pledge Agreement, and further stating,
as to each such Officer signing such certificate, that to the best of his or her
knowledge the Company has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and the Pledge Agreement and is not in
default in the performance or observance of any of the terms, provisions and
conditions of this Indenture or the Pledge Agreement (or, if a Default or Event
of Default shall have occurred, describing all such Defaults or Events of
Default of which he or she may have knowledge and what action the Company is
taking or proposes to take with respect thereto) and that to the best of his or
her knowledge no event has occurred and remains in existence by reason of which
payments on account of the principal of or interest, if any, on the Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03 above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article 4 or Article 5 hereof or, if any such violation has
occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
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(c) The Company shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any Default
or Event of Default, an Officers' Certificate specifying such Default or Event
of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes.
The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental levies
except such as are contested in good faith and by appropriate proceedings or
where the failure to effect such payment is not adverse in any material respect
to the Holders of the Notes.
Section 4.06. Stay, Extension and Usury Laws.
The Company and each of the Guarantors covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay, extension
or usury law wherever enacted, now or at any time hereafter in force, that may
affect the covenants or the performance of this Indenture; and the Company and
each of the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
shall not, by resort to any such law, hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law has been enacted.
Section 4.07. Restricted Payments.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) 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 in Equity
Interests (other than Disqualified Stock) of the Company or to the Company or a
Restricted Subsidiary of the Company); (ii) 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 or any direct or indirect parent of the Company; (iii) 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 or the Note
Guarantees, except a payment of interest or principal at the Stated Maturity
thereof; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively referred
to as "Restricted Payments"), unless, at the time of and after giving effect to
such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been permitted
to incur at least $1.00 of additional Indebtedness (other than Permitted Debt)
pursuant to the test set forth in Section 4.09(i); 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 this Indenture is less than
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the sum, without duplication, of: (1) the amount determined by subtracting (x)
2.0 times the aggregate Consolidated Interest Expense of the Company for the
period (taken as one accounting period) from December 31, 2002 to the last day
of the last full fiscal quarter prior to the date of the proposed Restricted
Payment (the "Computation Period") from (y) Operating Cash Flow of the Company
for the Computation Period, plus (2) 100% of the aggregate net cash proceeds
received by the Company since the date of this Indenture as a contribution to
its common equity capital or from the issue or sale of Equity Interests of the
Company (other than Disqualified Stock) or from the issue or sale of convertible
or exchangeable Disqualified Stock or convertible or exchangeable debt
securities of the Company that have been converted into or exchanged for such
Equity Interests (other than Equity Interests (or Disqualified Stock or debt
securities) sold to a Subsidiary of the Company), plus (3) 50% of any dividends
received by the Company or a Wholly Owned Restricted Subsidiary after the date
of this Indenture from LEC Unwired, LLC or 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, plus (4) to the extent
that any Unrestricted Subsidiary of the Company is redesignated as a Restricted
Subsidiary after the date of this Indenture, the lesser of (i) the fair market
value of the Company's Investment in such Subsidiary as of the date of such
redesignation or (ii) such fair market value as of the date on which such
Subsidiary was originally designated as an Unrestricted Subsidiary.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions shall not prohibit: (i) the payment of any
dividend within 60 days after the date of its declaration, if on the date of
declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of the Company or any Guarantor or
of any Equity Interests of the Company in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Restricted
Subsidiary of the Company) of, Equity Interests of the Company (other than
Disqualified Stock); provided that the amount of any such net cash proceeds that
are utilized for any such redemption, repurchase, retirement, defeasance or
other acquisition shall be excluded from clause (c)(2) of the preceding
paragraph; (iii) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of the Company or any Restricted Subsidiary with the
net cash proceeds from an incurrence of Permitted Refinancing Indebtedness; (iv)
the payment of any dividend by a Restricted Subsidiary of the Company to the
holders of its common Equity Interests on a pro rata basis; (v) the repurchase,
redemption or other acquisition or retirement for value of any 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 pursuant to
any management equity subscription agreement or stock option agreement in effect
as of the date of this Indenture; provided that the aggregate price paid for all
such repurchased, redeemed, acquired or retired Equity Interests (a) shall not
exceed $2.0 million in any fiscal year and (b) any unused amount in any twelve-
month period may be carried forward to one or more future periods; and (vi)
payments not otherwise permitted by clauses (i) through (v) in an amount not to
exceed $10.0 million.
The amount of all Restricted Payments (other than cash) shall be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued to or by the Company or such Restricted
Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair
market value of any assets or securities that are required to be valued by this
covenant shall be determined by the Board of Directors whose resolution with
respect thereto shall be delivered to the Trustee. The Board of Directors'
determination must be based upon an opinion or appraisal issued by an
accounting, appraisal or investment banking firm of national standing if the
fair market value exceeds $5.0 million. Not later than the date of making any
Restricted Payment, the Company shall deliver to the Trustee an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.07 were
computed, together with a copy of any fairness opinion or appraisal required by
this Indenture.
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Section 4.08. Dividend and Other Payment Restrictions Affecting Subsidiaries.
The Company shall not, and shall not permit any Guarantor to, directly or
indirectly, create or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Guarantor to: (i) pay
dividends or make any other distributions on its Capital Stock to the Company or
any of its Restricted Subsidiaries, or with respect to any other interest or
participation in, or measured by, its profits, or pay any indebtedness owed to
the Company or any of its Restricted Subsidiaries; (ii) make loans or advances
to the Company or any of its Restricted Subsidiaries; or (iii) transfer any of
its properties or assets to the Company or any of its Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of: (a) Existing Indebtedness as in
effect on the date of this Indenture and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or
refinancings thereof, provided that such amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those contained in such Existing
Indebtedness, as in effect on the date of this Indenture; (b) this Indenture,
the Notes and the Note Guarantees; (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
this Indenture to be incurred; (e) customary non-assignment provisions in leases
entered into in the ordinary course of business and consistent with past
practices; (f) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so acquired of the
nature described in clause (iii) of the preceding paragraph; (g) any agreement
for the sale or other disposition of a Restricted Subsidiary that restricts
distributions by that Restricted Subsidiary pending its sale or other
disposition; (h) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole, than those contained in
the agreements governing the Indebtedness being refinanced; (i) Permitted Liens
that limit the right of the Company or any of its Restricted Subsidiaries to
dispose of the assets subject to such Permitted Lien; (j) provisions with
respect to the disposition or distribution of assets or property in joint
venture agreements and other similar agreements entered into in the ordinary
course of business; and (k) restrictions on cash or other deposits or net worth
imposed by customers under contracts entered into in the ordinary course of
business.
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred Stock.
The Company shall not, and shall not permit any of its 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 shall not issue any Disqualified Stock and shall 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 Disqualified Stock, and the Guarantors may incur Indebtedness or issue
preferred stock, if: (i) no Default or Event of Default shall have occurred and
be continuing or would occur as a consequence thereof; and (ii) the Company's
Annualized Operating Cash Flow Ratio after giving effect to the incurrence of
the Indebtedness would have been less than the ratios set forth below for the
calendar year periods indicated:
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For the Period Ratio
1999-2005..............................7.0x
2006 and after.........................6.0x
The first paragraph of this Section 4.09 shall not prohibit the incurrence
of any of the following items of Indebtedness (collectively, "Permitted Debt"):
(i) the incurrence by the Company of revolving credit Indebtedness and letters
of credit under the Credit Agreement in an aggregate principal amount at any one
time outstanding under this clause (i) (with letters of credit being deemed to
have a principal amount equal to the maximum potential liability of the Company
and its Restricted Subsidiaries thereunder) not to exceed $150.0 million less
the aggregate amount of all Net Proceeds of Asset Sales applied by the Company
to repay Indebtedness under the Credit Agreement and effect a corresponding
commitment reduction thereunder pursuant to Section 4.10; (ii) the incurrence by
the Company and the Guarantors of Permitted Acquisition Indebtedness; (iii) the
incurrence by the Company and its Restricted Subsidiaries of the Existing
Indebtedness; (iv) the incurrence by the Company and the Guarantors of
Indebtedness represented by the Notes and the related Note Guarantees to be
issued on the date of this Indenture and the Exchange Notes and the related Note
Guarantees to be issued pursuant to the Registration Rights Agreement; (v) the
incurrence by the Company or any of its Guarantors 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 Guarantor, in an aggregate
principal amount, including all Permitted Refinancing Indebtedness incurred to
refund, refinance or replace any Indebtedness incurred pursuant to this clause
(v), not to exceed $5 million at any time outstanding; (vi) the incurrence by
the Company or any of its Guarantors of Permitted Refinancing Indebtedness in
exchange for, or the net proceeds of which are used to refund, refinance or
replace Indebtedness (other than intercompany Indebtedness) that was permitted
by this Indenture to be incurred under the first paragraph of this covenant or
clauses (iii) or (iv) of this paragraph; (vii) the incurrence by the Company or
any of its Guarantors of intercompany Indebtedness between or among the Company
and any of its Guarantors; provided, however, that: (a) if the Company or any
Guarantor is the obligor on such Indebtedness, such Indebtedness must be
unsecured and expressly subordinated to the prior payment in full in cash of all
Obligations with respect to the Notes, in the case of the Company, or the Note
Guarantee, in the case of a Guarantor; and (b) (1) any subsequent issuance or
transfer of Equity Interests that results in any such Indebtedness being held by
a Person other than the Company or a Guarantor thereof and (2) any sale or other
transfer of any such Indebtedness to a Person that is not either the Company or
a Guarantor; shall be deemed, in each case, to constitute an incurrence of such
Indebtedness by the Company or such Guarantor, as the case may be, that was not
permitted by this clause (vii); (viii) the incurrence by the Company or any of
its Guarantors of additional Indebtedness in an aggregate principal amount (or
accreted value, as applicable) at any time outstanding, including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (viii), not to exceed $50.0
million; (ix) the incurrence by the Company or any of its Guarantors 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 this Indenture to be outstanding; (x) the Guarantee by the Company or
any of the Guarantors of Indebtedness of the Company or any of the Guarantors
that is permitted to be incurred by another provision of this Section 4.09; (xi)
the accrual of interest, accretion or amortization of original issue discount,
the payment of interest on any Indebtedness in the form of additional
Indebtedness with the same terms, and the payment of dividends on Disqualified
Stock in the form of additional shares of the same class of Disqualified Stock;
and (xii) the incurrence by LEC Unwired, LLC or by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt, provided, however, that if any such
Indebtedness ceases to be Non-Recourse Debt of LEC Unwired, LLC or an
Unrestricted Subsidiary, such event shall be deemed to constitute an incurrence
of Indebtedness by a Restricted Subsidiary of the Company that was not permitted
by this clause (xii).
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For purposes of determining compliance with this Section 4.09, in the event
that an item of proposed Indebtedness meets the criteria of more than one of the
categories of Permitted Debt described in clauses (i) through (xii) above, or is
entitled to be incurred pursuant to the first paragraph of this Section 4.09,
the Company will be permitted to classify such item of Indebtedness on the date
of its incurrence in any manner that complies with this Section 4.09.
Indebtedness under the Credit Agreement outstanding on the date on which Notes
are first issued and authenticated under this Indenture shall be deemed to have
been incurred on such date in reliance on the exception provided by clause (i)
of the definition of Permitted Debt.
Section 4.10. Asset Sales.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, consummate an Asset Sale unless: (i) 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 of the assets or Equity
Interests issued or sold or otherwise disposed of, (ii) such fair market value
is determined by the Company's Board of Directors and evidenced by a resolution
of the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee, and (iii) at least 75% of the consideration therefor received by the
Company or such Restricted Subsidiary is in the form of cash or Cash
Equivalents. For purposes of this provision, each of the following shall be
deemed to be cash: (a) 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 Note Guarantee) 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) any securities, notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
contemporaneously (subject to ordinary settlement periods) converted by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received in that conversion).
Within 360 days after the receipt of any Net Proceeds from an Asset Sale,
the Company may apply such Net Proceeds at its option: (i) to repay Senior Debt
and, if the Senior Debt repaid is revolving credit Indebtedness to
correspondingly reduce commitments with respect thereto, (ii) to acquire all or
substantially all of the assets of, or a majority of the Voting Stock of,
another Permitted Business, (iii) to make a capital expenditure, or (iv) to
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
temporarily reduce revolving credit borrowings or otherwise invest such Net
Proceeds in any manner that is not prohibited by this Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as
provided in the preceding paragraph shall constitute "Excess Proceeds." When
the aggregate amount of Excess Proceeds exceeds $10.0 million, the Company shall
make an Asset Sale offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar to
those set forth in this Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets to purchase the maximum principal amount of
Notes and such other pari passu Indebtedness that may be purchased out of the
Excess Proceeds. The offer price in any Asset Sale Offer shall be equal to 100%
of the Accreted Value (if such date of purchase is prior to November 1, 2004)
and Liquidated Damages, if any, to the date of purchase, or 100% of the
principal amount (if such date of purchase is on or after November 1, 2004) plus
accrued and unpaid interest and Liquidated Damages, if any, to the date of
purchase, and will be payable in cash. If 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 this Indenture. If the aggregate
principal amount and/or Accreted Value, as the case may be, of Notes and such
other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the
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Trustee shall select the Notes and such other pari passu Indebtedness to be
purchased on a pro rata basis. Upon completion of each Asset Sale Offer, the
amount of Excess Proceeds shall be reset at zero.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of this Indenture, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of this Indenture by virtue of such
conflict.
Section 4.11. Transactions with Affiliates.
The Company shall not, and shall 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, an "Affiliate Transaction"), unless: (i) 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 (ii) 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 $1.0 million, a resolution of the
Board of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) 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
$5.0 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.
The following items shall not be deemed to be Affiliate Transactions and,
therefore, shall not be subject to the provisions of the prior paragraph: (i)
any employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business; (ii) transactions between or
among the Company and/or its Restricted Subsidiaries; (iii) transactions with a
Person that is an Affiliate of the Company solely because the Company owns an
Equity Interest in such Person; (iv) payment of reasonable directors fees to
Persons who are not otherwise Affiliates of the Company; (v) sales of Equity
Interests (other than Disqualified Stock) to Affiliates of the Company; and (vi)
Restricted Payments that are permitted by the provisions of Section 4.07.
The following items shall be deemed Affiliate Transactions, but shall not
be subject to the fairness opinion provisions in paragraph (ii)(b) above: (i)
transactions involving the leasing or sharing or other use by the Company or any
Restricted Subsidiary of communication network facilities, including, without
limitation, cable or other fiber lines, equipment of transmission capacity, of
any Affiliate of the Company (such Affiliate being a "Related Party") on terms
that are no less favorable, when taken as a whole, to the Company or such
Restricted Subsidiary, as applicable, than those available from such Related
Party to unaffiliated third parties; (ii) transactions involving the provision
of telecommunication services, including billing and related back-office
support, by a Related Party in the ordinary course of business to the Company or
any Restricted Subsidiary, or by the Company or any Restricted Subsidiary to a
Related Party, on terms that are no less favorable, when taken as a whole, to
the Company or such Restricted Subsidiary, as applicable, than those available
from such Related Party to unaffiliated third parties; and (iii) any sales
agency agreement pursuant to which an Affiliate has the right to market any or
all of the products or services of the Company or any of the Restricted
Subsidiaries.
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Section 4.12. Liens.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or suffer to
exist any Lien of any kind securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, except Permitted Liens.
Section 4.13. Business Activities.
The Company shall not, and shall 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.
Section 4.14. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done all
things necessary to preserve and keep in full force and effect (i) its corporate
existence, and the corporate, partnership or other existence of each of its
Subsidiaries, in accordance with the respective organizational documents (as the
same may be amended from time to time) of the Company or any such Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders of the Notes.
Section 4.15. Offer to Repurchase Upon Change of Control.
If a Change of Control occurs, each Holder of Notes shall have the right to
require the Company to repurchase all or any part (equal to $1,000 or an
integral multiple thereof) of that Holder's Notes pursuant to the offer
described below (the "Change of Control Offer"). In the Change of Control
Offer, the Company will offer a change of control payment in cash equal to 101%
of the aggregate Accreted Value of the Notes on the date of purchase (if such
date of purchase is prior to November 1, 2004) or 101% of the aggregate
principal amount of Notes repurchased plus accrued and unpaid interest and
Liquidated Damages, if any, thereon, to the date of purchase (if such date of
purchase is on or after November 1, 2004) (in either case, the "Change of
Control Payment"). Within ten days following any Change of Control, the Company
shall mail a notice to each Holder stating: (1) that the Change of Control
Offer is being made pursuant to this Section 4.15 and that all Notes tendered
will be accepted for payment; (2) the purchase price and the purchase date,
which shall be no earlier than 30 days and no later than 60 days from the date
such notice is mailed (the "Change of Control Payment Date"); (3) that any Note
not tendered will continue to accrete or accrue interest; (4) that, unless the
Company defaults in the payment of the Change of Control Payment, all Notes
accepted for payment pursuant to the Change of Control Offer shall cease to
accrete or accrue interest after the Change of Control Payment Date; (5) that
Holders electing to have any Notes purchased pursuant to a Change of Control
Offer will be required to surrender the Notes, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Notes completed, to the Paying
Agent at the address specified in the notice prior to the close of business on
the third Business Day preceding the Change of Control Payment Date; (6) that
Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the second Business Day
preceding the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Notes delivered for purchase, and a statement that such Holder is
withdrawing his election to have the Notes purchased; and (7) that Holders whose
Notes are being purchased only in part will be issued new Notes equal in
principal
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amount to the unpurchased portion of the Notes surrendered, which unpurchased
portion must be equal to $1,000 in principal amount or an integral multiple
thereof. The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control. To the extent that
the provisions of any securities laws or regulations conflict with the Change of
Control provisions of this Indenture, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under the Change of Control provisions of this
Indenture by virtue of such conflict.
On the Change of Control Payment Date, the Company shall, to the extent
lawful: (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer; (ii) 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 (iii) deliver or cause to be delivered to the
Trustee the Notes so accepted together with an Officers' Certificate stating the
Accreted Value (if such date of purchase is prior to November 1, 2004) or the
aggregate principal amount of the Notes (if such date or purchase is on or after
November 1, 2004) or portions thereof being purchased by the Company. The
Paying Agent shall promptly mail to each Holder of Notes so tendered the Change
of Control Payment for such Notes, and the Trustee shall promptly authenticate
and mail (or cause to be transferred by book entry) to each Holder a new Note
equal in principal amount to any unpurchased portion of the Notes surrendered,
if any; provided that each such new Note shall be in a principal amount of
$1,000 or an integral multiple thereof.
Prior to complying with any of the provisions of this Section 4.15, but in
any event within 90 days following a Change of Control, the Company shall either
repay all outstanding Senior Debt or obtain the requisite consents, if any,
under all agreements governing outstanding Senior Debt to permit the repurchase
of Notes required by this Section 4.15. The Company will publicly announce the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.
The provisions described above that require the Company to make a Change of
Control Offer following a Change of Control shall be applicable regardless of
whether any other provisions of this Indenture are applicable.
The Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this 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.
Section 4.16. No Senior Subordinated Debt.
Notwithstanding the provisions of Section 4.09 hereof, the Company shall
not incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to any Senior
Debt of the Company and senior in any respect in right of payment to the Notes.
No Guarantor shall incur, create, issue, assume, guarantee or otherwise become
liable for any Indebtedness that is subordinate or junior in right of payment to
the Senior Debt of such Guarantor and senior in any respect in right of payment
to such Guarantor's Note Guarantee.
Section 4.17. Designation of Restricted and Unrestricted Subsidiaries.
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default; provided
that in no event shall the business currently operated by US Unwired, Unwired
Telecom Corp. or Louisiana Unwired, LLC be transferred to or held
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by an Unrestricted Subsidiary. If a Restricted Subsidiary is designated as an
Unrestricted Subsidiary, the aggregate fair market value of all outstanding
Investments owned by the Company and its Restricted Subsidiaries in the
Subsidiary so designated shall be deemed to be an Investment made as of the time
of such designation and will either reduce the amount available for Restricted
Payments under the first paragraph of Section 4.07 hereof or reduce the amount
available for future Investments under one or more clauses of the definition of
Permitted Investments, as the Company shall determine. That designation will
only be permitted if such Investment would be permitted at that time and if such
Restricted Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary. The Board of Directors may redesignate any Unrestricted Subsidiary
to be a Restricted Subsidiary if the redesignation would not cause a Default.
Section 4.18. Payments for Consent.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration to or for the benefit of any Holder of Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
and is paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
Section 4.19. Additional Note Guarantees.
If the Company or any of its Restricted Subsidiaries shall acquire or
create another Restricted Subsidiary after the date of this Indenture, then that
newly acquired or created Restricted Subsidiary must become a Guarantor and
execute a Note Guarantee in the form of a supplemental indenture and deliver an
Opinion of Counsel, in accordance with the terms of this Indenture within 10
Business Days of the date on which it was acquired or created. The form of such
Note Guarantee is attached as Exhibit E hereto.
ARTICLE 5.
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets.
The Company shall not, directly or indirectly, consolidate or merge with or
into another Person (whether or not the Company is the surviving corporation),
or sell, assign, transfer, convey or otherwise dispose of all or substantially
all of the properties or assets of the Company and its Restricted Subsidiaries
taken as a whole, in one or more related transactions, to another Person;
unless: (i) either: (a) the Company is the surviving corporation; or (b) the
Person formed by or surviving any such consolidation or merger (if other than
the Company) or to which such sale, assignment, transfer, conveyance or other
disposition shall have been made is a corporation organized or existing under
the laws of the United States, any state thereof or the District of Columbia;
(ii) the Person formed by or surviving any such consolidation or merger (if
other than the Company) or the Person to which such sale, assignment, transfer,
conveyance or other disposition shall have been made assumes all the obligations
of the Company under the Notes, this Indenture and the Registration Rights
Agreement pursuant to a supplemental indenture in a form reasonably satisfactory
to the Trustee; (iii) immediately after such transaction no Default or Event of
Default exists; and (iv) the Company or the Person formed by or surviving any
such consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, conveyance or other disposition shall have been made: (a)
shall have Consolidated Net Worth immediately after the transaction equal to or
greater than the Consolidated Net Worth of the Company immediately preceding the
transaction; and (b) shall, on the date of such transaction after giving pro
forma effect thereto and any related financing transactions as if the same had
occurred at the beginning of the applicable four-quarter period, be permitted to
incur at least $1.00 of additional
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Indebtedness pursuant to the Annualized Operating Cash Flow Ratio test set forth
in the first paragraph of Section 4.09 herein.
The sale of the Company's PCS business shall be deemed a sale of
substantially all of the assets of the Company for purposes of the provisions of
this Section 5.01. In addition, the Company, Unwired Telecom Corp. and
Louisiana Unwired, LLC may not, directly or indirectly, lease all or
substantially all of their properties or assets, in one or more related
transactions, to any other Person.
The provisions of this Section 5.01 shall not be applicable to a sale,
assignment, transfer, conveyance or other disposition of assets between or among
the Company and any of its Wholly Owned Restricted Subsidiaries.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any sale, assignment, transfer, lease,
conveyance or other disposition of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into or with which the Company is merged or to which
such sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to the "Company" shall refer instead to
the successor corporation and not to the Company), and may exercise every right
and power of the Company under this Indenture with the same effect as if such
successor Person had been named as the Company herein; provided, however, that
the predecessor Company shall not be relieved from the obligation to pay the
principal of and interest on the Notes except in the case of a sale, assignment,
transfer, conveyance or other disposition of all of the Company's assets that
meets the requirements of Section 5.01 hereof.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment when due of interest on, or
Liquidated Damages with respect to, the Notes and such default continues for a
period of 30 days;
(b) the Company defaults in the payment when due of principal of or
premium, if any, on the Notes when the same becomes due and payable at maturity,
upon redemption (including in connection with an offer to purchase) or
otherwise;
(c) the Company or any Restricted Subsidiary fails to comply with any of
the provisions of Section 4.07, 4.09, 4.10, 4.15 or 5.01 hereof;
(d) the Company fails to observe or perform any other covenant,
representation, warranty or other agreement in this Indenture, the Notes or the
Pledge Agreement for 60 days after notice to the Company by the Trustee or the
Holders of at least 25% in aggregate principal amount of the Notes then
outstanding voting as a single class;
(e) a default occurs under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the
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Company or any of its Restricted Subsidiaries other than LEC Unwired, LLC (or
the payment of which is guaranteed by the Company or any of its Restricted
Subsidiaries other than LEC Unwired, LLC), whether such Indebtedness or
guarantee now exists, or is created after the date of this Indenture, which
default (i) is caused by a failure to pay principal of, or interest or premium,
if any, 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 (ii) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of such Indebtedness, together
with the principal amount of any other such Indebtedness under which there has
been a Payment Default or the maturity of which has been so accelerated,
aggregates $5 million or more;
(f) a final judgment or final judgments for the payment of money are
entered by a court or courts of competent jurisdiction against the Company or
any of its Restricted Subsidiaries other than LEC Unwired, LLC and such judgment
or judgments are not paid or discharged for a period (during which execution
shall not be effectively stayed) of 60 days, provided that the aggregate of all
such unpaid or undischarged judgments exceeds $5 million;
(g) the Company or any group of its Restricted Subsidiaries other than
LEC Unwired, LLC:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against it in an
involuntary case,
(iii) consents to the appointment of a custodian of it or for all or
substantially all of its property,
(iv) makes a general assignment for the benefit of its creditors, or
(v) generally is not paying its debts as they become due; or
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(i) is for relief against the Company or any of its Restricted
Subsidiaries other than LEC Unwired, LLC in an involuntary case;
(ii) appoints a custodian of the Company or any of its Restricted
Subsidiaries other than LEC Unwired, LLC or for all or substantially all of
the property of the Company or any of its Restricted Subsidiaries other
than LEC Unwired, LLC; or
(iii) orders the liquidation of the Company or any of its Restricted
Subsidiaries other than LEC Unwired, LLC; and the order or decree remains
unstayed and in effect for 60 consecutive days; or
(i) the Company shall breach any material representation, warranty or
agreement set forth in the Pledge Agreement or the Pledge Agreement shall be
held in any judicial proceeding to be unenforceable or invalid or shall cease
for any reason to be in full force and effect.
(j) except as permitted by this Indenture, any Note Guarantee is held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any
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Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under such Guarantor's Note Guarantee.
Section 6.02. Acceleration.
If any Event of Default (other than an Event of Default specified in clause
(g) or (h) of Section 6.01 hereof with respect to the Company or any of its
Restricted Subsidiaries, other than LEC Unwired, LLC, occurs and is continuing,
the Trustee or the Holders of at least 25% in principal amount of the then
outstanding Notes may declare all the Notes to be due and payable immediately.
Upon any such declaration, all principal of and accrued interest on (if on or
after November 1, 2004) or Accreted Value of (if prior to November 1, 2004) the
Notes shall become due and payable immediately. Notwithstanding the foregoing,
if an Event of Default specified in clause (g) or (h) of Section 6.01 hereof
occurs with respect to the Company or any Restricted Subsidiary other than LEC
Unwired, LLC, all outstanding Notes shall be due and payable immediately without
further action or notice. The Holders of a majority in aggregate principal
amount of the then outstanding Notes by written notice to the Trustee may on
behalf of all of the Holders rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal, interest or premium that has
become due solely because of the acceleration) have been cured or waived.
If an Event of Default occurs on or after November 1, 2004 by reason of any
willful action (or inaction) taken (or not taken) by or on behalf of the Company
with the intention of avoiding payment of the premium that the Company would
have had to pay if the Company then had elected to redeem the Notes pursuant to
Section 3.07 hereof, then, upon acceleration of the Notes, an equivalent premium
shall also become and be immediately due and payable, to the extent permitted by
law, anything in this Indenture or in the Notes to the contrary notwithstanding.
If an Event of Default occurs prior to November 1, 2004 by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding the prohibition on redemption of the Notes prior to
such date, then, upon acceleration of the Notes, an additional premium shall
also become and be immediately due and payable in an amount, for each of the
years beginning on November 1 of the years set forth below, as set forth below
(expressed as a percentage of the Accreted Value of the Notes to the date of
payment that would otherwise be due but for the provisions of this sentence):
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
1999.................................................. 113.375%
2000.................................................. 112.038%
2001.................................................. 110.700%
2002.................................................. 109.363%
2003.................................................. 108.025%
</TABLE>
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal, premium, if any, and
interest on the Notes or to enforce the performance of any provision of the
Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy or
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constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Holders of not less than a majority in aggregate principal amount of the
then outstanding Notes by notice to the Trustee may on behalf of the Holders of
all of the Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, premium and Liquidated Damages, if any, or interest
on, the Notes (including in connection with an offer to purchase) (provided,
however, that the Holders of a majority in aggregate principal amount of the
then outstanding Notes may rescind an acceleration and its consequences,
including any related payment default that resulted from such acceleration).
Upon any such waiver, such Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
Section 6.05. Control by Majority.
Holders of a majority in principal amount of the then outstanding Notes may
direct the time, method and place of conducting any proceeding for exercising
any remedy available to the Trustee or exercising any trust or power conferred
on it. However, the Trustee may refuse to follow any direction that conflicts
with law or this Indenture that the Trustee determines may be unduly prejudicial
to the rights of other Holders of Notes or that may involve the Trustee in
personal liability.
Section 6.06. Limitation on Suits.
A Holder of a Note may pursue a remedy with respect to this Indenture or
the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the rights of
another Holder of a Note or to obtain a preference or priority over another
Holder of a Note.
Section 6.07. Rights of Holders of Notes to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder of a Note to receive payment of principal, premium and Liquidated
Damages, if any, and interest on the Note, on or after the respective due dates
expressed in the Note (including in connection with an offer to purchase), or
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to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) occurs and is
continuing, the Trustee is authorized to recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount of
principal of, premium and Liquidated Damages, if any, and interest remaining
unpaid on the Notes and interest on overdue principal and, to the extent lawful,
interest and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee is authorized to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders of the Notes allowed in any judicial proceedings relative to the Company
(or any other obligor upon the Notes), its creditors or its property and shall
be entitled and empowered to collect, receive and distribute any money or other
property payable or deliverable on any such claims and any custodian in any such
judicial proceeding is hereby authorized by each Holder to make such payments to
the Trustee, and in the event that the Trustee shall consent to the making of
such payments directly to the Holders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof. To the extent that the payment of any such compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, and
any other amounts due the Trustee under Section 7.07 hereof out of the estate in
any such proceeding, shall be denied for any reason, payment of the same shall
be secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties that the Holders may be
entitled to receive in such proceeding whether in liquidation or under any plan
of reorganization or arrangement or otherwise. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder, or to authorize the
Trustee to vote in respect of the claim of any Holder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article, it shall pay
out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium and Liquidated Damages, if any, and interest,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium and Liquidated
Damages, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
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The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as a
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section does
not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to
Section 6.07 hereof, or a suit by Holders of more than 10% in principal amount
of the then outstanding Notes.
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Trustee need perform only
those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
the Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of this
Section;
(ii) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the Trustee
was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of this
Indenture that in any way relates to the Trustee is subject to paragraphs (a),
(b), and (c) of this Section.
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(e) No provision of this Indenture shall require the Trustee to expend or
risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
(f) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company. Money held in
trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) The Paying Agent, Registrar and any Authenticating Agent shall be
entitled to the protections, immunities and standard of care as are set forth in
paragraphs (a), (b) and (c) of this Section 7.01 with respect to the Trustee.
Section 7.02. Rights of Trustee.
(a) The Trustee may conclusively rely upon any document believed by it to
be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officers' Certificate or Opinion of Counsel. The Trustee may consult with
counsel and the written advice of such counsel or any Opinion of Counsel shall
be full and complete authorization and protection from liability in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care. No Depositary shall be deemed an agent of the Trustee and the Trustee
shall not be responsible for any act or omission of any Depositary.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any demand,
request, direction or notice from the Company shall be sufficient if signed by
an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
any of the Holders unless such Holders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
that might be incurred by it in compliance with such request or direction.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company or any Affiliate of the
Company with the same rights it would have if it were not Trustee. However, in
the event that the Trustee acquires any conflicting interest it must eliminate
such conflict within 90 days, apply to the SEC for permission to continue as
trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
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Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for the Company's use of the proceeds from the Notes or any money
paid to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any statement or recital herein or any statement in the Notes or
any other document in connection with the sale of the Notes or pursuant to this
Indenture other than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of the
Default or Event of Default within 90 days after it occurs. Except in the case
of a Default or Event of Default in payment of principal of, premium, if any, or
interest on any Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the Notes.
Section 7.06. Reports by Trustee to Holders of the Notes.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, and for so long as Notes remain outstanding, the Trustee
shall mail to the Holders of the Notes a brief report dated as of such reporting
date that complies with TIA (S) 313(a) (but if no event described in TIA (S)
313(a) has occurred within the twelve months preceding the reporting date, no
report need be transmitted). The Trustee also shall comply with TIA (S)
313(b)(2). The Trustee shall also transmit by mail all reports as required by
TIA (S) 313(c).
A copy of each report at the time of its mailing to the Holders of Notes
shall be mailed to the Company and filed with the SEC and each stock exchange on
which the Notes are listed in accordance with TIA (S) 313(d). The Company shall
promptly notify the Trustee when the Notes are listed on any stock exchange.
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and services hereunder. The
Trustee's compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee promptly
upon request for all reasonable disbursements, advances and expenses incurred or
made by it in addition to the compensation for its services. Such expenses
shall include the reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel.
The Company shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, including the
costs and expenses of enforcing this Indenture against the Company (including
this Section 7.07) and defending itself against any claim (whether asserted by
the Company or any Holder or any other person) or liability in connection with
the exercise or performance of any of its powers or duties hereunder, except to
the extent any such loss, liability or expense may be attributable to its
negligence or bad faith. The Trustee shall notify the Company promptly of any
claim for which it may seek indemnity. Failure by the Trustee to so notify the
Company shall not relieve the Company of its obligations hereunder. The Company
shall defend the claim and the Trustee shall cooperate in the
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defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel. The Company need not pay for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
The obligations of the Company under this Section 7.07 shall survive the
satisfaction and discharge of this Indenture.
To secure the Company's payment obligations in this Section, the Trustee
shall have a Lien prior to the Notes on all money or property held or collected
by the Trustee, except that held in trust to pay principal and interest on
particular Notes. Such Lien shall survive the satisfaction and discharge of
this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(g) or (h) hereof occurs, the expenses and the
compensation for the services (including the fees and expenses of its agents and
counsel) are intended to constitute expenses of administration under any
Bankruptcy Law.
The Trustee shall comply with the provisions of TIA (S) 313(b)(2) to the
extent applicable.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from the
trust hereby created by so notifying the Company. The Holders of a majority in
principal amount of the then outstanding Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order for
relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding Notes may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company, or
the Holders of at least 10% in principal amount of the then outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee, after written request by any Holder who has been a Holder
for at least six months, fails to comply with Section 7.10, such Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
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A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon, the resignation or
removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Holders. The retiring Trustee shall promptly transfer all property held by it
as Trustee to the successor Trustee, provided all sums owing to the Trustee
hereunder have been paid and subject to the Lien provided for in Section 7.07
hereof. Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee consolidates, merges or converts into, or transfers all or
substantially all of its corporate trust business to, another corporation, the
successor corporation without any further act shall be the successor Trustee.
Section 7.10. Eligibility; Disqualification.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $100 million
as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the requirements
of TIA (S) 310(a)(1), (2) and (5). The Trustee is subject to TIA (S) 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated therein.
ARTICLE 8.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.02 or 8.03 hereof be applied to all outstanding Notes and the
Note Guarantees upon compliance with the conditions set forth below in this
Article Eight.
Section 8.02. Legal Defeasance and Discharge.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Company and the Guarantors shall, subject
to the satisfaction of the conditions set forth in Section 8.04 hereof, be
deemed to have been discharged from its obligations with respect to all
outstanding Notes and the Note Guarantees on the date the conditions set forth
below are satisfied (hereinafter, "Legal Defeasance"). For this purpose, Legal
Defeasance means that the Company and the Guarantors shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding Notes
and the Note Guarantees, which shall thereafter be deemed to be "outstanding"
only for
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the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders of
outstanding Notes to receive solely from the trust fund described in Section
8.04 hereof, and as more fully set forth in such Section, payments in respect of
the principal of, premium, if any, interest and Liquidated Damages on such Notes
when such payments are due, (b) the Company's obligations with respect to such
Notes under Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and the Company's and the
Guarantors' obligations in connection therewith and (d) this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its option
under Section 8.03 hereof.
Section 8.03. Covenant Defeasance.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18 and 4.19 hereof and clause (iv) of
Section 5.01 hereof with respect to the outstanding Notes on and after the date
the conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to
the outstanding Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Section 6.01
hereof, but, except as specified above, the remainder of this Indenture and such
Notes shall be unaffected thereby. In addition, upon the Company's exercise
under Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
Sections 6.01(c) through 6.01(f) hereof shall not constitute Events of Default.
Section 8.04. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in trust, for
the benefit of the Holders, cash in United States dollars, non-callable
Government Securities, or a combination thereof, in such amounts as will be
sufficient, in the opinion of a nationally recognized firm of independent public
accountants, to pay the principal of, premium and Liquidated Damages, if any,
and interest on the outstanding Notes on the stated date for payment thereof or
on the applicable redemption date, as the case may be and Company must specify
whether the Notes are being defeased to maturity or to a particular redemption
date;
(b) in the case of an election under Section 8.02 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming
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that (A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (B) since the date of this Indenture, there
has been a change in the applicable federal income tax law, in either case to
the effect that, and based thereon such Opinion of Counsel shall confirm that,
the Holders of the outstanding Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred;
(c) in the case of an election under Section 8.03 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be continuing
on the date of such deposit (other than a Default or Event of Default resulting
from the incurrence of Indebtedness all or a portion of the proceeds of which
will be used to defease the Notes pursuant to this Article Eight concurrently
with such incurrence) or insofar as Sections 6.01(g) or 6.01(h) hereof is
concerned, at any time in the period ending on the 91st day after the date of
deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under, any material agreement or
instrument (other than this Indenture) to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound;
(f) the Company shall have delivered to the Trustee an Opinion of Counsel
(which may be subject to customary exceptions) to the effect that, no
intervening bankruptcy of the Company or any Guarantor between the date of
deposit and the 91st day following the deposit and assuming that no Holder is an
"insider" of the Company under applicable bankruptcy law, 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;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
Section 8.05. Deposited Money and Government Securities to be Held in Trust;
Other Miscellaneous Provisions.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding Notes
shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Notes and this Indenture, to the payment, either directly or
through any Paying Agent (including the Company acting as Paying Agent) as the
Trustee may determine, to the Holders of such Notes of all sums due and to
become
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due thereon in respect of principal, premium, if any, and interest, but such
money need not be segregated from other funds except to the extent required by
law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding Notes.
Anything in this Article Eight to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon the request of the
Company any money or non-callable Government Securities held by it as provided
in Section 8.04 hereof which, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the opinion delivered under Section
8.04(a) hereof), are in excess of the amount thereof that would then be required
to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.
Section 8.06. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then held by
the Company, in trust for the payment of the principal of, premium, if any, or
interest on any Note and remaining unclaimed for two years after such principal,
and premium, if any, or interest has become due and payable shall be paid to the
Company on its request or (if then held by the Company) shall be discharged from
such trust; and the Holder of such Note shall thereafter look only to the
Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
Section 8.07. Reinstatement.
If the Trustee or Paying Agent is unable to apply any United States dollars
or non-callable Government Securities in accordance with Section 8.02 or 8.03
hereof, as the case may be, by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02 or 8.03
hereof, as the case may be; provided, however, that, if the Company makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, the Company shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
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ARTICLE 9.
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes.
Notwithstanding Section 9.02 of this Indenture, the Company, the Guarantors
and the Trustee may amend or supplement this Indenture, the Note Guarantees or
the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes;
(c) to provide for the assumption of the Company's or a Guarantor's
obligations to the Holders of the Notes in the case of a merger or consolidation
or sale of all or substantially all of the Company's assets pursuant to Article
5 or Article 10 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes or that does not adversely affect the legal
rights hereunder of any Holder of the Note;
(e) to comply with requirements of the SEC in order to effect or maintain
the qualification of this Indenture under the TIA; or
(f) to allow any Guarantor to execute a supplemental indenture and/or a
Note Guarantee with respect to the Notes.
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon receipt by the Trustee of the documents described in Section
7.02 hereof, the Trustee shall join with the Company and the Guarantors in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
Section 9.02. With Consent of Holders of Notes.
Except as provided below in this Section 9.02, the Company, the Guarantors
and the Trustee may amend or supplement this Indenture (including Sections 3.09,
4.10 and 4.15 hereof), the Note Guarantees and the Notes with the consent of the
Holders of at least a majority in principal amount of the Notes then outstanding
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes), and, subject to
Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other
than a Default or Event of Default in the payment of the principal of, premium,
if any, or interest on the Notes, except a payment default resulting from an
acceleration that has been rescinded) or compliance with any provision of this
Indenture, the Note Guarantees or the Notes may be waived with the consent of
the Holders of a majority in principal amount of the then outstanding Notes
voting as a single class (including consents obtained in connection with a
tender offer or exchange offer for, or purchase of, the Notes).
Upon the request of the Company accompanied by a resolution of its Board of
Directors authorizing the execution of any such amended or supplemental
Indenture, and upon the filing with the Trustee of evidence satisfactory to the
Trustee of the consent of the Holders of Notes as aforesaid, and
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upon receipt by the Trustee of the documents described in Section 7.02 hereof,
the Trustee shall join with the Company and the Guarantors in the execution of
such amended or supplemental Indenture unless such amended or supplemental
Indenture directly affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise, in which case the Trustee may in its discretion,
but shall not be obligated to, enter into such amended or supplemental
Indenture.
It shall not be necessary for the consent of the Holders of Notes under
this Section 9.02 to approve the particular form of any proposed amendment or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amended or supplemental
Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Notes then outstanding voting as a
single class may waive compliance in a particular instance by the Company with
any provision of this Indenture or the Notes. However, without the consent of
each Holder affected, an amendment or waiver under this Section 9.02 may not
(with respect to any Notes held by a non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must consent to
an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any Note
or alter or waive any of the provisions with respect to the redemption of the
Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15
hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of principal of
or premium or Liquidated Damages, if any, or interest on the Notes (except a
rescission of acceleration of the Notes by the Holders of at least a majority in
aggregate principal amount of the then outstanding Notes and a waiver of the
payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of Notes to receive payments
of principal of or interest or premium or Liquidated Damages, if any, on the
Notes;
(g) make any change in Section 6.04 or 6.07 hereof or in the foregoing
amendment and waiver provisions; or
(h) release any Guarantor from any of its obligations under its Note
Guarantee or this Indenture, except in accordance with the terms of this
Indenture.
Section 9.03. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the Notes shall be set
forth in a amended or supplemental Indenture that complies with the TIA as then
in effect.
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Section 9.04. Revocation and Effect of Consents.
Until an amendment, supplement or waiver becomes effective, a consent to it
by a Holder of a Note is a continuing consent by the Holder of a Note and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder of a Note or subsequent Holder of a Note may
revoke the consent as to its Note if the Trustee receives written notice of
revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
Section 9.05. Notation on or Exchange of Notes.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
Section 9.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amended or supplemental Indenture authorized
pursuant to this Article Nine if the amendment or supplement does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The
Company may not sign an amendment or supplemental Indenture until the Board of
Directors approves it. In executing any amended or supplemental indenture, the
Trustee shall be entitled to receive and (subject to Section 7.01 hereof) shall
be fully protected in relying upon, in addition to the documents required by
Section 12.04 hereof, an Officer's Certificate and an Opinion of Counsel stating
that the execution of such amended or supplemental indenture is authorized or
permitted by this Indenture.
ARTICLE 10.
SUBORDINATION
Section 10.01. Agreement to Subordinate.
The Company agrees, and each Holder by accepting a Note agrees, that the
Indebtedness evidenced by the Notes including without limitation the Liquidated
Damages is subordinated in right of payment, to the extent and in the manner
provided in this Article 10, to the prior payment in full of all Senior Debt
(whether outstanding on the date hereof or hereafter created, incurred, assumed
or guaranteed), and that the subordination is for the benefit of the holders
from time to time of Senior Debt.
Section 10.02. Liquidation; Dissolution; Bankruptcy.
Upon any distribution to creditors of the Company or any Guarantor in a
liquidation or dissolution of the Company or any Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or any Guarantor or its property, in an assignment for the benefit of
creditors or any marshaling of the Company's or any Guarantor's assets and
liabilities:
(i) holders of Senior Debt shall be entitled to receive payment in
full of all Obligations due in respect of such Senior Debt (including
interest after the commencement of any
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such proceeding at the rate specified in the applicable Senior Debt) before
Holders of the Notes shall be entitled to receive any payment with respect
to the Notes or the Note Guarantees (except that Holders may receive (A)
Permitted Junior Securities and (B) payments and other distributions made
from any defeasance trust created pursuant to Section 8.01 hereof); and
(ii) until all Obligations with respect to Senior Debt (as provided in
clause (i) above) are paid in full, any distribution to which Holders would
be entitled but for this Article 10 shall be made to holders of Senior Debt
(except that Holders of Notes may receive (A) Permitted Junior Securities
and (B) payments and other distributions made from any defeasance trust
created pursuant to Section 8.01 hereof), as their interests may appear.
Section 10.03. Default on Designated Senior Debt.
(a) The Company may not make any payment or distribution to the Trustee or
any Holder in respect of Obligations with respect to the Notes including making
any deposit in trust and may not acquire from the Trustee or any Holder any
Notes for cash or property nor may any Guarantor make any payment in respect of
its Note Guarantee (other than (A) Permitted Junior Securities and (B) payments
and other distributions made from any defeasance trust created pursuant to
Section 8.01 hereof) until all principal and other Obligations with respect to
the Senior Debt have been paid in full if:
(i) a failure to make any payment on any series of Designated Senior
Debt when due (including upon any acceleration of any Series of Designated
Senior Debt); or
(ii) a default, other than a payment default, on Designated Senior
Debt occurs and is continuing that then permits holders of the Designated
Senior Debt to accelerate its maturity and the Trustee receives a notice of
the default (a "Payment Blockage Notice") from a Person who may give it
pursuant to Section 10.11 hereof. If the Trustee receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be effective
for purposes of this Section unless and until (A) at least 360 days shall
have elapsed since the effectiveness of the immediately prior Payment
Blockage Notice and (B) all scheduled payments of principal, interest and
premium and Liquidated Damages, if any, on the Notes that have come due
have been paid in full in cash. No nonpayment default that existed or was
continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
(b) The Company may and shall resume payments on and distributions in
respect of the Notes and may acquire them upon the earlier of:
(i) the date upon which the default is cured or waived (and, if
applicable, any acceleration is rescinded), or
(ii) in the case of a default referred to in clause (ii) of Section
10.03(a) hereof, the earlier of the date on which such non-payment default
is cured or waived or 179 days pass after notice is received if the
maturity of such Designated Senior Debt has not been accelerated,
if this Article 10 otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
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Section 10.04. Acceleration of Notes.
If payment of the Notes is accelerated because of an Event of Default, the
Company shall promptly notify holders of Senior Debt of the acceleration.
Neither the Company nor any Guarantor may make any payment with respect to the
Notes or the Note Guarantees until five Business Days after the holders of the
Senior Debt receive notice of such acceleration and, thereafter, may make
payments with respect to the Notes only if the provisions of this Article 10
otherwise permit payment at the time.
Section 10.05. When Distribution Must Be Paid Over.
In the event that the Trustee or any Holder receives any payment of any
Obligations with respect to the Notes at a time when the Trustee or such Holder,
as applicable, has actual knowledge that such payment is prohibited by Section
10.03 hereof, such payment shall be held by the Trustee or such Holder, in trust
for the benefit of, and shall be paid forthwith over and delivered, upon written
request, to, the holders of Senior Debt as their interests may appear or their
Representative under this Indenture or other agreement (if any) pursuant to
which Senior Debt may have been issued, as their respective interests may
appear, for application to the payment of all Obligations with respect to Senior
Debt remaining unpaid to the extent necessary to pay such Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee undertakes to
perform only such obligations on the part of the Trustee as are specifically set
forth in this Article 10, and no implied covenants or obligations with respect
to the holders of Senior Debt shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Trustee shall pay over or distribute to or on behalf of Holders or the Company
or any other Person money or assets to which any holders of Senior Debt shall be
entitled by virtue of this Article 10, except if such payment is made as a
result of the willful misconduct or gross negligence of the Trustee.
Section 10.06. Notice by Company.
The Company shall promptly notify the Trustee and the Paying Agent of any
facts known to the Company that would cause a payment of any Obligations with
respect to the Notes to violate this Article 10, but failure to give such notice
shall not affect the subordination of the Notes to the Senior Debt as provided
in this Article 10.
Section 10.07. Subrogation.
After all Senior Debt is paid in full and until the Notes are paid in full,
Holders of Notes shall be subrogated (equally and ratably with all other
Indebtedness pari passu with the Notes) to the rights of holders of Senior Debt
to receive distributions applicable to Senior Debt to the extent that
distributions otherwise payable to the Holders of Notes have been applied to the
payment of Senior Debt. A distribution made under this Article 10 to holders of
Senior Debt that otherwise would have been made to Holders of Notes is not, as
between the Company and Holders, a payment by the Company on the Notes.
Section 10.08. Relative Rights.
This Article 10 defines the relative rights of Holders of Notes and holders
of Senior Debt. Nothing in this Indenture shall:
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(i) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Notes in accordance with their terms;
(ii) affect the relative rights of Holders of Notes and creditors of
the Company other than their rights in relation to holders of Senior Debt;
or
(iii) prevent the Trustee or any Holder of Notes from exercising its
available remedies upon a Default or Event of Default, subject to the
rights of holders and owners of Senior Debt to receive distributions and
payments otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay principal of or
interest on a Note on the due date, the failure is still a Default or Event of
Default.
Section 10.09. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Debt to enforce the subordination of the
Indebtedness evidenced by the Notes shall be impaired by any act or failure to
act by the Company or any Holder or by the failure of the Company or any Holder
to comply with this Indenture.
Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Debt, the distribution may be made and the notice given to their
Representative.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee and the Holders of Notes shall be entitled to rely
upon any order or decree made by any court of competent jurisdiction or upon any
certificate of such Representative or of the liquidating trustee or agent or
other Person making any distribution to the Trustee or to the Holders of Notes
for the purpose of ascertaining the Persons entitled to participate in such
distribution, the holders of the Senior Debt and other Indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
Section 10.11. Rights of Trustee and Paying Agent.
Notwithstanding the provisions of this Article 10 or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment or distribution by
the Trustee, and the Trustee and the Paying Agent may continue to make payments
on the Notes, unless the Trustee shall have received at its Corporate Trust
Office at least five Business Days prior to the date of such payment written
notice of facts that would cause the payment of any Obligations with respect to
the Notes to violate this Article 10. Only the Company or a Representative may
give the notice. Nothing in this Article 10 shall impair the claims of, or
payments to, the Trustee under or pursuant to Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold Senior Debt
with the same rights it would have if it were not Trustee. Any Agent may do the
same with like rights.
Section 10.12. Authorization to Effect Subordination.
Each Holder of Notes, by the Holder's acceptance thereof, authorizes and
directs the Trustee on such Holder's behalf to take such action as may be
necessary or appropriate to effectuate the
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subordination as provided in this Article 10, and appoints the Trustee to act as
such Holder's attorney-in-fact for any and all such purposes. If the Trustee
does not file a proper proof of claim or proof of debt in the form required in
any proceeding referred to in Section 6.09 hereof at least 30 days before the
expiration of the time to file such claim, the holders (or their representative)
or Senior Debt of the Company are hereby authorized to file an appropriate claim
for and on behalf of the Holders of the Notes.
Section 10.13. Amendments.
The provisions of this Article 10 shall not be amended or modified without
the written consent of the holders of all Senior Debt.
ARTICLE 11.
NOTE GUARANTEES
Section 11.01. Guarantee.
Subject to this Article 11, each of the Guarantors hereby, jointly and
severally, unconditionally guarantees to each Holder of a Note authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of this Indenture, the Notes or
the obligations of the Company hereunder or thereunder, that: (a) the principal
of and interest on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, if lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other obligations, that same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Guarantors shall be jointly and severally
obligated to pay the same immediately. Each Guarantor agrees that this is a
guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of the
Notes or this Indenture, the absence of any action to enforce the same, any
waiver or consent by any Holder of the Notes with respect to any provisions
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Guarantor hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company, protest, notice and all demands whatsoever
and covenant that this Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and this Indenture.
If any Holder or the Trustee is required by any court or otherwise to
return to the Company, the Guarantors or any custodian, trustee, liquidator or
other similar official acting in relation to either the Company or the
Guarantors, any amount paid by either to the Trustee or such Holder, this Note
Guarantee, to the extent theretofore discharged, shall be reinstated in full
force and effect.
Each Guarantor agrees that it shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Guarantor further agrees that, as between the Guarantors, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be
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accelerated as provided in Article 6 hereof for the purposes of this Note
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any declaration of acceleration of such obligations as provided in
Article 6 hereof, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this Note
Guarantee. The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair the
rights of the Holders under the Guarantee.
Section 11.02. Subordination of Note Guarantee.
The Obligations of each Guarantor under its Note Guarantee pursuant to this
Article 11 shall be junior and subordinated to the Senior Guarantee of such
Guarantor on the same basis as the Notes are junior and subordinated to Senior
Debt of the Company. For the purposes of the foregoing sentence, the Trustee
and the Holders shall have the right to receive and/or retain payments by any of
the Guarantors only at such times as they may receive and/or retain payments in
respect of the Notes pursuant to this Indenture, including Article 10 hereof.
Section 11.03. Limitation on Guarantor Liability.
Each Guarantor, and by its acceptance of Notes, each Holder, hereby
confirms that it is the intention of all such parties that the Note Guarantee of
such Guarantor not constitute a fraudulent transfer or conveyance for purposes
of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar federal or state law to the extent applicable to any
Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders
and the Guarantors hereby irrevocably agree that the obligations of such
Guarantor will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of such Guarantor that are relevant under such
laws, and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under this Article 10, result
in the obligations of such Guarantor under its Note Guarantee not constituting a
fraudulent transfer or conveyance.
Section 11.04. Execution and Delivery of Note Guarantee.
To evidence its Note Guarantee set forth in Section 11.01, each Guarantor
hereby agrees that a notation of such Note Guarantee substantially in the form
included in Exhibit E shall be endorsed by an Officer of such Guarantor on each
Note authenticated and delivered by the Trustee and that this Indenture shall be
executed on behalf of such Guarantor by its President or one of its Vice
Presidents.
Each Guarantor hereby agrees that its Note Guarantee set forth in Section
11.01 shall remain in full force and effect notwithstanding any failure to
endorse on each Note a notation of such Note Guarantee.
If an Officer whose signature is on this Indenture or on the Note Guarantee
no longer holds that office at the time the Trustee authenticates the Note on
which a Note Guarantee is endorsed, the Note Guarantee shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the Note Guarantee set forth in this
Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new Subsidiaries
subsequent to the date of this Indenture, if required by Section 4.24 hereof,
the Company shall cause such Subsidiaries to execute
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supplemental indentures to this Indenture and Note Guarantees in accordance with
Section 4.19 hereof and this Article 10, to the extent applicable.
Section 11.05. Guarantors May Consolidate, etc., on Certain Terms.
Except as otherwise provided in Section 11.05, no Guarantor may consolidate
with or merge with or into (whether or not such Guarantor is the surviving
Person) another Person whether or not affiliated with such Guarantor unless:
(a) subject to Section 11.05 hereof, the Person formed by or surviving any
such consolidation or merger (if other than a Guarantor or the Company)
unconditionally assumes all the obligations of such Guarantor, pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, this Indenture and the Note Guarantee on the terms set
forth herein or therein; and
(b) immediately after giving effect to such transaction, no Default or
Event of Default exists.
In case of any such consolidation, merger, sale or conveyance and upon the
assumption by the successor Person, by supplemental indenture, executed and
delivered to the Trustee and satisfactory in form to the Trustee, of the Note
Guarantee endorsed upon the Notes and the due and punctual performance of all of
the covenants and conditions of this Indenture to be performed by the Guarantor,
such successor Person shall succeed to and be substituted for the Guarantor with
the same effect as if it had been named herein as a Guarantor. Such successor
Person thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall not
have been signed by the Company and delivered to the Trustee. All the Note
Guarantees so issued shall in all respects have the same legal rank and benefit
under this Indenture as the Note Guarantees theretofore and thereafter issued in
accordance with the terms of this Indenture as though all of such Note
Guarantees had been issued at the date of the execution hereof.
Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses
(a) and (b) above, nothing contained in this Indenture or in any of the Notes
shall prevent any consolidation or merger of a Guarantor with or into the
Company or another Guarantor, or shall prevent any sale or conveyance of the
property of a Guarantor as an entirety or substantially as an entirety to the
Company or another Guarantor.
Section 11.06. Releases Following Sale of Assets.
In the event of a sale or other disposition of all of the assets of any
Guarantor, by way of merger, consolidation or otherwise, or a sale or other
disposition of all of the capital stock of any Guarantor, in each case to a
Person that is not (either before or after giving effect to such transactions) a
Restricted Subsidiary of the Company, then such Guarantor (in the event of a
sale or other disposition, by way of merger, consolidation or otherwise, of all
of the capital stock of such Guarantor) or the corporation acquiring the
property (in the event of a sale or other disposition of all or substantially
all of the assets of such Guarantor) will be released and relieved of any
obligations under its Note Guarantee; provided that the Net Proceeds of such
sale or other disposition are applied in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof.
Upon delivery by the Company to the Trustee of an Officers' Certificate and an
Opinion of Counsel to the effect that such sale or other disposition was made by
the Company in accordance with the provisions of this Indenture, including
without limitation Section 4.10 hereof, the Trustee shall execute any documents
reasonably required in order to evidence the release of any Guarantor from its
obligations under its Note Guarantee.
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Any Guarantor not released from its obligations under its Note Guarantee
shall remain liable for the full amount of principal of and interest on the
Notes and for the other obligations of any Guarantor under this Indenture as
provided in this Article 11.
ARTICLE 12.
COLLATERAL AND SECURITY
Section 12.01. Pledge Agreement.
The performance of all obligations of Louisiana Unwired, LLC under its
Guarantee shall be secured as provided in the Pledge Agreement and the
Intercreditor Agreement which Louisiana Unwired, LLC has entered into
simultaneously with the execution of this Indenture and which is attached as
Exhibit G hereto. Each Holder of Notes, by its acceptance thereof, consents and
agrees to the terms of the Pledge Agreement and the Intercreditor Agreement
(including, without limitation, the provisions providing for foreclosure and
release of Pledged Collateral) as the same may be in effect or may be amended
from time to time in accordance with its terms and authorizes and directs the
Collateral Agent to enter into the Pledge Agreement and the Intercreditor
Agreement and to perform its obligations and exercise its rights thereunder in
accordance therewith. The Company shall deliver to the Trustee copies of all
documents delivered to the Collateral Agent pursuant to the Pledge Agreement,
and shall do or cause to be done all such acts and things as may be necessary or
proper, or as may be required by the provisions of the Pledge Agreement, to
assure and confirm to the Trustee and the Collateral Agent the security interest
in the Pledged Collateral contemplated hereby, by the Pledge Agreement or the
Intercreditor Agreement or any part thereof, as from time to time constituted,
so as to render the same available for the security and benefit of this
Indenture and of the Notes secured hereby, according to the intent and purposes
herein expressed.
Section 12.02. Recording and Opinions.
(a) The Company shall furnish to the Trustee prior to making the
Permitted Texas Unwired Investments an Opinion of Counsel either (i) stating
that in the opinion of such counsel all action has been taken with respect to
the recording, registering and filing of this Indenture, financing statements or
other instruments necessary to make effective the Lien intended to be created by
the Pledge Agreement, and reciting with respect to the security interests in the
Pledged Collateral, the details of such action, or (ii) stating that, in the
opinion of such counsel, no such action is necessary to make such Lien
effective.
(b) The Company shall furnish to the Collateral Agent and the Trustee on
November 1 in each year beginning with November 1, 2000, an Opinion of Counsel,
dated as of such date, either (i) (A) stating that, in the opinion of such
counsel, action has been taken with respect to the recording, registering,
filing, re-recording, re-registering and refiling of all supplemental
indentures, financing statements, continuation statements or other instruments
of further assurance as is necessary to maintain the Lien of the Pledge
Agreement and reciting with respect to the security interests in the Pledged
Collateral the details of such action or referring to prior Opinions of Counsel
in which such details are given, (B) stating that, based on relevant laws as in
effect on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to preserve and protect, to
the extent such protection and preservation are possible by filing, the rights
of the Holders of Notes and the Collateral Agent and the Trustee hereunder and
under the Pledge Agreement with respect to the security interests in the Pledged
Collateral, or (ii) stating that, in the opinion of such counsel, no such action
is necessary to maintain such Lien and assignment.
(c) The Company shall otherwise comply with the provisions of TIA
(S)314(b).
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Section 12.03. Release of Collateral.
(a) Subject to subsections (b), (c) and (d) of this Section 12.03,
Pledged Collateral may be released from the Lien and security interest created
by the Pledge Agreement at any time or from time to time in accordance with the
provisions of the Pledge Agreement or as provided hereby. In addition, upon the
request of the Company pursuant to an Officers' Certificate certifying that all
conditions precedent hereunder have been met and stating whether or not such
release is in connection with an Asset Sale and upon issuance of an Opinion of
Counsel stating that all conditions precedent hereunder have been met (at the
sole cost and expense of the Company), the Collateral Agent shall release
Pledged Collateral that is sold, conveyed or disposed of in compliance with the
provisions of this Indenture; provided, that if such sale, conveyance or
disposition constitutes an Asset Sale, the Company shall apply the Net Proceeds
in accordance with Section 4.10 hereof. Upon receipt of such Officers'
Certificate the Collateral Agent shall execute, deliver or acknowledge any
necessary or proper instruments of termination, satisfaction or release to
evidence the release of any Pledged Collateral permitted to be released pursuant
to this Indenture or the Pledge Agreement.
(b) No Pledged Collateral shall be released from the Lien and security
interest created by the Pledge Agreement pursuant to the provisions of the
Pledge Agreement unless there shall have been delivered to the Collateral Agent
the certificate and Opinion of Counsel required by this Section 12.03.
(c) At any time when a Default or Event of Default shall have occurred
and be continuing and the maturity of the Notes shall have been accelerated
(whether by declaration or otherwise) and the Trustee shall have delivered a
notice of acceleration to the Collateral Agent, no release of Pledged Collateral
pursuant to the provisions of the Pledge Agreement shall be effective as against
the Holders of Notes.
(d) The release of any Pledged Collateral from the terms of this
Indenture and the Pledge Agreement shall not be deemed to impair the security
under this Indenture in contravention of the provisions hereof if and to the
extent the Pledged Collateral is released pursuant to the terms of the Pledge
Agreement. To the extent applicable, the Company shall cause TIA (S) 313(b),
relating to reports, and TIA (S) 314(d), relating to the release of property or
securities from the Lien and security interest of the Pledge Agreement and
relating to the substitution therefor of any property or securities to be
subjected to the Lien and security interest of the Pledge Agreement, to be
complied with. Any certificate or opinion required by TIA (S) 314(d) may be made
by an Officer of the Company except in cases where TIA (S) 314(d) requires that
such certificate or opinion be made by an independent Person, which Person shall
be an independent engineer, appraiser or other expert selected or approved by
the Trustee and the Collateral Agent in the exercise of reasonable care.
Section 12.04. Certificates of the Company.
The Company shall furnish to the Trustee and the Collateral Agent, prior to
each proposed release of Pledged Collateral pursuant to the Pledge Agreement,
(i) all documents required by TIA (S)314(d) and (ii) an Opinion of Counsel,
which may be rendered by internal counsel to the Company, to the effect that
such accompanying documents constitute all documents required by TIA (S)314(d).
The Trustee may, to the extent permitted by Sections 7.01 and 7.02 hereof,
accept as conclusive evidence of compliance with the foregoing provisions the
appropriate statements contained in such documents and such Opinion of Counsel.
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Section 12.05. Certificates of the Trustee.
In the event that the Company wishes to release Pledged Collateral in
accordance with the Pledge Agreement and has delivered the certificates and
documents required by the Pledge Agreement and Sections 12.03 and 12.04 hereof,
the Trustee shall determine whether it has received all documentation required
by TIA (S) 314(d) in connection with such release and, based on such
determination and the Opinion of Counsel delivered pursuant to Section 12.04(b),
shall deliver a certificate to the Collateral Agent setting forth such
determination.
Section 12.06. Authorization of Actions to Be Taken by the Trustee Under the
Pledge Agreement.
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee may,
in its sole discretion and without the consent of the Holders of Notes, direct,
on behalf of the Holders of Notes, the Collateral Agent to, take all actions it
deems necessary or appropriate in order to (a) enforce any of the terms of the
Pledge Agreement and (b) collect and receive any and all amounts payable in
respect of the Obligations of the Company hereunder. The Trustee shall have
power to institute and maintain such suits and proceedings as it may deem
expedient to prevent any impairment of the Pledged Collateral by any acts that
may be unlawful or in violation of the Pledge Agreement or this Indenture, and
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders of Notes in the Pledged
Collateral (including power to institute and maintain suits or proceedings to
restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest hereunder or be prejudicial to the interests
of the Holders of Notes or of the Trustee).
Section 12.07. Authorization of Receipt of Funds by the Trustee Under the
Pledge Agreement.
The Trustee is authorized to receive any funds for the benefit of the
Holders of Notes distributed under the Pledge Agreement, and to make further
distributions of such funds to the Holders of Notes according to the provisions
of this Indenture.
Section 12.08. Termination of Security Interest.
Upon the payment in full of all Obligations of the Company under this
Indenture and the Notes, or upon Legal Defeasance, the Trustee shall, at the
request of the Company, deliver a certificate to the Collateral Agent stating
that such Obligations have been paid in full, and instruct the Collateral Agent
to release the Liens pursuant to this Indenture and the Pledge Agreement.
ARTICLE 13.
SATISFACTION AND DISCHARGE
Section 13.01. Satisfaction and Discharge.
This Indenture will be discharged and will cease to be of further effect as
to all Notes issued hereunder, when:
(1) either:
(a) all Notes that have been authenticated (except lost, stolen or
destroyed Notes that have been replaced or paid and Notes for whose
payment money has theretofore been
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deposited in trust and thereafter repaid to the Company) have been
delivered to the Trustee for cancellation; or
(b) all Notes that have not been delivered to the Trustee for cancellation
have become due and payable by reason of the making of a notice of
redemption or otherwise or will become due and payable within one year
and the Company or any Guarantor has irrevocably deposited or caused
to be deposited with the Trustee as trust funds in trust solely for
the benefit of the Holders, cash in U.S. dollars, non-callable
Government Securities, or a combination thereof, in such amounts as
will be sufficient without consideration of any interest or
reinvestment of interest, to pay and discharge the entire indebtedness
on the Notes not delivered to the Trustee for cancellation for
principal, premium and Liquidated Damages, if any, and accrued
interest to the date of maturity or redemption;
(2) no Default or Event of Default shall have occurred and be continuing on the
date of such deposit or shall occur as a result of such deposit and such
deposit will not result in a breach or violation of, or constitute a
default under, any other instrument to which the Company or any Guarantor
is a party or by which the Company or any Guarantor is bound;
(3) the Company or any Guarantor has paid or caused to be paid all sums payable
by it under this Indenture; and
(4) the Company has delivered irrevocable instructions to the Trustee under
this Indenture to apply the deposited money toward the payment of the Notes
at maturity or the redemption date, as the case may be.
In addition, the Company must deliver an Officers' Certificate and an Opinion of
Counsel to the Trustee stating that all conditions precedent to satisfaction and
discharge have been satisfied.
Notwithstanding the satisfaction and discharge of this Indenture, if money
shall have been deposited with the Trustee pursuant to subclause (b) of clause
(1) of this Section, the provisions of Section 11.02, Section 8.06 and Section
7.07 shall survive.
Section 13.02. Application of Trust Money.
Subject to the provisions of Section 8.06, all money deposited with the
Trustee pursuant to Section 13.01 shall be held in trust and applied by it, in
accordance with the provisions of the Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Persons entitled thereto,
of the principal (and premium, if any) and interest for whose payment such money
has been deposited with the Trustee; but such money need not be segregated from
other funds except to the extent required by law.
If the Trustee or Paying Agent is unable to apply any money or Government
Securities in accordance with Section 13.01 by reason of any legal proceeding or
by reason of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application, the Company's
and any Guarantor's obligations under this Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section
13.01; provided that if the Company has made any payment of principal of,
premium, if any, or interest on any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the money or Government Securities held
by the Trustee or Paying Agent.
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ARTICLE 14.
MISCELLANEOUS
Section 14.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with the
duties imposed by TIA (S)318(c), the imposed duties shall control.
Section 14.02. Notices.
Any notice or communication by the Company, any Guarantor or the Trustee to
the others is duly given if in writing and delivered in Person or mailed by
first class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company and/or any Guarantor:
US Unwired Inc.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
Telecopier No.: (318) 497-3197
Attention: General Counsel
With a copy to:
Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P.
201 St. Charles Avenue, Suite 4600
New Orleans, Louisiana 70171
Telecopier No.: (504) 586-5250
Attention: Louis Y. Fishman
If to the Trustee:
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street, 23/rd/ Floor
Hartford, Connecticut 06103
Telecopier No.: (860) 244-1889
Attention: Laurel Melody-Casasanta
The Company, any Guarantor or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to Holders) shall be
deemed to have been duly given: at the time delivered by hand, if personally
delivered; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back, if telexed; when receipt acknowledged,
if telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA (S) 313(c), to the extent required by the TIA. Failure
to mail a notice or communication to a Holder or any defect in it shall not
affect its sufficiency with respect to other Holders.
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<PAGE>
If a notice or communication is mailed in the manner provided above within
the time prescribed, it is duly given, whether or not the addressee receives it.
If the Company mails a notice or communication to Holders, it shall mail a
copy to the Trustee and each Agent at the same time.
Section 14.03. Communication by Holders of Notes with Other Holders of Notes.
Holders may communicate pursuant to TIA (S) 312(b) with other Holders with
respect to their rights under this Indenture or the Notes. The Company, the
Trustee, the Registrar and anyone else shall have the protection of TIA (S)
312(c).
Section 14.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Indenture, the Company shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 14.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably satisfactory
to the Trustee (which shall include the statements set forth in Section 14.05
hereof) stating that, in the opinion of such counsel, all such conditions
precedent and covenants have been satisfied.
Section 14.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (other than a certificate provided
pursuant to TIA (S) 314(a)(4)) shall comply with the provisions of TIA (S)
314(e) and shall include:
(a) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
satisfied; and
(d) a statement as to whether or not, in the opinion of such Person, such
condition or covenant has been satisfied.
Section 14.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
74
<PAGE>
Section 14.07. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No past, present or future director, officer, employee, incorporator or
stockholder of the Company or any Guarantor, as such, shall have any liability
for any obligations of the Company or such Guarantor under the Notes, the Note
Guarantees, this Indenture or the Pledge Agreement or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for issuance of the Notes.
Section 14.08. Governing Law.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT GIVING EFFECT
TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION
OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
Section 14.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret any other indenture, loan or
debt agreement of the Company or its Subsidiaries or of any other Person. Any
such indenture, loan or debt agreement may not be used to interpret this
Indenture.
Section 14.10. Successors.
All agreements of the Company in this Indenture and the Notes shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successors. All agreements of each Guarantor in this Indenture shall bind its
successors, except as otherwise provided in Section 11.05.
Section 14.11. Severability.
In case any provision in this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
Section 14.12. Counterpart Originals.
The parties may sign any number of copies of this Indenture. Each signed
copy shall be an original, but all of them together represent the same
agreement.
Section 14.13. Table of Contents, Headings, etc.
The Table of Contents, Cross-Reference Table and Headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part of this Indenture and shall in no way
modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
75
<PAGE>
SIGNATURES
Dated as of October 29, 1999
US UNWIRED INC.
By:/s/ Robert Piper
----------------------------------
Name: Robert Piper
Title: President
Attest:
/s/ Thomas G. Henning
- -----------------------------------
Name: Thomas G. Henning
Title: Secretary
LOUISIANA UNWIRED, LLC
By:/s/ Robert Piper
------------------------------------
Name: Robert Piper
Title: Manager
Attest:
/s/ Thomas G. Henning
- ----------------------------------
Name: Thomas G. Henning
Title: Assistant Manager
UNWIRED TELECOM CORP.
By:/s/ Robert Piper
-------------------------------------
Name: Robert Piper
Title: President
Attest:
/s/ Thomas G. Henning
__________________________________
Name: Thomas G. Henning
Title: Secretary
S-1
<PAGE>
STATE STREET BANK AND TRUST COMPANY
By: /s/ Laurel Melody - Casasanta
---------------------------------
Name: Laurel Melody Casasanta
Title: Assistant Vice President
Attest:
/s/ illegible signature
__________________________________
Authorized Signatory
Date: October 29, 1999
S-2
<PAGE>
EXHIBIT A1
[Face of Note]
- --------------------------------------------------------------------------------
FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT;
FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $523.06,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $1,145.69, THE ISSUE DATE IS OCTOBER
29, 1999 AND THE YIELD TO MATURITY IS 13 3/8% PER ANNUM.
CUSIP/CINS 90338RAA2
13/3/8/% Series A Senior Subordinated Discount Notes due 2009
No. 1 $399,840,000
US UNWIRED INC.
promises to pay to Cede & Co. or registered assigns,
the principal sum of Three Hundred Ninety-Nine Million Eight Hundred Forty
Thousand
Dollars on November 1, 2009.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Dated: October 29, 1999
US UNWIRED INC.
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
This is one of the Notes referred to (SEAL)
in the within-mentioned Indenture:
STATE STREET BANK AND
TRUST COMPANY,
as Trustee
By:___________________________
Authorized Signatory
- --------------------------------------------------------------------------------
A1-1
<PAGE>
[Back of Note]
__% [Series A] [Series B] Senior Subordinated Discount Notes due 2009
[Insert the Global Note Legend, if applicable pursuant to the provisions of the
Indenture]
[Insert the Private Placement Legend, if applicable pursuant to the provisions
of the Indenture]
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. US Unwired Inc. a Louisiana corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 13/3/8/% per
annum in the manner specified below and shall pay the Liquidated Damages payable
pursuant to Section 5 of the Registration Rights Agreement referred to below.
Interest will not accrue prior to November 1, 2004. Thereafter, the Company will
pay interest and Liquidated Damages semi-annually in arrears on May 1 and
November 1 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on the Notes
will accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from November 1, 2004; provided that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a record date referred to on the face hereof and the next succeeding
Interest Payment Date, interest shall accrue from such next succeeding Interest
Payment Date; provided, further, that the first Interest Payment Date shall be
May 1, 2005. The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, from time to time on demand at a rate that is 1% per annum in excess of the
rate then in effect; it shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the April 15 or October 15 next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium and Liquidated Damages on,
all Global Notes and all other Notes the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture and Pledge Agreement. The Company issued the Notes under an
Indenture dated as of October 29, 1999 ("Indenture") among the Company, the
guarantors named therein (the "Guarantors") and the Trustee. The terms of the
Notes include those stated in the Indenture and those
A1-2
<PAGE>
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
amended (15 U.S. Code (S)(S) 77aaa-77bbbb). The Notes are subject to all such
terms, and Holders are referred to the Indenture and such Act for a statement of
such terms. To the extent any provision of this Note conflicts with the express
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $400 million in
aggregate principal amount at maturity. The Notes are secured by a pledge of the
Pledged Collateral pursuant to the Pledge Agreement referred to in the
Indenture.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to November 1, 2004.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on November 1 of the years indicated below:
Year Percentage
---- ----------
2004..................................................... 106.688%
2005..................................................... 104.458%
2006..................................................... 102.229%
2007 and thereafter...................................... 100.000%
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, at any time prior to November 1, 2002, the Company may, on any one or more
occasions, redeem up to 35% of the originally issued aggregate principal amount
of Notes with the net cash proceeds of one or more public offering of its stock
at a redemption price equal to 113/3/8/% of the Accreted Value thereof; provided
that at least 65% in aggregate principal amount of the Notes originally issued
remain outstanding immediately after the occurrence of such redemption and that
such redemption occurs within 45 days of the date of the closing of such public
equity offering.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) If a Change of Control occurs, each Holder of Notes shall have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of that Holder's Notes pursuant to the offer
described below (the "Change of Control Offer"). In the Change of Control Offer,
the Company will offer a change of control payment in cash equal to 101% of the
aggregate Accreted Value of the Notes on the date of purchase (if such date of
purchase is prior to November 1, 2004) or 101% of the aggregate principal amount
of Notes repurchased plus accrued and unpaid interest and Liquidated Damages, if
any, thereon, to the date of purchase (if such date of purchase is on or after
November 1, 2004) (in either case, the "Change of Control Payment"). Within ten
days following any Change of Control, the Company shall mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and setting forth the procedures governing the Change of Control Offer
as required by the Indenture.
A1-3
<PAGE>
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales,
when the aggregate amount of Excess Proceeds exceeds $5 million, the Company
shall commence an offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes 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 (as "Asset Sale Offer") pursuant to Section
3.09 of the Indenture to purchase the maximum principal amount of Notes and such
other pari passu Indebtedness that may be purchased out of the Excess Proceeds
at an offer price in cash in an amount equal to 100% of the Accreted Value (if
such date of purchase is prior to November 1, 2004) and Liquidated Damages, if
any, to the date of purchase, or 100% of the principal amount (if such date of
purchase is on or after November 1, 2004) plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture. If 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 and/or Accreted Value, as the case may be, of Notes and such
other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes and such other
pari passu Indebtedness to be purchased on a pro rata basis. Holders of Notes
that are the subject of an offer to purchase will receive an Asset Sale Offer
from the Company prior to any related purchase date and may elect to have such
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
10. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture, the Note Guarantees or the Notes may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
then outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture, the Note Guarantees or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes voting as a single class. Without the consent of
any Holder of a Note, the Indenture, the Note Guarantees or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or Guarantor's obligations
to Holders of the Notes in case of a merger or consolidation or sale of all or
substantially all of the Company's assets, to make any change that would provide
any additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the SEC in order to effect or
A1-4
<PAGE>
maintain the qualification of the Indenture under the Trust Indenture Act, or to
allow any Guarantor to execute a supplemental indenture to the Indenture and/or
a Note Guarantee with respect to the Notes.
12. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages on the Notes;
(ii) default in payment when due of principal of or premium, if any, on the
Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company or any Restricted Subsidiary to comply with Section 4.07, 4.09,
4.10, 4.15 or 5.01 of the Indenture; (iv) failure by the Company for 60 days
after notice to the Company by the Trustee or the Holders of at least 25% in
principal amount of the Notes then outstanding voting as a single class to
comply with certain other agreements in the Indenture, the Notes or the Pledge
Agreement; (v) certain defaults under certain other agreements relating to
Indebtedness of the Company which default results in the acceleration of such
Indebtedness prior to its express maturity; (vi) certain final judgments for the
payment of money that remain undischarged for a period of 60 days; (vii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Restricted Subsidiaries other than LEC Unwired, LLC; (viii) the breach of
certain covenants in the Pledge Agreement or the Pledge Agreement shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect; and (ix) except as permitted by the
Indenture, any Note Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor or any Person acting on its behalf shall deny or
disaffirm its obligations under such Guarantor's Note Guarantee. If any Event
of Default occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
A1-5
<PAGE>
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Restricted Global Notes and Restricted
Definitive Notes. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the A/B Exchange Registration
Rights Agreement dated as of October 29, 1999, between the Company and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
US UNWIRED, INC.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
Attention: General Counsel
A1-6
<PAGE>
Assignment Form
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to:___________________________________
(Insert assignee's legal name)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: _______________
Your Signature:_________________________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee*: ________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-7
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.15 of the Indenture, check the appropriate box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you
elect to have purchased:
$_______________
Date: _______________
Your Signature:____________________________
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No.:____________________
Signature Guarantee*: _________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A1-8
<PAGE>
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*
The following exchanges of a part of this Global Note for an interest in
another Global Note or for a Definitive Note, or exchanges of a part of another
Global Note or Definitive Note for an interest in this Global Note, have been
made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease in Amount of increase in [at maturity] of this
Principal Amount Principal Amount Global Note following Signature of authorized
[at maturity] of [at maturity] of such decrease officer of Trustee or
Date of Exchange this Global Note this Global Note (or increase) Note Custodian
- ------------------------ ------------------------- ------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
</TABLE>
* This schedule should be included only if the Note is issued in global form.
A1-9
<PAGE>
EXHIBIT A2
[Face of Regulation S Temporary Global Note]
- --------------------------------------------------------------------------------
FOR THE PURPOSES OF SECTIONS 1272, 1273 AND 1275 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED, THIS SECURITY IS BEING ISSUED WITH ORIGINAL ISSUE DISCOUNT;
FOR EACH $1,000 PRINCIPAL AMOUNT OF THIS SECURITY, THE ISSUE PRICE IS $523.06,
THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $1,145.69, THE ISSUE DATE IS OCTOBER
29, 1999 AND THE YIELD TO MATURITY IS 13 3/8% PER ANNUM.
CUSIP/CINS U91286AA9
13 3/8% Series A Senior Subordinated Discount Notes due 2009
No. 2 $160,000
US UNWIRED INC.
promises to pay to Cede & Co. or registered assigns,
the principal sum of One Hundred Sixty Thousand
Dollars on November 1, 2009.
Interest Payment Dates: May 1 and November 1
Record Dates: April 15 and October 15
Dated: October 29, 1999
US UNWIRED INC.
By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
This is one of the Notes referred to (SEAL)
in the within-mentioned Indenture:
STATE STREET BANK AND
TRUST COMPANY,
as Trustee
By: ________________________
Authorized Signatory
- --------------------------------------------------------------------------------
A2-1
<PAGE>
[Back of Regulation S Temporary Global Note]
___% [Series A] [Series B] Senior Subordinated Discount Notes due 2009
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE
BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE PAYMENT OF INTEREST HEREON.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THE NOTE (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THE NOTE
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION PROVIDED BY RULE 144A UNDER THE SECURITIES ACT. THE
HOLDER OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) SUCH NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) (a) TO A
PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN OF RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF THE COMPANY SO
REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (B)
THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
OF THE NOTE EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (1) ABOVE.
A2-2
<PAGE>
Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. Interest. US Unwired Inc. a Louisiana corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 13 3/8% per
annum in the manner specified below and shall pay the Liquidated Damages payable
pursuant to Section 5 of the Registration Rights Agreement referred to below.
Interest will not accrue prior to November 1, 2004. Thereafter, the Company
will pay interest and Liquidated Damages semi-annually in arrears on May 1 and
November 1 of each year, or if any such day is not a Business Day, on the next
succeeding Business Day (each an "Interest Payment Date"). Interest on the
Notes will accrue from the most recent date to which interest has been paid or,
if no interest has been paid, from November 1, 2004; provided that if there is
no existing Default in the payment of interest, and if this Note is
authenticated between a record date referred to on the face hereof and the next
succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be May 1, 2005. The Company shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal and premium, if any, from time to time on demand at a rate that is 1%
per annum in excess of the rate then in effect; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Liquidated Damages (without regard to any
applicable grace periods) from time to time on demand at the same rate to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.
Until this Regulation S Temporary Global Note is exchanged for one or more
Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to
receive payments of interest hereon; until so exchanged in full, this Regulation
S Temporary Global Note shall in all other respects be entitled to the same
benefits as other Senior Subordinated Notes under the Indenture.
2. Method of Payment. The Company will pay interest on the Notes (except
defaulted interest) and Liquidated Damages to the Persons who are registered
Holders of Notes at the close of business on the April 15 or October 15 next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium and Liquidated Damages, if any, and interest
at the office or agency of the Company maintained for such purpose within or
without the City and State of New York, or, at the option of the Company,
payment of interest and Liquidated Damages may be made by check mailed to the
Holders at their addresses set forth in the register of Holders, and provided
that payment by wire transfer of immediately available funds will be required
with respect to principal of and interest, premium and Liquidated Damages on,
all Global Notes and all other Notes the Holders of which shall have provided
wire transfer instructions to the Company or the Paying Agent. Such payment
shall be in such coin or currency of the United States of America as at the time
of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, State Street Bank and Trust
Company, the Trustee under the Indenture, will act as Paying Agent and
Registrar. The Company may change any Paying Agent or Registrar without notice
to any Holder. The Company or any of its Subsidiaries may act in any such
capacity.
4. Indenture and Pledge Agreement. The Company issued the Notes under an
Indenture dated as of October 29, 1999 ("Indenture") among the Company, the
guarantors named therein (the "Guarantors") and the Trustee. The terms of the
Notes include those stated in the Indenture and those made part of the Indenture
by reference to the Trust Indenture Act of 1939, as amended (15 U.S. Code (S)(S)
77aaa-77bbbb). The Notes are subject to all such terms, and Holders are referred
to the Indenture and such Act for a statement of such terms. To the extent any
provision of this Note conflicts with the express
A2-3
<PAGE>
provisions of the Indenture, the provisions of the indenture shall govern and be
controlling. The Notes are obligations of the Company limited to $400 million in
aggregate principal amount at maturity. The Notes are secured by a pledge of the
Pledged Collateral pursuant to the Pledge Agreement referred to in the
Indenture.
5. Optional Redemption.
(a) Except as set forth in subparagraph (b) of this Paragraph 5, the
Company shall not have the option to redeem the Notes prior to November 1, 2004.
Thereafter, the Company shall have the option to redeem the Notes, in whole or
in part, upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Liquidated Damages, if any, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on November 1 of the years indicated below:
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2004...................................................... 106.688%
2005...................................................... 104.458%
2006...................................................... 102.229%
2007 and thereafter....................................... 100.000%
</TABLE>
(b) Notwithstanding the provisions of subparagraph (a) of this Paragraph
5, at any time prior to November 1, 2002, the Company may, on any one or more
occasions, redeem up to 35% of the originally issued aggregate principal amount
of Notes with the net cash proceeds of one or more public offering of its stock
at a redemption price equal to 113 3/8% of the Accreted Value thereof; provided
that at least 65% in aggregate principal amount of the Notes originally issued
remain outstanding immediately after the occurrence of such redemption and that
such redemption occurs within 45 days of the date of the closing of such public
equity offering.
6. Mandatory Redemption.
Except as set forth in paragraph 7 below, the Company shall not be required
to make mandatory redemption payments with respect to the Notes.
7. Repurchase at Option of Holder.
(a) If a Change of Control occurs, each Holder of Notes shall have the
right to require the Company to repurchase all or any part (equal to $1,000 or
an integral multiple thereof) of that Holder's Notes pursuant to the offer
described below (the "Change of Control Offer"). In the Change of Control Offer,
the Company will offer a change of control payment in cash equal to 101% of the
aggregate Accreted Value of the Notes on the date of purchase (if such date of
purchase is prior to November 1, 2004) or 101% of the aggregate principal amount
of Notes repurchased plus accrued and unpaid interest and Liquidated Damages, if
any, thereon, to the date of purchase (if such date of purchase is on or after
November 1, 2004) (in either case, the "Change of Control Payment"). Within ten
days following any Change of Control, the Company shall mail a notice to each
Holder describing the transaction or transactions that constitute the Change of
Control and setting forth the procedures governing the Change of Control Offer
as required by the Indenture.
(b) If the Company or a Restricted Subsidiary consummates any Asset Sales,
when the aggregate amount of Excess Proceeds exceeds $5 million, the Company
shall commence an offer to all Holders of Notes and all holders of other
Indebtedness that is pari passu with the Notes containing provisions similar
A2-4
<PAGE>
to those set forth in the Indenture with respect to offers to purchase or redeem
with the proceeds of sales of assets (as "Asset Sale Offer") pursuant to Section
3.09 of the Indenture to purchase the maximum principal amount of Notes and such
other pari passu Indebtedness that may be purchased out of the Excess Proceeds
at an offer price in cash in an amount equal to 100% of the Accreted Value (if
such date of purchase is prior to November 1, 2004) and Liquidated Damages, if
any, to the date of purchase, or 100% of the principal amount (if such date of
purchase is on or after November 1, 2004) plus accrued and unpaid interest and
Liquidated Damages, if any, to the date of purchase, in accordance with the
procedures set forth in the Indenture. If 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 and/or Accreted Value, as the case may be, of Notes and such
other pari passu Indebtedness tendered into such Asset Sale Offer exceeds the
amount of Excess Proceeds, the Trustee shall select the Notes and such other
pari passu Indebtedness to be purchased on a pro rata basis. Holders of Notes
that are the subject of an offer to purchase will receive an Asset Sale Offer
from the Company prior to any related purchase date and may elect to have such
Notes purchased by completing the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Notes.
8. Notice of Redemption. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the Notes held by a Holder are to be redeemed. On and
after the redemption date interest ceases to accrue on Notes or portions thereof
called for redemption.
9. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000.
The transfer of Notes may be registered and Notes may be exchanged as provided
in the Indenture. The Registrar and the Trustee may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents and the
Company may require a Holder to pay any taxes and fees required by law or
permitted by the Indenture. The Company need not exchange or register the
transfer of any Note or portion of a Note selected for redemption, except for
the unredeemed portion of any Note being redeemed in part. Also, the Company
need not exchange or register the transfer of any Notes for a period of 15 days
before a selection of Notes to be redeemed or during the period between a record
date and the corresponding Interest Payment Date.
This Regulation S Temporary Global Note is exchangeable in whole or in part
for one or more Global Notes only (i) on or after the termination of the 40-day
restricted period (as defined in Regulation S) and (ii) upon presentation of
certificates (accompanied by an Opinion of Counsel, if applicable) required by
Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global
Note for one or more Global Notes, the Trustee shall cancel this Regulation S
Temporary Global Note.
10. Persons Deemed Owners. The registered Holder of a Note may be treated
as its owner for all purposes.
11. Amendment, Supplement and Waiver. Subject to certain exceptions, the
Indenture, the Note Guarantees or the Notes may be amended or supplemented with
the consent of the Holders of at least a majority in principal amount of the
then outstanding Notes voting as a single class, and any existing default or
compliance with any provision of the Indenture, the Note Guarantees or the Notes
may be waived with the consent of the Holders of a majority in principal amount
of the then outstanding Notes voting as a single class. Without the consent of
any Holder of a Note, the Indenture, the Note Guarantees or the Notes may be
amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or Guarantor's obligations
to Holders of the Notes in case of a merger or consolidation or sale of all or
substantially all of the Company's assets, to make any change that would provide
any
A2-5
<PAGE>
additional rights or benefits to the Holders of the Notes or that does not
adversely affect the legal rights under the Indenture of any such Holder, to
comply with the requirements of the SEC in order to effect or maintain the
qualification of the Indenture under the Trust Indenture Act, or to allow any
Guarantor to execute a supplemental indenture to the Indenture and/or a Note
Guarantee with respect to the Notes.
12. Defaults and Remedies. Events of Default include: (i) default for 30
days in the payment when due of interest or Liquidated Damages on the Notes;
(ii) default in payment when due of principal of or premium, if any, on the
Notes when the same becomes due and payable at maturity, upon redemption
(including in connection with an offer to purchase) or otherwise, (iii) failure
by the Company or any Restricted Subsidiary to comply with Section 4.07, 4.09,
4.10, 4.15 or 5.01 of the Indenture; (iv) failure by the Company for 60 days
after notice to the Company by the Trustee or the Holders of at least 25% in
principal amount of the Notes then outstanding voting as a single class to
comply with certain other agreements in the Indenture, the Notes or the Pledge
Agreement; (v) certain defaults under certain other agreements relating to
Indebtedness of the Company which default results in the acceleration of such
Indebtedness prior to its express maturity; (vi) certain final judgments for the
payment of money that remain undischarged for a period of 60 days; (vii) certain
events of bankruptcy or insolvency with respect to the Company or any of its
Restricted Subsidiaries other than LEC Unwired, LLC; (viii) the breach of
certain covenants in the Pledge Agreement or the Pledge Agreement shall be held
in any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect; and (ix) except as permitted by the
Indenture, any Note Guarantee shall be held in any judicial proceeding to be
unenforceable or invalid or shall cease for any reason to be in full force and
effect or any Guarantor or any Person acting on its behalf shall deny or
disaffirm its obligations under such Guarantor's Note Guarantee. If any Event
of Default occurs and is continuing, the Trustee or the Holders of at least 25%
in principal amount of the then outstanding Notes may declare all the Notes to
be due and payable. Notwithstanding the foregoing, in the case of an Event of
Default arising from certain events of bankruptcy or insolvency, all outstanding
Notes will become due and payable without further action or notice. Holders may
not enforce the Indenture or the Notes except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of the
then outstanding Notes may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Holders of the Notes notice of any
continuing Default or Event of Default (except a Default or Event of Default
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest. The Holders of a majority in aggregate
principal amount of the Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the Notes waive any existing Default or Event of
Default and its consequences under the Indenture except a continuing Default or
Event of Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a statement regarding
compliance with the Indenture, and the Company is required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. Trustee Dealings with Company. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Company or its Affiliates, and may otherwise deal with the Company or
its Affiliates, as if it were not the Trustee.
14. No Recourse Against Others. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
A2-6
<PAGE>
16. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. Additional Rights of Holders of Restricted Global Notes and Restricted
Definitive Notes. In addition to the rights provided to Holders of Notes under
the Indenture, Holders of Restricted Global Notes and Restricted Definitive
Notes shall have all the rights set forth in the A/B Exchange Registration
Rights Agreement dated as of October 29, 1999, between the Company and the
parties named on the signature pages thereof (the "Registration Rights
Agreement").
18. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture and/or the Registration Rights Agreement.
Requests may be made to:
US UNWIRED, INC.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
Attention: General Counsel
A2-7
<PAGE>
Assignment Form
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: __________________________________
(Insert assignee's legal name)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
Date: _______________
Your Signature: __________________________________
(Sign exactly as your name appears on
the face of this Note)
Signature Guarantee*: _________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A2-8
<PAGE>
Option of Holder to Elect Purchase
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.10 or 4.15 of the Indenture, check the appropriate box below:
[_] Section 4.10 [_] Section 4.15
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you
elect to have purchased:
$_______________
Date: _______________
Your Signature:___________________________________
(Sign exactly as your name appears on the
face of this Note)
Tax Identification No.:___________________________
Signature Guarantee*: _________________________
* Participant in a recognized Signature Guarantee Medallion Program (or other
signature guarantor acceptable to the Trustee).
A2-9
<PAGE>
SCHEDULE OF EXCHANGES OF REGULATION S TEMPORARY GLOBAL NOTE
The following exchanges of a part of this Regulation S Temporary Global
Note for an interest in another Global Note, or of other Restricted Global Notes
for an interest in this Regulation S Temporary Global Note, have been made:
<TABLE>
<CAPTION>
Principal Amount
Amount of decrease in Amount of increase in [at maturity] of this
Principal Amount Principal Amount Global Note following Signature of authorized
[at maturity] of [at maturity] of such decrease officer of Trustee or
Date of Exchange this Global Note this Global Note (or increase) Note Custodian
---------------- ---------------- ---------------- ------------- --------------
<S> <C> <C> <C> <C>
</TABLE>
A2-10
<PAGE>
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
US UNWIRED, INC.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
[Registrar address block]
Re: 13 3/8% Senior Subordinated Discount Notes due 2009
----------------------------------------------------
Reference is hereby made to the Indenture, dated as of October 29, 1999
(the "Indenture"), among US Unwired Inc., as issuer (the "Company"), the
guarantors named therein and State Street Bank and Trust Company, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
___________________, (the "Transferor") owns and proposes to transfer the
Note[s] or interest in such Note[s] specified in Annex A hereto, in the
principal amount of $___________ in such Note[s] or interests (the "Transfer"),
to ___________________________ (the "Transferee"), as further specified in
Annex A hereto. In connection with the Transfer, the Transferor hereby
certifies that:
[CHECK ALL THAT APPLY]
1. [_] Check if Transferee will take delivery of a beneficial interest in
------------------------------------------------------------------
the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer
- ---------------------------------------------------------------
is being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky securities laws of any state of the
United States. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the 144A Global Note and/or the Definitive Note and
in the Indenture and the Securities Act.
2. [_] Check if Transferee will take delivery of a beneficial interest in
------------------------------------------------------------------
the Temporary Regulation S Global Note, the Regulation S Global Note or a
- -------------------------------------------------------------------------
Definitive Note pursuant to Regulation S. The Transfer is being effected
- ----------------------------------------
pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act
and, accordingly, the Transferor hereby further certifies that (i) the Transfer
is not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred
B-1
<PAGE>
beneficial interest or Definitive Note will be subject to the restrictions on
Transfer enumerated in the Private Placement Legend printed on the Regulation S
Global Note, the Temporary Regulation S Global Note and/or the Definitive Note
and in the Indenture and the Securities Act.
3. [_] Check and complete if Transferee will take delivery of a beneficial
-------------------------------------------------------------------
interest in the IAI Global Note or a Definitive Note pursuant to any provision
- ------------------------------------------------------------------------------
of the Securities Act other than Rule 144A or Regulation S. The Transfer is
- ----------------------------------------------------------
being effected in compliance with the transfer restrictions applicable to
beneficial interests in Restricted Global Notes and Restricted Definitive Notes
and pursuant to and in accordance with the Securities Act and any applicable
blue sky securities laws of any state of the United States, and accordingly the
Transferor hereby further certifies that (check one):
(a) [_] such Transfer is being effected pursuant to and in
accordance with Rule 144 under the Securities Act;
or
(b) [_] such Transfer is being effected to the Company or a
subsidiary thereof;
or
(c) [_] such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) [_] such Transfer is being effected to an Institutional
Accredited Investor and pursuant to an exemption from the registration
requirements of the Securities Act other than Rule 144A, Rule 144 or Rule
904, and the Transferor hereby further certifies that it has not engaged
in any general solicitation within the meaning of Regulation D under the
Securities Act and the Transfer complies with the transfer restrictions
applicable to beneficial interests in a Restricted Global Note or
Restricted Definitive Notes and the requirements of the exemption claimed,
which certification is supported by (1) a certificate executed by the
Transferee in the form of Exhibit D to the Indenture and (2) if such
Transfer is in respect of a principal amount of Notes at the time of
transfer of less than $250,000, an Opinion of Counsel provided by the
Transferor or the Transferee (a copy of which the Transferor has attached
to this certification), to the effect that such Transfer is in compliance
with the Securities Act. Upon consummation of the proposed transfer in
accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the IAI
Global Note and/or the Definitive Notes and in the Indenture and the
Securities Act.
4. [_] Check if Transferee will take delivery of a beneficial interest in
------------------------------------------------------------------
an Unrestricted Global Note or of an Unrestricted Definitive Note.
- -----------------------------------------------------------------
(a) [_] Check if Transfer is pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or
B-2
<PAGE>
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(b) [_] Check if Transfer is Pursuant to Regulation S. (i) The Transfer is
being effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any state of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will no longer be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes, on Restricted Definitive Notes and in the Indenture.
(c) [_] Check if Transfer is Pursuant to Other Exemption. (i) The Transfer
is being effected pursuant to and in compliance with an exemption from the
registration requirements of the Securities Act other than Rule 144, Rule 903 or
Rule 904 and in compliance with the transfer restrictions contained in the
Indenture and any applicable blue sky securities laws of any State of the United
States and (ii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act. Upon consummation of the proposed Transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Note will not be subject to the restrictions on transfer enumerated
in the Private Placement Legend printed on the Restricted Global Notes or
Restricted Definitive Notes and in the Indenture.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
__________________________________________
[Insert Name of Transferor]
By:_______________________________________
Name:
Title:
Dated: _______________
B-3
<PAGE>
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP _________), or
(ii) [_] Regulation S Global Note (CUSIP _________), or
(iii) [_] IAI Global Note (CUSIP _________); or
(b) [_] a Restricted Definitive Note.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) [_] a beneficial interest in the:
(i) [_] 144A Global Note (CUSIP _________), or
(ii) [_] Regulation S Global Note (CUSIP _________), or
(iii) [_] IAI Global Note (CUSIP _________); or
(iv) [_] Unrestricted Global Note (CUSIP _________); or
(b) [_] a Restricted Definitive Note; or
(c) [_] an Unrestricted Definitive Note,
in accordance with the terms of the Indenture.
B-4
<PAGE>
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
US UNWIRED, INC.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
[Registrar address block]
Re: 13 3/8% Senior Subordinated Discount Noted due 2009
---------------------------------------------------
(CUSIP ____________)
Reference is hereby made to the Indenture, dated as of October 29, 1999
(the "Indenture"), among US Unwired Inc., as issuer (the "Company"), the
guarantors named therein and State Street Bank and Trust Company, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
__________________________, (the "Owner") owns and proposes to exchange the
Note[s] or interest in such Note[s] specified herein, in the principal amount of
$____________ in such Note[s] or interests (the "Exchange"). In connection with
the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Notes or Beneficial Interests in a
--------------------------------------------------------------------
Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests
- --------------------------------------------------------------------------------
in an Unrestricted Global Note
- ------------------------------
(a) [_] Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) [_] Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for an Unrestricted
Definitive Note, the Owner hereby certifies (i) the Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to the
Restricted Global Notes and pursuant to and in accordance with the Securities
Act, (iii) the restrictions on transfer contained in the Indenture and the
Private Placement Legend are not required in order to maintain compliance with
the Securities Act and (iv) the Definitive Note is being acquired in compliance
with any applicable blue sky securities laws of any state of the United States.
(c) [_] Check if Exchange is from Restricted Definitive Note to beneficial
interest in an Unrestricted Global Note. In connection with the Owner's Exchange
of a Restricted Definitive Note for a beneficial interest in an Unrestricted
Global Note, the Owner hereby certifies (i) the beneficial interest is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in
C-1
<PAGE>
compliance with the transfer restrictions applicable to Restricted Definitive
Notes and pursuant to and in accordance with the Securities Act, (iii) the
restrictions on transfer contained in the Indenture and the Private Placement
Legend are not required in order to maintain compliance with the Securities Act
and (iv) the beneficial interest is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(d) [_] Check if Exchange is from Restricted Definitive Note to
Unrestricted Definitive Note. In connection with the Owner's Exchange of a
Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby
certifies (i) the Unrestricted Definitive Note is being acquired for the Owner's
own account without transfer, (ii) such Exchange has been effected in compliance
with the transfer restrictions applicable to Restricted Definitive Notes and
pursuant to and in accordance with the Securities Act, (iii) the restrictions on
transfer contained in the Indenture and the Private Placement Legend are not
required in order to maintain compliance with the Securities Act and (iv) the
Unrestricted Definitive Note is being acquired in compliance with any applicable
blue sky securities laws of any state of the United States.
2. Exchange of Restricted Definitive Notes or Beneficial Interests in
------------------------------------------------------------------
Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests
- -------------------------------------------------------------------------------
in Restricted Global Notes
- --------------------------
(a) [_] Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Note. In connection with the Exchange of
the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Note with an equal principal amount, the Owner hereby certifies that
the Restricted Definitive Note is being acquired for the Owner's own account
without transfer. Upon consummation of the proposed Exchange in accordance with
the terms of the Indenture, the Restricted Definitive Note issued will continue
to be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Restricted Definitive Note and in the Indenture
and the Securities Act.
(b) [_] Check if Exchange is from Restricted Definitive Note to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Note for a beneficial interest in the
[CHECK ONE] [_] 144A Global Note, [_] Regulation S Global Note, [_] IAI Global
Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture, the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
_____________________________________________
[Insert Name of Transferor]
By:__________________________________________
Name:
Title:
Dated: ______________________
C-2
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
US UNWIRED, INC.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
[Registrar address block]
Re: 13 3/8% Senior Subordinated Discount Noted due 2009
---------------------------------------------------
Reference is hereby made to the Indenture, dated as of October 29, 1999
(the "Indenture"), among US Unwired Inc., as issuer (the "Company"), the
guarantors named therein and State Street Bank and Trust Company, as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
In connection with our proposed purchase of $____________ aggregate
principal amount of:
(a) [_] a beneficial interest in a Global Note, or
(b) [_] a Definitive Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any
interest therein is subject to certain restrictions and conditions set forth in
the Indenture and the undersigned agrees to be bound by, and not to resell,
pledge or otherwise transfer the Notes or any interest therein except in
compliance with, such restrictions and conditions and the United States
Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been
registered under the Securities Act, and that the Notes and any interest therein
may not be offered or sold except as permitted in the following sentence. We
agree, on our own behalf and on behalf of any accounts for which we are acting
as hereinafter stated, that if we should sell the Notes or any interest therein,
we will do so only (A) to the Company or any subsidiary thereof, (B) in
accordance with Rule 144A under the Securities Act to a "qualified institutional
buyer" (as defined therein), (C) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has furnished on its
behalf by a U.S. broker-dealer) to you and to the Company a signed letter
substantially in the form of this letter and, if such transfer is in respect of
a principal amount of Notes, at the time of transfer of less than $250,000, an
Opinion of Counsel in form reasonably acceptable to the Company to the effect
that such transfer is in compliance with the Securities Act, (D) outside the
United States in accordance with Rule 904 of Regulation S under the Securities
Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or
(F) pursuant to an effective registration statement under the Securities Act,
and we further agree to provide to any person purchasing the Definitive Note or
beneficial interest in a Global Note from us in a transaction meeting the
requirements of clauses (A) through (E) of this paragraph a notice advising such
purchaser that resales thereof are restricted as stated herein.
3. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certifications, legal opinions and other
D-1
<PAGE>
information as you and the Company may reasonably require to confirm that the
proposed sale complies with the foregoing restrictions. We further understand
that the Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Notes, and we and
any accounts for which we are acting are each able to bear the economic risk of
our or its investment.
5. We are acquiring the Notes or beneficial interest therein purchased by
us for our own account or for one or more accounts (each of which is an
institutional "accredited investor") as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
_____________________________________________
[Insert Name of Accredited Investor]
By:__________________________________________
Name:
Title:
Dated: _______________________
D-2
<PAGE>
EXHIBIT E
[FORM OF NOTATION OF GUARANTEE]
For value received, each Guarantor (which term includes any successor
Person under the Indenture) has, jointly and severally, unconditionally
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture dated as of October 29, 1999 (the "Indenture") among
US Unwired Inc., the Guarantors listed on Schedule I thereto and State Street
Bank and Trust Company, as trustee (the "Trustee"), (a) the due and punctual
payment of the principal of, premium, if any, interest and Liquidated Damages,
if any, on the Notes (as defined in the Indenture), whether at maturity, by
acceleration, redemption or otherwise, the due and punctual payment of interest
on overdue principal and premium, and, to the extent permitted by law, interest,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms of the Indenture and
(b) in case of any extension of time of payment or renewal of any Notes or any
of such other obligations, that the same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at stated maturity, by acceleration or otherwise. The obligations of the
Guarantors to the Holders of Notes and to the Trustee pursuant to the Note
Guarantee and the Indenture are expressly set forth in Article 11 of the
Indenture and reference is hereby made to the Indenture for the precise terms of
the Note Guarantee. Each Holder of a Note, by accepting the same, (a) agrees to
and shall be bound by such provisions, (b) authorizes and directs the Trustee,
on behalf of such Holder, to take such action as may be necessary or appropriate
to effectuate the subordination as provided in the Indenture and (c) appoints
the Trustee attorney-in-fact of such Holder for such purpose; provided, however,
that the Indebtedness evidenced by this Note Guarantee shall cease to be so
subordinated and subject in right of payment upon any defeasance of this Note in
accordance with the provisions of the Indenture.
[Name of Guarantor(s)]
By:__________________________________________
Name:
Title:
E-1
<PAGE>
EXHIBIT F
FORM OF SUPPLEMENTAL INDENTURE
TO BE DELIVERED BY SUBSEQUENT GUARANTORS
Supplemental Indenture (this "Supplemental Indenture"), dated as of
________________, among __________________ (the "Guaranteeing Subsidiary"), a
subsidiary of US Unwired Inc. (or its permitted successor), a Louisiana
corporation (the "Company"), the Company, the other Guarantors (as defined in
the Indenture referred to herein) and State Street Bank and Trust Company, as
trustee under the indenture referred to below (the "Trustee").
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an indenture (the "Indenture"), dated as of October 29, 1999 providing for the
issuance of an aggregate principal amount at maturity of up to $400 million of
13 3/8% Senior Subordinated Discount Notes due 2009 (the "Notes");
WHEREAS, the Indenture provides that under certain circumstances the
Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental
indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally
guarantee all of the Company's Obligations under the Notes and the Indenture on
the terms and conditions set forth herein (the "Note Guarantee"); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is
authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the
equal and ratable benefit of the Holders of the Notes as follows:
1. Capitalized Terms. Capitalized terms used herein without definition
shall have the meanings assigned to them in the Indenture.
2. Agreement to Guarantee. The Guaranteeing Subsidiary hereby agrees as
follows:
(a) Along with all Guarantors named in the Indenture, to jointly and
severally Guarantee to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, the Notes or
the obligations of the Company hereunder or thereunder, that:
(i) the principal of and interest on the Notes will be promptly
paid in full when due, whether at maturity, by acceleration, redemption
or otherwise, and interest on the overdue principal of and interest on
the Notes, if any, if lawful, and all other obligations of the Company
to the Holders or the Trustee hereunder or thereunder will be promptly
paid in full or performed, all in accordance with the terms hereof and
thereof; and
(ii) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, that same will be promptly
paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so
F-1
<PAGE>
guaranteed or any performance so guaranteed for whatever reason, the
Guarantors shall be jointly and severally obligated to pay the same
immediately.
(b) The obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Notes or the Indenture,
the absence of any action to enforce the same, any waiver or consent by any
Holder of the Notes with respect to any provisions hereof or thereof, the
recovery of any judgment against the Company, any action to enforce the
same or any other circumstance which might otherwise constitute a legal or
equitable discharge or defense of a guarantor.
(c) The following is hereby waived: diligence presentment, demand of
payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Company, any right to require a proceeding first against
the Company, protest, notice and all demands whatsoever.
(d) This Note Guarantee shall not be discharged except by complete
performance of the obligations contained in the Notes and the Indenture,
and the Guaranteeing Subsidiary accepts all obligations of a Guarantor
under the Indenture.
(e) If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors, or any Custodian,
Trustee, liquidator or other similar official acting in relation to either
the Company or the Guarantors, any amount paid by either to the Trustee or
such Holder, this Note Guarantee, to the extent theretofore discharged,
shall be reinstated in full force and effect.
(f) The Guaranteeing Subsidiary shall not be entitled to any right of
subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed
hereby.
(g) As between the Guarantors, on the one hand, and the Holders and
the Trustee, on the other hand, (x) the maturity of the obligations
guaranteed hereby may be accelerated as provided in Article 6 of the
Indenture for the purposes of this Note Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (y) in the event of any
declaration of acceleration of such obligations as provided in Article 6 of
the Indenture, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantors for the purpose of this
Note Guarantee.
(h) The Guarantors shall have the right to seek contribution from any
non-paying Guarantor so long as the exercise of such right does not impair
the rights of the Holders under the Guarantee.
(i) Pursuant to Section 11.02 of the Indenture, after giving effect
to any maximum amount and any other contingent and fixed liabilities that
are relevant under any applicable Bankruptcy or fraudulent conveyance laws,
and after giving effect to any collections from, rights to receive
contribution from or payments made by or on behalf of any other Guarantor
in respect of the obligations of such other Guarantor under Article 11 of
the Indenture, this new Note Guarantee shall be limited to the maximum
amount permissible such that the obligations of such Guarantor under this
Note Guarantee will not constitute a fraudulent transfer or conveyance.
3. Execution and Delivery. Each Guaranteeing Subsidiary agrees that the
Note Guarantees shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Note Guarantee.
F-2
<PAGE>
4. Guaranteeing Subsidiary May Consolidate, Etc. on Certain Terms.
(a) The Guaranteeing Subsidiary may not consolidate with or merge
with or into (whether or not such Guarantor is the surviving Person)
another corporation, Person or entity whether or not affiliated with such
Guarantor unless:
(i) subject to Sections 11.04 and 11.05 of the Indenture, the
Person formed by or surviving any such consolidation or merger (if
other than a Guarantor or the Company) unconditionally assumes all the
obligations of such Guarantor, pursuant to a supplemental indenture in
form and substance reasonably satisfactory to the Trustee, under the
Notes, the Indenture and the Note Guarantee on the terms set forth
herein or therein; and
(ii) immediately after giving effect to such transaction, no
Default or Event of Default exists.
(b) In case of any such consolidation, merger, sale or conveyance and
upon the assumption by the successor corporation, by supplemental
indenture, executed and delivered to the Trustee and satisfactory in form
to the Trustee, of the Note Guarantee endorsed upon the Notes and the due
and punctual performance of all of the covenants and conditions of the
Indenture to be performed by the Guarantor, such successor corporation
shall succeed to and be substituted for the Guarantor with the same effect
as if it had been named herein as a Guarantor. Such successor corporation
thereupon may cause to be signed any or all of the Note Guarantees to be
endorsed upon all of the Notes issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Trustee. All the
Note Guarantees so issued shall in all respects have the same legal rank
and benefit under the Indenture as the Note Guarantees theretofore and
thereafter issued in accordance with the terms of the Indenture as though
all of such Note Guarantees had been issued at the date of the execution
hereof.
(c) Except as set forth in Articles 4 and 5 and Section 11.05 of
Article 11 of the Indenture, and notwithstanding clauses (a) and (b) above,
nothing contained in the Indenture or in any of the Notes shall prevent any
consolidation or merger of a Guarantor with or into the Company or another
Guarantor, or shall prevent any sale or conveyance of the property of a
Guarantor as an entirety or substantially as an entirety to the Company or
another Guarantor.
5. Releases.
(a) In the event of a sale or other disposition of all of the assets
of any Guarantor, by way of merger, consolidation or otherwise, or a sale
or other disposition of all to the capital stock of any Guarantor, in each
case to a Person that is not (either before or after giving effect to such
transaction) a Restricted Subsidiary of the Company, then such Guarantor
(in the event of a sale or other disposition, by way of merger,
consolidation or otherwise, of all of the capital stock of such Guarantor)
or the corporation acquiring the property (in the event of a sale or other
disposition of all or substantially all of the assets of such Guarantor)
will be released and relieved of any obligations under its Note Guarantee;
provided that the Net Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of the Indenture,
including without limitation Section 4.10 of the Indenture. Upon delivery
by the Company to the Trustee of an Officers' Certificate and an Opinion of
Counsel to the effect that such sale or other disposition was made by the
Company in accordance with the provisions of the Indenture, including
without limitation Section 4.10 of the Indenture, the Trustee shall execute
any documents reasonably
F-3
<PAGE>
required in order to evidence the release of any Guarantor from its
obligations under its Note Guarantee.
(b) Any Guarantor not released from its obligations under its Note
Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor under
the Indenture as provided in Article 11 of the Indenture.
6. No Recourse Against Others. No past, present or future director,
officer, employee, incorporator, stockholder or agent of the Guaranteeing
Subsidiary, as such, shall have any liability for any obligations of the Company
or any Guaranteeing Subsidiary under the Notes, any Note Guarantees, the
Indenture or this Supplemental Indenture or for any claim based on, in respect
of, or by reason of, such obligations or their creation. Each Holder of the
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 SEC that such a waiver is against public policy.
7. NEW YORK LAW TO GOVERN. THE INTERNAL LAW OF THE STATE OF NEW YORK
SHALL GOVERN AND BE USED TO CONSTRUE THIS SUPPLEMENTAL INDENTURE BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
8. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
9. Effect of Headings. The Section headings herein are for convenience
only and shall not affect the construction hereof.
10. The Trustee. The Trustee shall not be responsible in any manner
whatsoever for or in respect of the validity or sufficiency of this Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made solely by the Guaranteeing Subsidiary and the Company.
F-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed and attested, all as of the date first above
written.
Dated: _______________, ____
[Guaranteeing Subsidiary]
By: _______________________________
Name:
Title:
[Company]
By: _______________________________
Name:
Title:
[Existing Guarantors]
By: _______________________________
Name:
Title:
[Trustee],
as Trustee
By: _______________________________
Authorized Signatory
F-5
<PAGE>
Schedule I
SCHEDULE OF GUARANTORS
The following schedule lists each Guarantor under the Indenture as of the
Issue Date:
1. Louisiana Unwired, LLC
2. Unwired Telecom Corp.
F-6
<PAGE>
EXHIBIT G
PLEDGE AND SECURITY AGREEMENT
-----------------------------
THIS PLEDGE AND SECURITY AGREEMENT (the "Pledge Agreement") is made and
----------------
entered into as of October 29, 1999 (the "Closing Date"), by and between
------------
Louisiana Unwired, LLC (the "Pledgor"), having its principal place of business
-------
at One Lakeshore Drive, Suite 1900, Lake Charles, Louisiana 70629, and State
Street Bank and Trust Company, in its capacity as trustee under the Indenture
(as defined), as collateral agent (the "Collateral Agent"), for the benefit of
----------------
itself and for the holders (the "Holders") of US Unwired, Inc.'s 13-3/8% Senior
-------
Subordinated Discount Notes due 2009 (together with any notes issued in
replacement thereof or in exchange or substitution therefor, the "Notes").
-----
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed thereto in the Indenture (hereinafter defined).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, US Unwired Inc. ("Borrower") currently owns, legally and
--------
beneficially, approximately 96% of the partnership interests of Pledgor; and
WHEREAS, Pledgor is the legal and beneficial owner of an approximately
eighty percent (80%) partnership interest in Pledged Partnership (as hereinafter
defined); and
WHEREAS, Borrower and Collateral Agent, as Trustee, have entered into that
certain indenture dated as of October 29, 1999 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which Borrower issued the Notes and Pledgor guaranteed
---------
the Notes (the "Guarantee"); and
WHEREAS, the terms of the Indenture require that the Pledgor (i) pledge to
Collateral Agent for the ratable benefit of the Holders of the Notes, and grant
to Collateral Agent for the ratable benefit of the Holders of the Notes, a
second priority security interest in the Collateral (as defined herein) and (ii)
execute and deliver this Pledge Agreement in order to secure the payment and
performance by the Pledgor of all of its obligations under both the Indenture
and its Guarantee of the Notes (the "Obligations"); and
-----------
WHEREAS, the payment of the Credit Agreement (as defined), is secured by,
inter alia, a first priority pledge of the Collateral (the "Senior Pledge") in
- ----- ---- -------------
favor of the Lenders and certain other parties to the Credit Agreement, as set
forth on the signature pages thereto or as may be added from time to time
pursuant to the terms thereof; and
WHEREAS, the Collateral Agent and CoBank, ACB, have entered into that
Intercreditor Agreement (as herein defined); and
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement:
NOW, THEREFORE, in consideration of the premises, and in order to induce
the purchase of the Guarantee, Pledgor hereby agrees with the Collateral Agent
for its benefit and the ratable benefit of the Holders of the Notes as follows:
G-1
<PAGE>
ARTICLE I. DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
-------------
underscored) shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof) when used in this Pledge
Agreement:
"Collateral" shall mean and include the (i) intercompany notes payable to
----------
Pledgor, the Borrower, or any subsidiary of Pledgor or Borrower by Borrower,
Pledgor or the Pledged Partnership and (ii) Partnership Interests, Distributions
and all certificates, accounts, chattel paper, instruments, general intangibles,
cash, books, records, notices and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for the
Partnership Interests or the Distributions, together with all rights of Pledgor
to receive and retain any of the foregoing and all proceeds of the foregoing.
"Credit Agreement" shall mean that certain Credit Agreement, dated as of
----------------
October 1, 1999, by and between Borrower and CoBank, ACB, as Administrative
Agent and as a Lender, the other Lenders identified therein, and the other
parties referenced therein, as the same may be amended, modified, supplemented,
extended, or restated from time to time, pursuant to which CoBank, ACB and
Lenders have committed to make available to Borrower a revolving credit facility
and term loan facility in the aggregate maximum principal amount outstanding at
any one time not to exceed $130,000,000.
"Distributions" shall mean all right, title and interest of Pledgor,
-------------
whether legal or equitable, now or hereafter existing and howsoever evidenced,
incurred or arising, to receive distributions from Pledged Partnership as a
partner thereof or otherwise, whether cash or non-cash, including, without
limitation, any and all rights of Pledgor to receive a return of all or any part
of any contribution made by Pledgor to Pledged Partnership, including, without
limitation, any and all rights to receive returns of advances or loans.
"Event of Default" shall mean any of the events listed in Section 6.01 of
----------------
the Indenture.
"Intercreditor Agreement" shall mean the Intercreditor Agreement between
-----------------------
the Collateral Agent and the Administrative Agent dated as of October 29, 1999.
"Obligations" is defined in the Recitals.
-----------
"Partnership Agreement" shall mean that certain Partnership Agreement,
---------------------
dated as of October 22, 1999 among Pledgor, Fort Bend Telephone Company and XIT
Leasing, Inc., and all amendments thereto as of the date hereof, with respect to
the rights and obligations of the partners of Pledged Partnership.
"Partnership Interests" shall mean all right, title and interest of
---------------------
Pledgor, whether legal or equitable, now or hereafter existing, and howsoever
evidenced or arising, in Pledged Partnership as a partner thereof.
"Pledge Agreement" is defined in the preamble.
---------------- --------
"Pledged Partnership" shall mean Texas Unwired, a Louisiana general
-------------------
partnership.
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"Pledged Partnership Interests" shall mean all Partnership Interests
-----------------------------
pledged pursuant to the Pledge Agreement.
"Pledge Agreement" is defined in the preamble.
---------------- --------
"Satisfaction Date" means the date on which all Obligations under the
-----------------
Indenture and the Senior Secured Notes have been paid in full or otherwise
satisfied.
SECTION 1.2. Indenture Definitions. Unless otherwise defined herein or
---------------------
the context otherwise requires, terms used in this Pledge Agreement, including
its preamble and recitals, have the meanings provided in the Indenture.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in
------------------
the Indenture or the context otherwise requires, terms for which meanings are
provided in the Uniform Commercial Code from time to time in effect in the State
of New York (the "U.C.C.") are used in this Pledge Agreement, including its
------
preamble and recitals, with such meanings.
ARTICLE II. PLEDGE
SECTION 2.1. Grant of Security Interest. Pledgor hereby pledges,
--------------------------
hypothecates, assigns, charges, delivers and transfers to the Collateral Agent
for its benefit and for the ratable benefit of the Holders of the Notes, and
hereby grants to the Collateral Agent for the ratable benefit of the Holders of
the Notes, a continuing security interest in, all of the Collateral.
SECTION 2.2. Security for Obligations. This Pledge Agreement secures the
------------------------
payment in full and in cash of all Obligations.
SECTION 2.3. Delivery of Pledged Collateral. Pledgor hereby agrees that,
------------------------------
pursuant to the terms of the Intercreditor Agreement, all certificates or
instruments representing or evidencing the Collateral shall be held by the
Administrative Agent for the benefit of the Lenders and the Holders. Upon
expiration or termination of the Intercreditor Agreement, Pledgor shall
immediately deliver or cause to be delivered to the Collateral Agent all
certificates or instruments representing or evidencing the Collateral. All such
certificates or instruments shall be in suitable form for transfer by delivery
and shall be accompanied by instruments of transfer or assignment duly executed
in blank and undated, all in form and substance satisfactory to the Collateral
Agent.
SECTION 2.4. Distributions on Pledged Partnership Interests. In the event
----------------------------------------------
that any Distribution is to be paid on any Pledged Partnership Interest at a
time when no Event of Default has occurred and is continuing, such Distribution
may be paid directly to Pledgor. If any such Event of Default has occurred and
is continuing, then any such Distribution shall be paid directly to the
Collateral Agent.
SECTION 2.5. Continuing Security Interest. This Pledge Agreement shall
----------------------------
create a continuing security interest in the Collateral and shall:
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(a) remain in full force and effect until all Obligations under the
Indenture and the Notes are satisfied in full;
(b) be binding upon each Pledgor and its successors, transferees and
assigns; and
(c) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Holders of the Notes.
The security interest granted herein shall terminate and all rights to the
Collateral shall revert to Pledgor on the Satisfaction Date. Upon any such
termination or release of Collateral, the Collateral Agent will, at each
Pledgor's sole expense, deliver to such Pledgor, without any representations,
warranties or recourse of any kind whatsoever, all certificates and instruments
representing or evidencing all Pledged Partnership Interests, together with all
other Collateral held by the Collateral Agent hereunder, and execute and deliver
to such Pledgor such documents as such Pledgor shall reasonably request to
evidence such termination or release.
SECTION 2.6. Security Interest Absolute. All rights of the Collateral
--------------------------
Agent and the Liens granted to the Collateral Agent hereunder, and all
obligations of each Pledgor hereunder, shall be absolute and unconditional,
irrespective of
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) the failure of the Collateral Agent, for its own benefit or the
benefit of the Holders of the Notes:
(i) to assert any claim or demand or to enforce any right or
remedy against Pledgor, any Guarantor (as such term is defined in the
Indenture) or any other Person under the provisions of the Indenture,
the Notes or the Guarantees or otherwise, or
(ii) to exercise any right or remedy against any guarantor of, or
collateral securing, any Obligations of Pledgor or any Guarantor.
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations or any other extension,
compromise or renewal of any Obligation of Pledgor or any Guarantor,
(d) any reduction, limitation, impairment or termination of any
Obligation of Pledgor or any Guarantor for any reason (other than the
satisfaction of and repayment in full and in cash of all Obligations),
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and Pledgor hereby waives any
right to or claim of) any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise or unenforceability of, or any
other event or occurrence affecting, any Obligation of Pledgor, any
Guarantor or otherwise,
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(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Indenture, the
Notes or the other Guarantees,
(f) any addition, exchange, release, surrender or non-perfection of
any collateral (including the Collateral), or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty, for
any of the Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, Pledgor, any
Guarantor, any surety or any guarantor.
SECTION 2.7. Postponement of Subrogation, etc. Pledgor will not exercise
--------------------------------
any rights which it may acquire by reason of any payment made hereunder, whether
by way of subrogation, reimbursement or otherwise, until the Satisfaction Date.
Any amount paid to Pledgor on account of any payment made hereunder shall be
held in trust for the benefit of the Holders of the Notes and shall immediately
be paid to the Collateral Agent, for the ratable benefit of the Holders of the
Notes, and credited and applied against the Obligations, whether matured or
unmatured, in accordance with the terms of the Indenture, provided, however,
that if
(a) Pledgor has made payment to the Collateral Agent for the ratable
benefit of the Holders of the Notes of all or any part of the Obligations,
and
(b) the Satisfaction Date has occurred,
the Collateral Agent, on behalf of the Holders of the Notes, agrees that, at
Pledgor's request, the Collateral Agent, on behalf of the Holders of the Notes,
will execute and deliver to Pledgor appropriate documents (without recourse and
without representation or warranty) necessary to evidence the transfer by
subrogation to Pledgor of an interest in the Obligations resulting from such
payment by Pledgor. In furtherance of the foregoing, prior to the Satisfaction
Date, Pledgor shall refrain from taking any action or commencing any proceeding
against any Guarantor (or its successors or assigns, whether in connection with
a bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments made under this Pledge Agreement to the Collateral Agent or the Holders
of the Notes.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Warranties, etc. Pledgor represents and warrants unto the Collateral Agent
----------------
and the Holders of the Notes, as at the date of each pledge and delivery
hereunder by Pledgor to the Collateral Agent of any Collateral as set forth in
this Article:
SECTION 3.1. Ownership, No Liens, etc. Pledgor is the legal and
------------------------
beneficial owner of, and has good and valid title to (and has full right and
authority to pledge and assign) the Collateral, including the eighty (80%)
partnership interest in the Pledged Partnership free and clear of all Liens,
except any Lien granted pursuant hereto in favor of the Collateral Agent or any
Permitted Lien.
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SECTION 3.2. Valid Security Interest.
-----------------------
(a) The execution and delivery of this Pledge Agreement creates a
valid second-priority security interest in the Collateral and (i) in the
case of any intercompany notes and any Pledged Partnership Interests that
are certificated, upon the delivery of such Collateral to the
Administrative Agent or a person described in Section 8-301(a)(2) of the
U.C.C. such security interest will be a valid second-priority, perfected
security interest, and (ii) in the case of all other Collateral, upon the
filing of the U.C.C. financing statements (Form U.C.C.-1) delivered by the
Pledgors to the Collateral Agent with respect to such Collateral, such
security interest will be a valid second-priority, perfected security
interest. Pledgor has filed all U.C.C. financing statements (Form U.C.C.-1)
referred to above in the appropriate offices therefor and has taken all of
the other actions referred to above necessary to create perfected and
second-priority security interests in the applicable Collateral.
(b) Upon the expiration or termination of the Intercreditor
Agreement, and the receipt of notice of such satisfaction by Pledgor,
Pledgor shall deliver, or cause the Collateral to be delivered, to the
Collateral Agent, at which time the pledge made pursuant to this Pledge
Agreement shall create a valid and perfected first priority security
interest in the Collateral, securing the payment of the Obligations for the
benefit of Collateral Agent and the Holders of the Notes, and enforceable
as such against all creditors of Pledgor and any Persons purporting to
purchase any of the Collateral from Pledgor.
SECTION 3.3. Organization. Pledgor is a limited liability company duly
------------
organized, validly existing and in good standing under the laws of the State of
Louisiana and has all requisite power and authority to enter into this Pledge
Agreement; and Pledgor's principal place of business and the place it maintains
all records relating to the Collateral is now at the location listed in Section
8.4 and Pledgor's taxpayer identification number is 72-1407430.
SECTION 3.4. As to Pledged Partnership Interests. In the case of any
-----------------------------------
Pledged Partnership Interests constituting Collateral, all such Pledged
Partnership Interests are duly authorized and validly issued, fully paid and
non-assessable, and constitute 80% of the partnership interests of Pledgor.
Pledgor does not have any Subsidiaries incorporated in the United States of
which it directly owns any Capital Stock other than the Pledged Partnership. In
the event any of the Pledged Partnership Interests become certificated, the
certificates representing the Pledged Partnership Interests shall be delivered
to the Collateral Agent or a person described in Section 8-301(a)(2) of the
U.C.C., with stock powers, accompanied by undated instruments of transfer duly
executed in blank and the Collateral Agent has "control" (as defined in the
U.C.C.) of such Pledged Shares.
SECTION 3.5. Authorization, Approval, etc. No authorization, approval or
----------------------------
other action by, and no notice to or filing with, any Governmental Authority,
regulatory body or other Person (other than those that have been, or on the
Closing Date will be, duly obtained or made and which are, or on the Closing
Date will be, in full force and effect) is required either
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(a) for the pledge by Pledgor of any Collateral pursuant to this
Pledge Agreement or for the execution, delivery and performance of this
Pledge Agreement by Pledgor, or
(b) for the exercise by the Collateral Agent of the voting or other
rights provided for in this Pledge Agreement, or, except with respect to
any Pledged Partnership Interests as may be required in connection with a
disposition of such Pledged Partnership Interests by laws affecting the
offering and sale of securities generally, the remedies in respect of the
Collateral pursuant to this Pledge Agreement,
provided, however, that in order to exercise the voting and certain other rights
- -------- -------
provided for in this Pledge Agreement, the Pledged Partnership Interests must be
transferred into the name of the Collateral Agent on the books and records of
the Issuer prior to the exercise of such voting or other rights.
SECTION 3.6. Compliance with Laws. Pledgor is in compliance with the
--------------------
requirements of all applicable laws (including, the provisions of the Fair Labor
Standards Act), rules, regulations and orders of every Governmental Authority,
the non-compliance with which could have a material adverse effect on the
business, prospects, financial condition or results of operations of Pledgor, or
draw into question the validity of this Pledge Agreement or the other documents
contemplated by the Indenture or adversely affect the value of the Collateral.
SECTION 3.7. Power to Enter Into Agreement. Pledgor has all requisite
-----------------------------
corporate power and authority to enter into this Pledge Agreement.
SECTION 3.8. Due Execution. This Pledge Agreement has been duly executed
-------------
and delivered by Pledgor and constitutes a legal, valid and binding obligation
of Pledgor, enforceable against Pledgor in accordance with its terms, except as
the enforceability hereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and equitable principles of general
applicability.
SECTION 3.9. No Litigation. No litigation, investigation or proceeding of
-------------
or before any arbitrator or governmental authority is pending or, to the best
knowledge of Pledgor, threatened by or against Pledgor or against any of its
properties or revenues with respect to this Pledge Agreement or any of the
transactions contemplated hereby.
SECTION 3.10. Legal Pledge. The pledge of the Collateral pursuant to this
------------
Pledge Agreement is not prohibited by any applicable law or governmental
regulation, release, interpretation or opinion of the Board of Governors of the
Federal Reserve System or other regulatory agency (including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System).
ARTICLE IV. COVENANTS
SECTION 4.1. Protect Collateral, Further Assurances, etc. Except for the
-------------------------------------------
Senior Pledge, or as otherwise provided for in the Credit Agreement, Pledgor
will not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the
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Collateral Agent hereunder or as specifically permitted by the Indenture).
Pledgor will warrant and defend the right and title herein granted unto the
Collateral Agent in and to the Collateral (and all right, title and interest
represented by the Collateral) against the claims and demands of all Persons
whomsoever. Pledgor agrees that at any time, and from time to time, at the
expense of Pledgor, Pledgor will promptly execute and deliver all further
instruments, and take all further action, that may be necessary or desirable, or
that the Collateral Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Pledgor will not certificate or issue
any Partnership Interests unless the same are immediately pledged to the
Collateral Agent hereunder and delivered to the Administrative Agent, the
Collateral Agent or a person described in Section 8-301(a) of the U.C.C.
SECTION 4.2. Endorsements. Pledgor agrees that all certificated Pledged
------------
Partnership Interests delivered by such Pledgor pursuant to this Pledge
Agreement will be accompanied by duly executed, or other equivalent instruments
of transfer reasonably acceptable to the Collateral Agent. Pledgor will, from
time to time upon the reasonable request of the Collateral Agent, promptly
deliver to the Collateral Agent such instruments and similar documents,
reasonably satisfactory in form and substance to the Collateral Agent, with
respect to the Collateral as the Collateral Agent may reasonably request and
will, from time to time upon the request of the Collateral Agent after the
occurrence of any Event of Default, promptly cause the Pledged Partnership to
transfer any Pledged Partnership Interests or other Collateral into the name of
any nominee designated by the Collateral Agent.
SECTION 4.3. Continuous Pledge. Subject to Section 2.4 hereof, Pledgor
-----------------
will, at all times, keep pledged to the Collateral Agent pursuant hereto all
Pledged Partnership Interests, all Distributions with respect thereto, and all
other Collateral, instruments, proceeds and rights from time to time received by
or distributable to such Pledgor in respect of any Collateral.
SECTION 4.4. Voting Rights, Dividends, etc. Pledgor agrees:
-----------------------------
(a) if an Event of Default shall have occurred and be continuing,
promptly upon receipt of notice thereof by Pledgor and without any request
therefore by the Collateral Agent, to deliver (properly endorsed where
required hereby or requested by the Collateral Agent) to the Collateral
Agent all Distributions and all proceeds of the Collateral, all of which
shall be held by the Collateral Agent as additional Collateral for use in
accordance with Section 6.4 hereof; and
-----------
(b) if an Event of Default shall have occurred and be continuing and
the Collateral Agent shall have notified Pledgor of the Collateral Agent's
intention to exercise its voting power under this Section:
(i) the Collateral Agent may exercise (to the exclusion of
Pledgor) the voting power and all other incidental rights of ownership
with respect to any Pledged Partnership Interests or other Collateral,
and Pledgor hereby grants the Collateral Agent an irrevocable proxy,
exercisable under such circumstances, to vote the Pledged Partnership
Interests and such other Collateral; and
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<PAGE>
(ii) promptly to deliver to the Collateral Agent such additional
proxies and other documents as may be necessary to allow the
Collateral Agent to exercise such voting power.
All Distributions and proceeds which may at any time and from time to time be
held by Pledgor but which Pledgor is then obligated to deliver to the Collateral
Agent, shall, until delivery to the Collateral Agent, be held by Pledgor
separate and apart from its other property in trust for the Collateral Agent.
The Collateral Agent agrees that unless an Event of Default shall have occurred
and be continuing and the Collateral Agent shall have given the notice referred
to in this Section, Pledgor has the exclusive power to exercise all voting and
other consensual rights with respect to the Pledged Partnership Interests, and
the Collateral Agent shall, upon the written request of Pledgor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by Pledgor, and which are necessary to allow Pledgor to exercise such
powers with respect to any of the Pledged Partnership Interests; provided,
--------
however, that no vote shall be cast, or consent, waiver or ratification given,
- -------
or action taken by Pledgor that would materially impair the value of any
Collateral or be inconsistent with or violate any provision of the Indenture,
the Notes, the Guarantees or this Pledge Agreement.
ARTICLE V. THE COLLATERAL AGENT
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. Pledgor hereby
-------------------------------------------
irrevocably appoints the Collateral Agent as Pledgor's attorney-in-fact, with
full authority and in the name, place and stead of the Pledgor or in its own
name, from time to time in the Collateral Agent's discretion, to take, upon the
occurrence and during the continuance of an Event of Default, any action and to
execute any instrument which the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Pledge Agreement, including without
limitation:
(a) to ask, demand, collect, sue for, recover, compromise and receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above; and
----------
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce the rights
of the Collateral Agent with respect to any of the Collateral.
SECTION 5.2. Authority of Collateral Agent.
-----------------------------
(a) The Collateral Agent shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Collateral Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. The Collateral Agent may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall
not be liable for the actions of any such agents
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appointed with due care and shall be entitled to retain counsel and to act
in reliance upon the advice of counsel concerning all such matters. Neither
the Collateral Agent nor any director, officer, employee, attorney or agent
of the Collateral Agent shall be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Collateral Agent and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document reasonably believed by it or them to
be genuine and correct and to have been signed or sent by the proper person
or persons.
(b) Pledgor acknowledges that the rights and responsibilities of the
Collateral Agent under this Pledge Agreement with respect to any action
taken by the Collateral Agent or the exercise or non-exercise by the
Collateral Agent of any option, right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Collateral Agent and the Holders of the
Notes, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between
the Collateral Agent and each or Pledgor, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Holders of the Notes
with full and valid authority so to act or refrain from acting, and Pledgor
shall not be obligated or entitled to make any inquiry respecting such
authority.
(c) The Trustee has been appointed as trustee pursuant to the
Indenture. The actions of the Trustee hereunder, acting as Collateral
Agent, are subject to the provisions of the Indenture.
SECTION 5.3. Resignation or Removal of the Collateral Agent. Until such
----------------------------------------------
time as the Obligations shall have been paid in full, the Collateral Agent may
at any time, by giving written notice to Pledgor, the Trustee (as defined in the
Indenture) and the Holders of the Notes, resign and be discharged of the
responsibilities hereby created, such resignation to become effective upon (i)
the appointment of a successor Collateral Agent and (ii) the acceptance of such
appointment by such successor Collateral Agent. As promptly as practicable after
the giving of any such notice, the Trustee (if the Trustee is not then acting as
the Collateral Agent hereunder), or if the Trustee and the Collateral Agent are
the same person or entity, the Holders of the Notes shall appoint a successor
Collateral Agent, which successor Collateral Agent shall be reasonably
acceptable to the Pledgors. If no successor Collateral Agent shall be appointed
and shall have accepted such appointment within 90 days after the Collateral
Agent gives the aforesaid notice of resignation, the Collateral Agent may apply
to any court of competent jurisdiction to appoint a successor Collateral Agent
to act until such time, if any, as a successor shall have been appointed as
provided in this Section. Any successor so appointed by such court shall
immediately and without further act be superseded by any successor Collateral
Agent appointed by the Holders of the Notes, as provided in this Section.
Simultaneously with its replacement as Collateral Agent hereunder, the
Collateral Agent so replaced shall deliver to its successor all documents,
instruments, certificates and other items of whatever kind (including, without
limitation, the certificates and instruments evidencing the Collateral and all
instruments of transfer or assignment) held by it pursuant to the terms hereof.
Any Collateral Agent that has resigned shall be entitled to fees, costs and
expenses to the extent incurred or arising, or relating to events occurring,
before its resignation or removal.
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SECTION 5.4. Release; Termination of Agreement.
---------------------------------
(a) This Pledge Agreement shall terminate upon the earlier to occur
of: (i) full and final payment and performance of the Obligations (and upon
receipt by the Collateral Agent of Pledgor's written certification that all
such Obligations have been satisfied) and payment in full of all fees and
expenses owing by the Pledgor to the Collateral Agent, (ii) the day of the
Legal Defeasance of all of the Obligations pursuant to Section 8.02 of the
Indenture (other than those surviving Obligations specified therein) or
(iii) such other termination date as is provided by the Indenture. At such
time, the Collateral Agent shall, at the request of Pledgor, reassign and
redeliver to Pledgor all of the Collateral hereunder that has not been
sold, disposed of, retained or applied by the Collateral Agent in
accordance with the terms hereof. Such reassignment and redelivery shall be
without warranty by or recourse to the Collateral Agent, except as to the
absence of any prior assignments by the Collateral Agent of its interest in
the Collateral, and shall be at the expense of the Pledgors.
(b) Pledgor agrees that it will not, except as permitted by the
Indenture, sell or dispose of, or grant any option or warrant with respect
to, any of the Collateral; provided, however, that if Pledgor shall sell
any of the Collateral in accordance with the terms of the Indenture, the
Collateral Agent shall, at the request of Pledgor and subject to
requirements of Section 12.03 of the Indenture, release the Collateral
subject to such sale free and clear of the Lien under this Pledge
Agreement.
SECTION 5.5. Collateral Agent May Perform. If Pledgor fails to perform
----------------------------
any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by Pledgor pursuant to Section
6.5 hereof.
SECTION 5.6. Collateral Agent Has No Duty. The powers conferred on the
----------------------------
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Holders of the Notes) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for the reasonable care of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral or responsibility
for
(a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not the Collateral Agent has or is deemed to have knowledge of
such matters, or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
SECTION 5.7. Reasonable Care. The Collateral Agent is required to
---------------
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession, provided, however, the Collateral Agent shall be
-------- -------
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as Pledgor
reasonably requests in writing from time to time, but failure of the Collateral
Agent to
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comply with any such request at any time shall not in itself be deemed a failure
to exercise reasonable care.
ARTICLE VI. REMEDIES
SECTION 6.1. Certain Remedies. If an Event of Default shall have occurred
----------------
and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the U.C.C. (whether or not the U.C.C. applies to the affected
Collateral) and also may, without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Collateral Agent may deem commercially reasonable. Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten day's
prior notice to Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefore, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(b) The Collateral Agent may
(i) transfer all or any part of the Collateral into the name of
the Collateral Agent or its nominee, with or without disclosing that such
Collateral is subject to the Lien hereunder,
(ii) notify the parties obligated on any of the Collateral to make
payment to the Collateral Agent of any amount due or to become due
thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than
the original period) any obligations of any nature of any party with
respect thereto,
(iv) endorse any checks, drafts or other writings in Pledgor's
name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral and
(vi) execute (in the name, place and stead of Pledgor)
endorsements, assignments, stock powers and other instruments of conveyance
or transfer with respect to all or any of the Collateral.
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SECTION 6.2. Further Action. If the Collateral Agent shall determine to
--------------
exercise its right to sell all or any of the Collateral pursuant to Section 6.1,
------------
Pledgor agrees that, upon request of the Collateral Agent, Pledgor will, at its
own expense, do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid and
binding and in compliance with applicable law.
SECTION 6.3. Compliance with Restrictions. Pledgor agrees that in any
----------------------------
sale of any of the Collateral whenever an Event of Default shall have occurred
and be continuing, the Collateral Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority, and Pledgor further
agrees that such compliance shall not result in such sale being considered or
deemed not to have been made in a commercially reasonable manner, nor shall the
Collateral Agent be liable nor accountable to Pledgor for any discount allowed
by reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
-----------------------
Collateral Agent in respect of any sale of, collection from or other realization
upon, all or any part of the Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent as additional collateral security for, or
then or at any time thereafter be applied (after payment of any amounts payable
to the Collateral Agent pursuant to Section 7.07 of the Indenture and, Section
-------
6.5 below) in whole or in part by the Collateral Agent against, all or any part
- ---
of the Obligations in such order as the Collateral Agent shall elect. Any
surplus of such cash or other proceeds held by the Collateral Agent and
remaining after the Satisfaction Date, shall be paid over to Pledgor or to
whomsoever may be lawfully entitled to receive such surplus. The Pledgor shall
remain liable for any deficiency.
SECTION 6.5. Indemnity and Expenses. Pledgor hereby indemnifies and holds
----------------------
harmless the Collateral Agent from and against any and all claims, losses and
liabilities arising out of or resulting from this Pledge Agreement (including
enforcement of this Pledge Agreement), except claims, losses or liabilities
resulting from the Collateral Agent's gross negligence or willful misconduct,
and Pledgor will pay to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which the Collateral Agent may incur, in
each case, in connection with:
(a) the administration of this Pledge Agreement,
(b) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral,
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<PAGE>
(c) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder, or
(d) the failure by Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII. LOUISIANA PROVISIONS.
SECTION 7.1. General. The provisions of this Article 7 shall apply to the
-------
Collateral and all proceeds thereof at all times during which such Collateral or
the proceeds there-of are located in Louisiana or are otherwise subject to the
application of Louisiana law in any respect. The term "Louisiana Collateral" as
used herein shall refer to all portions of the Collateral and the proceeds
thereof that are from time to time located in the State of Louisiana or are
otherwise subject to Louisiana law at all times during which such portions or
proceeds thereof are located in Louisiana or are otherwise mandatorily subject
to the application of Louisiana law under the applicable laws of other states.
SECTION 7.2. Financing Statements. Pledgor will complete and sign one or
--------------------
more appropriate Louisiana UCC-1 financing statements with regard to the
Collateral and the proceeds thereof. Pledgor authorizes Collateral Agent, at
Pledgor's expense, to file multiple originals, or photocopies, carbon copies or
facsimile copies of such Louisiana UCC-1 financing statements with the
appropriate filing officer or officers in the State of Louisiana, pursuant to
the provisions of Chapter 9 of the Louisiana Commercial Laws.
SECTION 7.3. Event of Default; Remedies. Upon the occurrence of any Event
--------------------------
of Default hereunder, Collateral Agent shall have the following rights and
remedies with respect to the Louisiana Collateral, which rights and remedies are
in addition to and are not in lieu or limitation of any other rights and
remedies that may be provided in this Pledge Agreement, the Indenture or any
related documents, under Chapter 9 of the Louisiana Commercial Laws (La. R.S.
(S)(S) 10:9-101, et seq.), under the Uniform Commercial Code of any state other
-- ---
than Louisiana, or at law or equity generally:
(a) Collateral Agent may cause the Louisiana Collateral, or any part
or parts there-of, to be immediately seized wherever found, and sold,
whether in term of court or in vacation, under ordinary or executory
process, in accordance with applicable Louisiana law, to the highest bidder
for cash, with or without appraisement, without the necessity of making
additional demand, or of notifying Pledgor or placing Pledgor in default.
(b) For purposes of foreclosure under Louisiana executory process
procedures, Pledgor confesses judgment and acknowledges to be indebted unto
and in favor of Collateral Agent and the Holder up to the full amount of
the Obligations, in principal, interest, costs, expenses, attorneys' fees
and other fees and charges. To the extent permitted under applicable
Louisiana law, Pledgor additionally waives: (a) the benefit of appraisal as
provided in Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of
Civil Procedure and all other laws with regard to appraisal upon judicial
sale; (b) the demand and three (3) days' delay as provided under Articles
2639 and 2721 of the Louisiana Code of Civil Procedure; (c) the notice of
seizure as provided under Articles 2293 and 2721 of the Louisiana Code of
Civil Procedure; (d) the three (3) days' delay
G-14
<PAGE>
provided under Articles 2331 and 2722 of the Louisiana Code of Civil
Procedure; and (e) all other benefits provided under Articles 2331, 2722
and 2723 of the Louisiana Code of Civil Procedure and all other similar
provisions of the Louisiana Code of Civil Procedure not specifically listed
hereinabove.
(c) Should any of the Louisiana Collateral be seized as an incident
to an action for the recognition or enforcement of the Obligations or this
Pledge Agreement, the Indenture or any related document, by executory
process, sequestration, attachment, writ of fieri facias or otherwise,
-------------
Pledgor agrees that the court issuing any such order shall, if requested by
Collateral Agent, appoint Collateral Agent or any person or entity named by
Collateral Agent at the time such seizure is requested, or at any time
thereafter, as keeper of the Louisiana Collateral as provided under La.
R.S. (S)(S) 9:5136, et seq., Pledgor agrees to pay the reasonable fees of
-- ---
such keeper, which compensation to the keeper shall also be a part of the
Obligations secured under this Pledge Agreement.
(d) Should it become necessary for Collateral Agent to foreclose
against the Louisiana Collateral, all declarations of fact that are made
under an authentic act before a Notary Public in the presence of two
witnesses, by a person declaring such facts to lie within his or her
knowledge, shall constitute authentic evidence for purposes of executory
process and also for purposes of La. R.S. (S) 9:3509.1, La. R.S. (S)
9:3504(D)(6) and La. R.S. (S) 10:9-508, as applicable.
SECTION 7.4. GOVERNING LAW. ANYTHING TO THE CONTRARY CONTAINED IN THIS
-------------
PLEDGE AGREEMENT NOTWITHSTANDING, THE SECURITY INTERESTS IN THE LOUISIANA
COLLATERAL GRANTED IN THIS PLEDGE AGREEMENT, AND COLLATERAL AGENT'S OR ANY
HOLDER'S REMEDIES IN THE COURTS SITTING IN AND FOR THE STATE OF LOUISIANA WITH
RESPECT TO THE LOUISIANA COLLATERAL SHALL BE GOVERNED BY LOUISIANA LAW.
ARTICLE VIII. MISCELLANEOUS PROVISIONS
SECTION 8.1. Security Agreement. This Pledge Agreement is a Security
------------------
Agreement executed pursuant to the Indenture and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof.
SECTION 8.2. Amendments, etc. No amendment to or waiver of any provision
---------------
of this Pledge Agreement nor consent to any departure by Pledgor herefrom shall
in any event be effective unless the same shall be in writing and signed by the
Collateral Agent (on behalf of the Holders of the Notes) and Pledgor, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it is given.
SECTION 8.3. Protection of Collateral. The Collateral Agent may from time
------------------------
to time, at its option, and at the expense of the Pledgor, perform any act which
Pledgor agrees hereunder to perform and which Pledgor shall fall to perform
after being requested in writing so to perform (it being understood that no such
request need be given after the occurrence and during the continuance of an
Event of Default) and the Collateral Agent may from time to time take any
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<PAGE>
other action which the Collateral Agent reasonably deems necessary for the
maintenance, preservation or protection of any of the Collateral or of its
security interest therein.
SECTION 8.4. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing and addressed, delivered or
transmitted, if to Pledgor, at the address or facsimile number of US Unwired,
Inc. provided for in the Indenture, and, if to the Collateral Agent, at State
Street Bank and Trust Company, Goodwin Square, 225 Asylum Street, Hartford,
Connecticut 06103, Telecopier No.: (860) 244-1889, Attn: Laurel Melody-
Casasanta, or as to any such party at such other address or facsimile number as
shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. Any notice, (a)(i) if
mailed and properly addressed with postage prepaid or (ii) if properly addressed
and sent by pre-paid courier service, shall be deemed given when such notice has
been received or (b) if transmitted by facsimile, shall be deemed given when
transmitted (and telephonic confirmation of receipt thereof has been received).
SECTION 8.5. Headings. The various headings of this Pledge Agreement are
--------
inserted for convenience only, and shall not affect the meaning or
interpretation of this Pledge Agreement or any provisions hereof.
SECTION 8.6. Severability. Any provision of this Pledge Agreement which
------------
is prohibited or unenforceable in any jurisdiction shall, as to such provision
and such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions of this Pledge
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 8.7. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE DEEMED TO BE A
-------------
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCLUDING THE LAW OF CONFLICTS.
SECTION 8.8. Counterparts. This Pledge Agreement may be executed by the
------------
parties hereto in several counterparts, each of which shall be deemed to be an
original (whether such counterpart is originally executed or an electronic copy
of an original) and all of which shall constitute together but one and the same
agreement. This Pledge Agreement shall become effective and binding upon Pledgor
when a counterpart hereof executed on behalf of Pledgor shall have been received
by the Collateral Agent.
[Signatures commence on the following page]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
LOUISIANA UNWIRED, LLC
By
-------------------------------------
Title:
STATE STREET BANK AND TRUST
COMPANY as Collateral Agent
By
_____________________________________
Title:
S-1
<PAGE>
EXHIBIT 4.2
PLEDGE AND SECURITY AGREEMENT
-----------------------------
THIS PLEDGE AND SECURITY AGREEMENT (the "Pledge Agreement") is made and
----------------
entered into as of October 29, 1999 (the "Closing Date"), by and between
------------
Louisiana Unwired, LLC (the "Pledgor"), having its principal place of business
-------
at One Lakeshore Drive, Suite 1900, Lake Charles, Louisiana 70629, and State
Street Bank and Trust Company, in its capacity as trustee under the Indenture
(as defined), as collateral agent (the "Collateral Agent"), for the benefit of
----------------
itself and for the holders (the "Holders") of US Unwired, Inc.'s 13-3/8 % Senior
-------
Subordinated Discount Notes due 2009 (together with any notes issued in
replacement thereof or in exchange or substitution therefor, the "Notes").
-----
Capitalized terms used but not otherwise defined herein shall have the meanings
ascribed thereto in the Indenture (hereinafter defined).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, US Unwired Inc. ("Borrower") currently owns, legally and
--------
beneficially, approximately 96% of the partnership interests of Pledgor; and
WHEREAS, Pledgor is the legal and beneficial owner of an approximately
eighty percent (80%) partnership interest in Pledged Partnership (as hereinafter
defined); and
WHEREAS, Borrower and Collateral Agent, as Trustee, have entered into that
certain indenture dated as of October 29, 1999 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the
"Indenture"), pursuant to which Borrower issued the Notes and Pledgor guaranteed
---------
the Notes (the "Guarantee"); and
WHEREAS, the terms of the Indenture require that the Pledgor (i) pledge to
Collateral Agent for the ratable benefit of the Holders of the Notes, and grant
to Collateral Agent for the ratable benefit of the Holders of the Notes, a
second priority security interest in the Collateral (as defined herein) and (ii)
execute and deliver this Pledge Agreement in order to secure the payment and
performance by the Pledgor of all of its obligations under both the Indenture
and its Guarantee of the Notes (the "Obligations"); and
-----------
WHEREAS, the payment of the Credit Agreement (as defined), is secured by,
inter alia, a first priority pledge of the Collateral (the "Senior Pledge") in
- ----- ---- -------------
favor of the Lenders and certain other parties to the Credit Agreement, as set
forth on the signature pages thereto or as may be added from time to time
pursuant to the terms thereof; and
WHEREAS, the Collateral Agent and CoBank, ACB, have entered into that
Intercreditor Agreement (as herein defined); and
WHEREAS, the Pledgor has duly authorized the execution, delivery and
performance of this Pledge Agreement:
NOW, THEREFORE, in consideration of the premises, and in order to induce
the purchase of the Guarantee, Pledgor hereby agrees with the Collateral Agent
for its benefit and the ratable benefit of the Holders of the Notes as follows:
<PAGE>
ARTICLE I. DEFINITIONS
SECTION 1.1. Certain Terms. The following terms (whether or not
-------------
underscored) shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof) when used in this Pledge
Agreement:
"Collateral" shall mean and include the (i) intercompany notes payable to
----------
Pledgor, the Borrower, or any subsidiary of Pledgor or Borrower by Borrower,
Pledgor or the Pledged Partnership and (ii) Partnership Interests, Distributions
and all certificates, accounts, chattel paper, instruments, general intangibles,
cash, books, records, notices and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for the
Partnership Interests or the Distributions, together with all rights of Pledgor
to receive and retain any of the foregoing and all proceeds of the foregoing.
"Credit Agreement" shall mean that certain Credit Agreement, dated as of
----------------
October 1, 1999, by and between Borrower and CoBank, ACB, as Administrative
Agent and as a Lender, the other Lenders identified therein, and the other
parties referenced therein, as the same may be amended, modified, supplemented,
extended, or restated from time to time, pursuant to which CoBank, ACB and
Lenders have committed to make available to Borrower a revolving credit facility
and term loan facility in the aggregate maximum principal amount outstanding at
any one time not to exceed $130,000,000.
"Distributions" shall mean all right, title and interest of Pledgor,
-------------
whether legal or equitable, now or hereafter existing and howsoever evidenced,
incurred or arising, to receive distributions from Pledged Partnership as a
partner thereof or otherwise, whether cash or non-cash, including, without
limitation, any and all rights of Pledgor to receive a return of all or any part
of any contribution made by Pledgor to Pledged Partnership, including, without
limitation, any and all rights to receive returns of advances or loans.
"Event of Default" shall mean any of the events listed in Section 6.01 of
----------------
the Indenture.
"Intercreditor Agreement" shall mean the Intercreditor Agreement between
-----------------------
the Collateral Agent and the Administrative Agent dated as of October 29, 1999.
"Obligations" is defined in the Recitals.
-----------
"Partnership Agreement" shall mean that certain Partnership Agreement,
---------------------
dated as of October 22, 1999 among Pledgor, Fort Bend Telephone Company and XIT
Leasing, Inc., and all amendments thereto as of the date hereof, with respect to
the rights and obligations of the partners of Pledged Partnership.
"Partnership Interests" shall mean all right, title and interest of
---------------------
Pledgor, whether legal or equitable, now or hereafter existing, and howsoever
evidenced or arising, in Pledged Partnership as a partner thereof.
"Pledge Agreement" is defined in the preamble.
---------------- --------
"Pledged Partnership" shall mean Texas Unwired, a Louisiana general
-------------------
partnership.
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<PAGE>
"Pledged Partnership Interests" shall mean all Partnership Interests
-----------------------------
pledged pursuant to the Pledge Agreement.
"Pledge Agreement" is defined in the preamble.
---------------- --------
"Satisfaction Date" means the date on which all Obligations under the
-----------------
Indenture and the Senior Secured Notes have been paid in full or otherwise
satisfied.
SECTION 1.2. Indenture Definitions. Unless otherwise defined herein or
---------------------
the context otherwise requires, terms used in this Pledge Agreement, including
its preamble and recitals, have the meanings provided in the Indenture.
SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or in
------------------
the Indenture or the context otherwise requires, terms for which meanings are
provided in the Uniform Commercial Code from time to time in effect in the State
of New York (the "U.C.C.") are used in this Pledge Agreement, including its
------
preamble and recitals, with such meanings.
ARTICLE II. PLEDGE
SECTION 2.1. Grant of Security Interest. Pledgor hereby pledges,
--------------------------
hypothecates, assigns, charges, delivers and transfers to the Collateral Agent
for its benefit and for the ratable benefit of the Holders of the Notes, and
hereby grants to the Collateral Agent for the ratable benefit of the Holders of
the Notes, a continuing security interest in, all of the Collateral.
SECTION 2.2. Security for Obligations. This Pledge Agreement secures the
------------------------
payment in full and in cash of all Obligations.
SECTION 2.3. Delivery of Pledged Collateral. Pledgor hereby agrees that,
------------------------------
pursuant to the terms of the Intercreditor Agreement, all certificates or
instruments representing or evidencing the Collateral shall be held by the
Administrative Agent for the benefit of the Lenders and the Holders. Upon
expiration or termination of the Intercreditor Agreement, Pledgor shall
immediately deliver or cause to be delivered to the Collateral Agent all
certificates or instruments representing or evidencing the Collateral. All such
certificates or instruments shall be in suitable form for transfer by delivery
and shall be accompanied by instruments of transfer or assignment duly executed
in blank and undated, all in form and substance satisfactory to the Collateral
Agent.
SECTION 2.4. Distributions on Pledged Partnership Interests. In the event
----------------------------------------------
that any Distribution is to be paid on any Pledged Partnership Interest at a
time when no Event of Default has occurred and is continuing, such Distribution
may be paid directly to Pledgor. If any such Event of Default has occurred and
is continuing, then any such Distribution shall be paid directly to the
Collateral Agent.
SECTION 2.5. Continuing Security Interest. This Pledge Agreement shall
----------------------------
create a continuing security interest in the Collateral and shall:
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<PAGE>
(a) remain in full force and effect until all Obligations under the
Indenture and the Notes are satisfied in full;
(b) be binding upon each Pledgor and its successors, transferees and
assigns; and
(c) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Holders of the Notes.
The security interest granted herein shall terminate and all rights to the
Collateral shall revert to Pledgor on the Satisfaction Date. Upon any such
termination or release of Collateral, the Collateral Agent will, at each
Pledgor's sole expense, deliver to such Pledgor, without any representations,
warranties or recourse of any kind whatsoever, all certificates and instruments
representing or evidencing all Pledged Partnership Interests, together with all
other Collateral held by the Collateral Agent hereunder, and execute and deliver
to such Pledgor such documents as such Pledgor shall reasonably request to
evidence such termination or release.
SECTION 2.6. Security Interest Absolute. All rights of the Collateral
--------------------------
Agent and the Liens granted to the Collateral Agent hereunder, and all
obligations of each Pledgor hereunder, shall be absolute and unconditional,
irrespective of
(a) any lack of validity or enforceability of the Indenture or any
other agreement or instrument relating thereto;
(b) the failure of the Collateral Agent, for its own benefit or the
benefit of the Holders of the Notes:
(i) to assert any claim or demand or to enforce any right or
remedy against Pledgor, any Guarantor (as such term is defined in the
Indenture) or any other Person under the provisions of the Indenture,
the Notes or the Guarantees or otherwise, or
(ii) to exercise any right or remedy against any guarantor of, or
collateral securing, any Obligations of Pledgor or any Guarantor.
(c) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations or any other extension,
compromise or renewal of any Obligation of Pledgor or any Guarantor,
(d) any reduction, limitation, impairment or termination of any
Obligation of Pledgor or any Guarantor for any reason (other than the
satisfaction of and repayment in full and in cash of all Obligations),
including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to (and Pledgor hereby waives any
right to or claim of) any defense or set-off, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality,
nongenuineness, irregularity, compromise or unenforceability of, or any
other event or occurrence affecting, any Obligation of Pledgor, any
Guarantor or otherwise,
-4-
<PAGE>
(e) any amendment to, rescission, waiver, or other modification of,
or any consent to departure from, any of the terms of the Indenture, the
Notes or the other Guarantees,
(f) any addition, exchange, release, surrender or non-perfection of
any collateral (including the Collateral), or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty, for
any of the Obligations, or
(g) any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, Pledgor, any
Guarantor, any surety or any guarantor.
SECTION 2.7. Postponement of Subrogation, etc. Pledgor will not exercise
--------------------------------
any rights which it may acquire by reason of any payment made hereunder, whether
by way of subrogation, reimbursement or otherwise, until the Satisfaction Date.
Any amount paid to Pledgor on account of any payment made hereunder shall be
held in trust for the benefit of the Holders of the Notes and shall immediately
be paid to the Collateral Agent, for the ratable benefit of the Holders of the
Notes, and credited and applied against the Obligations, whether matured or
unmatured, in accordance with the terms of the Indenture, provided, however,
that if
(a) Pledgor has made payment to the Collateral Agent for the ratable
benefit of the Holders of the Notes of all or any part of the Obligations,
and
(b) the Satisfaction Date has occurred,
the Collateral Agent, on behalf of the Holders of the Notes, agrees that, at
Pledgor's request, the Collateral Agent, on behalf of the Holders of the Notes,
will execute and deliver to Pledgor appropriate documents (without recourse and
without representation or warranty) necessary to evidence the transfer by
subrogation to Pledgor of an interest in the Obligations resulting from such
payment by Pledgor. In furtherance of the foregoing, prior to the Satisfaction
Date, Pledgor shall refrain from taking any action or commencing any proceeding
against any Guarantor (or its successors or assigns, whether in connection with
a bankruptcy proceeding or otherwise) to recover any amounts in respect of
payments made under this Pledge Agreement to the Collateral Agent or the Holders
of the Notes.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Warranties, etc. Pledgor represents and warrants unto the Collateral Agent
----------------
and the Holders of the Notes, as at the date of each pledge and delivery
hereunder by Pledgor to the Collateral Agent of any Collateral as set forth in
this Article:
SECTION 3.1. Ownership, No Liens, etc. Pledgor is the legal and
------------------------
beneficial owner of, and has good and valid title to (and has full right and
authority to pledge and assign) the Collateral, including the eighty (80%)
partnership interest in the Pledged Partnership free and clear of all Liens,
except any Lien granted pursuant hereto in favor of the Collateral Agent or any
Permitted Lien.
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<PAGE>
SECTION 3.2. Valid Security Interest.
-----------------------
(a) The execution and delivery of this Pledge Agreement creates a
valid second-priority security interest in the Collateral and (i) in the
case of any intercompany notes and any Pledged Partnership Interests that
are certificated, upon the delivery of such Collateral to the
Administrative Agent or a person described in Section 8-301(a)(2) of the
U.C.C. such security interest will be a valid second-priority, perfected
security interest, and (ii) in the case of all other Collateral, upon the
filing of the U.C.C. financing statements (Form U.C.C.-1) delivered by the
Pledgors to the Collateral Agent with respect to such Collateral, such
security interest will be a valid second-priority, perfected security
interest. Pledgor has filed all U.C.C. financing statements (Form U.C.C.-1)
referred to above in the appropriate offices therefor and has taken all of
the other actions referred to above necessary to create perfected and
second-priority security interests in the applicable Collateral.
(b) Upon the expiration or termination of the Intercreditor
Agreement, and the receipt of notice of such satisfaction by Pledgor,
Pledgor shall deliver, or cause the Collateral to be delivered, to the
Collateral Agent, at which time the pledge made pursuant to this Pledge
Agreement shall create a valid and perfected first priority security
interest in the Collateral, securing the payment of the Obligations for the
benefit of Collateral Agent and the Holders of the Notes, and enforceable
as such against all creditors of Pledgor and any Persons purporting to
purchase any of the Collateral from Pledgor.
SECTION 3.3. Organization. Pledgor is a limited liability company duly
------------
organized, validly existing and in good standing under the laws of the State of
Louisiana and has all requisite power and authority to enter into this Pledge
Agreement; and Pledgor's principal place of business and the place it maintains
all records relating to the Collateral is now at the location listed in Section
8.4 and Pledgor's taxpayer identification number is 72-1407430.
SECTION 3.4. As to Pledged Partnership Interests. In the case of any
-----------------------------------
Pledged Partnership Interests constituting Collateral, all such Pledged
Partnership Interests are duly authorized and validly issued, fully paid and
non-assessable, and constitute 80% of the partnership interests of Pledgor.
Pledgor does not have any Subsidiaries incorporated in the United States of
which it directly owns any Capital Stock other than the Pledged Partnership. In
the event any of the Pledged Partnership Interests become certificated, the
certificates representing the Pledged Partnership Interests shall be delivered
to the Collateral Agent or a person described in Section 8-301(a)(2) of the
U.C.C., with stock powers, accompanied by undated instruments of transfer duly
executed in blank and the Collateral Agent has "control" (as defined in the
U.C.C.) of such Pledged Shares.
SECTION 3.5. Authorization, Approval, etc. No authorization, approval or
----------------------------
other action by, and no notice to or filing with, any Governmental Authority,
regulatory body or other Person (other than those that have been, or on the
Closing Date will be, duly obtained or made and which are, or on the Closing
Date will be, in full force and effect) is required either
-6-
<PAGE>
(a) for the pledge by Pledgor of any Collateral pursuant to this
Pledge Agreement or for the execution, delivery and performance of this
Pledge Agreement by Pledgor, or
(b) for the exercise by the Collateral Agent of the voting or other
rights provided for in this Pledge Agreement, or, except with respect to
any Pledged Partnership Interests as may be required in connection with a
disposition of such Pledged Partnership Interests by laws affecting the
offering and sale of securities generally, the remedies in respect of the
Collateral pursuant to this Pledge Agreement,
provided, however, that in order to exercise the voting and certain other rights
- -------- -------
provided for in this Pledge Agreement, the Pledged Partnership Interests must be
transferred into the name of the Collateral Agent on the books and records of
the Issuer prior to the exercise of such voting or other rights.
SECTION 3.6. Compliance with Laws. Pledgor is in compliance with the
--------------------
requirements of all applicable laws (including, the provisions of the Fair Labor
Standards Act), rules, regulations and orders of every Governmental Authority,
the non-compliance with which could have a material adverse effect on the
business, prospects, financial condition or results of operations of Pledgor, or
draw into question the validity of this Pledge Agreement or the other documents
contemplated by the Indenture or adversely affect the value of the Collateral.
SECTION 3.7. Power to Enter Into Agreement. Pledgor has all requisite
-----------------------------
corporate power and authority to enter into this Pledge Agreement.
SECTION 3.8. Due Execution. This Pledge Agreement has been duly executed
-------------
and delivered by Pledgor and constitutes a legal, valid and binding obligation
of Pledgor, enforceable against Pledgor in accordance with its terms, except as
the enforceability hereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and equitable principles of general
applicability.
SECTION 3.9. No Litigation. No litigation, investigation or proceeding of
-------------
or before any arbitrator or governmental authority is pending or, to the best
knowledge of Pledgor, threatened by or against Pledgor or against any of its
properties or revenues with respect to this Pledge Agreement or any of the
transactions contemplated hereby.
SECTION 3.10. Legal Pledge. The pledge of the Collateral pursuant to this
------------
Pledge Agreement is not prohibited by any applicable law or governmental
regulation, release, interpretation or opinion of the Board of Governors of the
Federal Reserve System or other regulatory agency (including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System).
ARTICLE IV. COVENANTS
SECTION 4.1. Protect Collateral, Further Assurances, etc. Except for the
-------------------------------------------
Senior Pledge, or as otherwise provided for in the Credit Agreement, Pledgor
will not sell, assign, transfer, pledge, or encumber in any other manner the
Collateral (except in favor of the
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<PAGE>
Collateral Agent hereunder or as specifically permitted by the Indenture).
Pledgor will warrant and defend the right and title herein granted unto the
Collateral Agent in and to the Collateral (and all right, title and interest
represented by the Collateral) against the claims and demands of all Persons
whomsoever. Pledgor agrees that at any time, and from time to time, at the
expense of Pledgor, Pledgor will promptly execute and deliver all further
instruments, and take all further action, that may be necessary or desirable, or
that the Collateral Agent may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral. Pledgor will not certificate or issue
any Partnership Interests unless the same are immediately pledged to the
Collateral Agent hereunder and delivered to the Administrative Agent, the
Collateral Agent or a person described in Section 8-301(a) of the U.C.C.
SECTION 4.2. Endorsements. Pledgor agrees that all certificated Pledged
------------
Partnership Interests delivered by such Pledgor pursuant to this Pledge
Agreement will be accompanied by duly executed, or other equivalent instruments
of transfer reasonably acceptable to the Collateral Agent. Pledgor will, from
time to time upon the reasonable request of the Collateral Agent, promptly
deliver to the Collateral Agent such instruments and similar documents,
reasonably satisfactory in form and substance to the Collateral Agent, with
respect to the Collateral as the Collateral Agent may reasonably request and
will, from time to time upon the request of the Collateral Agent after the
occurrence of any Event of Default, promptly cause the Pledged Partnership to
transfer any Pledged Partnership Interests or other Collateral into the name of
any nominee designated by the Collateral Agent.
SECTION 4.3. Continuous Pledge. Subject to Section 2.4 hereof, Pledgor
-----------------
will, at all times, keep pledged to the Collateral Agent pursuant hereto all
Pledged Partnership Interests, all Distributions with respect thereto, and all
other Collateral, instruments, proceeds and rights from time to time received by
or distributable to such Pledgor in respect of any Collateral.
SECTION 4.4. Voting Rights, Dividends, etc. Pledgor agrees:
-----------------------------
(a) if an Event of Default shall have occurred and be continuing,
promptly upon receipt of notice thereof by Pledgor and without any request
therefore by the Collateral Agent, to deliver (properly endorsed where
required hereby or requested by the Collateral Agent) to the Collateral
Agent all Distributions and all proceeds of the Collateral, all of which
shall be held by the Collateral Agent as additional Collateral for use in
accordance with Section 6.4 hereof; and
-----------
(b) if an Event of Default shall have occurred and be continuing and
the Collateral Agent shall have notified Pledgor of the Collateral Agent's
intention to exercise its voting power under this Section:
(i) the Collateral Agent may exercise (to the exclusion of
Pledgor) the voting power and all other incidental rights of ownership
with respect to any Pledged Partnership Interests or other Collateral,
and Pledgor hereby grants the Collateral Agent an irrevocable proxy,
exercisable under such circumstances, to vote the Pledged Partnership
Interests and such other Collateral; and
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<PAGE>
(ii) promptly to deliver to the Collateral Agent such additional
proxies and other documents as may be necessary to allow the
Collateral Agent to exercise such voting power.
All Distributions and proceeds which may at any time and from time to time be
held by Pledgor but which Pledgor is then obligated to deliver to the Collateral
Agent, shall, until delivery to the Collateral Agent, be held by Pledgor
separate and apart from its other property in trust for the Collateral Agent.
The Collateral Agent agrees that unless an Event of Default shall have occurred
and be continuing and the Collateral Agent shall have given the notice referred
to in this Section, Pledgor has the exclusive power to exercise all voting and
other consensual rights with respect to the Pledged Partnership Interests, and
the Collateral Agent shall, upon the written request of Pledgor, promptly
deliver such proxies and other documents, if any, as shall be reasonably
requested by Pledgor, and which are necessary to allow Pledgor to exercise such
powers with respect to any of the Pledged Partnership Interests; provided,
--------
however, that no vote shall be cast, or consent, waiver or ratification given,
- -------
or action taken by Pledgor that would materially impair the value of any
Collateral or be inconsistent with or violate any provision of the Indenture,
the Notes, the Guarantees or this Pledge Agreement.
ARTICLE V. THE COLLATERAL AGENT
SECTION 5.1. Collateral Agent Appointed Attorney-in-Fact. Pledgor hereby
-------------------------------------------
irrevocably appoints the Collateral Agent as Pledgor's attorney-in-fact, with
full authority and in the name, place and stead of the Pledgor or in its own
name, from time to time in the Collateral Agent's discretion, to take, upon the
occurrence and during the continuance of an Event of Default, any action and to
execute any instrument which the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Pledge Agreement, including without
limitation:
(a) to ask, demand, collect, sue for, recover, compromise and receive
and give acquittance and receipts for moneys due and to become due under or
in respect of any of the Collateral,
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above; and
----------
(c) to file any claims or take any action or institute any
proceedings which the Collateral Agent may deem necessary or desirable for
the collection of any of the Collateral or otherwise to enforce the rights
of the Collateral Agent with respect to any of the Collateral.
SECTION 5.2. Authority of Collateral Agent.
-----------------------------
(a) The Collateral Agent shall have and be entitled to exercise all
powers hereunder that are specifically granted to the Collateral Agent by
the terms hereof, together with such powers as are reasonably incidental
thereto. The Collateral Agent may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall
not be liable for the actions of any such agents
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<PAGE>
appointed with due care and shall be entitled to retain counsel and to act
in reliance upon the advice of counsel concerning all such matters. Neither
the Collateral Agent nor any director, officer, employee, attorney or agent
of the Collateral Agent shall be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Collateral Agent and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document reasonably believed by it or them to
be genuine and correct and to have been signed or sent by the proper person
or persons.
(b) Pledgor acknowledges that the rights and responsibilities of the
Collateral Agent under this Pledge Agreement with respect to any action
taken by the Collateral Agent or the exercise or non-exercise by the
Collateral Agent of any option, right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Collateral Agent and the Holders of the
Notes, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between
the Collateral Agent and each or Pledgor, the Collateral Agent shall be
conclusively presumed to be acting as agent for the Holders of the Notes
with full and valid authority so to act or refrain from acting, and Pledgor
shall not be obligated or entitled to make any inquiry respecting such
authority.
(c) The Trustee has been appointed as trustee pursuant to the
Indenture. The actions of the Trustee hereunder, acting as Collateral
Agent, are subject to the provisions of the Indenture.
SECTION 5.3. Resignation or Removal of the Collateral Agent. Until such
----------------------------------------------
time as the Obligations shall have been paid in full, the Collateral Agent may
at any time, by giving written notice to Pledgor, the Trustee (as defined in the
Indenture) and the Holders of the Notes, resign and be discharged of the
responsibilities hereby created, such resignation to become effective upon (i)
the appointment of a successor Collateral Agent and (ii) the acceptance of such
appointment by such successor Collateral Agent. As promptly as practicable after
the giving of any such notice, the Trustee (if the Trustee is not then acting as
the Collateral Agent hereunder), or if the Trustee and the Collateral Agent are
the same person or entity, the Holders of the Notes shall appoint a successor
Collateral Agent, which successor Collateral Agent shall be reasonably
acceptable to the Pledgors. If no successor Collateral Agent shall be appointed
and shall have accepted such appointment within 90 days after the Collateral
Agent gives the aforesaid notice of resignation, the Collateral Agent may apply
to any court of competent jurisdiction to appoint a successor Collateral Agent
to act until such time, if any, as a successor shall have been appointed as
provided in this Section. Any successor so appointed by such court shall
immediately and without further act be superseded by any successor Collateral
Agent appointed by the Holders of the Notes, as provided in this Section.
Simultaneously with its replacement as Collateral Agent hereunder, the
Collateral Agent so replaced shall deliver to its successor all documents,
instruments, certificates and other items of whatever kind (including, without
limitation, the certificates and instruments evidencing the Collateral and all
instruments of transfer or assignment) held by it pursuant to the terms hereof.
Any Collateral Agent that has resigned shall be entitled to fees, costs and
expenses to the extent incurred or arising, or relating to events occurring,
before its resignation or removal.
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<PAGE>
SECTION 5.4. Release; Termination of Agreement.
---------------------------------
(a) This Pledge Agreement shall terminate upon the earlier to occur
of: (i) full and final payment and performance of the Obligations (and upon
receipt by the Collateral Agent of Pledgor's written certification that all
such Obligations have been satisfied) and payment in full of all fees and
expenses owing by the Pledgor to the Collateral Agent, (ii) the day of the
Legal Defeasance of all of the Obligations pursuant to Section 8.02 of the
Indenture (other than those surviving Obligations specified therein) or
(iii) such other termination date as is provided by the Indenture. At such
time, the Collateral Agent shall, at the request of Pledgor, reassign and
redeliver to Pledgor all of the Collateral hereunder that has not been
sold, disposed of, retained or applied by the Collateral Agent in
accordance with the terms hereof. Such reassignment and redelivery shall be
without warranty by or recourse to the Collateral Agent, except as to the
absence of any prior assignments by the Collateral Agent of its interest in
the Collateral, and shall be at the expense of the Pledgors.
(b) Pledgor agrees that it will not, except as permitted by the
Indenture, sell or dispose of, or grant any option or warrant with respect
to, any of the Collateral; provided, however, that if Pledgor shall sell
any of the Collateral in accordance with the terms of the Indenture, the
Collateral Agent shall, at the request of Pledgor and subject to
requirements of Section 12.03 of the Indenture, release the Collateral
subject to such sale free and clear of the Lien under this Pledge
Agreement.
SECTION 5.5. Collateral Agent May Perform. If Pledgor fails to perform
----------------------------
any agreement contained herein, the Collateral Agent may itself perform, or
cause performance of, such agreement, and the expenses of the Collateral Agent
incurred in connection therewith shall be payable by Pledgor pursuant to Section
6.5 hereof.
SECTION 5.6. Collateral Agent Has No Duty. The powers conferred on the
----------------------------
Collateral Agent hereunder are solely to protect its interest (on behalf of the
Holders of the Notes) in the Collateral and shall not impose any duty on it to
exercise any such powers. Except for the reasonable care of any Collateral in
its possession and the accounting for moneys actually received by it hereunder,
the Collateral Agent shall have no duty as to any Collateral or responsibility
for
(a) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not the Collateral Agent has or is deemed to have knowledge of
such matters, or
(b) taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
SECTION 5.7. Reasonable Care. The Collateral Agent is required to
---------------
exercise reasonable care in the custody and preservation of any of the
Collateral in its possession, provided, however, the Collateral Agent shall be
-------- -------
deemed to have exercised reasonable care in the custody and preservation of any
of the Collateral, if it takes such action for that purpose as Pledgor
reasonably requests in writing from time to time, but failure of the Collateral
Agent to
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<PAGE>
comply with any such request at any time shall not in itself be deemed a failure
to exercise reasonable care.
ARTICLE VI. REMEDIES
SECTION 6.1. Certain Remedies. If an Event of Default shall have occurred
----------------
and be continuing:
(a) The Collateral Agent may exercise in respect of the Collateral,
in addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the U.C.C. (whether or not the U.C.C. applies to the affected
Collateral) and also may, without notice except as specified below, sell
the Collateral or any part thereof in one or more parcels at public or
private sale, at any of the Collateral Agent's offices or elsewhere, for
cash, on credit or for future delivery, and upon such other terms as the
Collateral Agent may deem commercially reasonable. Pledgor agrees that, to
the extent notice of sale shall be required by law, at least ten day's
prior notice to Pledgor of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent shall not be obligated to make any sale
of Collateral regardless of notice of sale having been given. The
Collateral Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefore, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(b) The Collateral Agent may
(i) transfer all or any part of the Collateral into the name of
the Collateral Agent or its nominee, with or without disclosing that such
Collateral is subject to the Lien hereunder,
(ii) notify the parties obligated on any of the Collateral to make
payment to the Collateral Agent of any amount due or to become due
thereunder,
(iii) enforce collection of any of the Collateral by suit or
otherwise, and surrender, release or exchange all or any part thereof, or
compromise or extend or renew for any period (whether or not longer than
the original period) any obligations of any nature of any party with
respect thereto,
(iv) endorse any checks, drafts or other writings in Pledgor's
name to allow collection of the Collateral,
(v) take control of any proceeds of the Collateral and
(vi) execute (in the name, place and stead of Pledgor)
endorsements, assignments, stock powers and other instruments of conveyance
or transfer with respect to all or any of the Collateral.
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SECTION 6.2. Further Action. If the Collateral Agent shall determine to
--------------
exercise its right to sell all or any of the Collateral pursuant to Section 6.1,
------------
Pledgor agrees that, upon request of the Collateral Agent, Pledgor will, at its
own expense, do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid and
binding and in compliance with applicable law.
SECTION 6.3. Compliance with Restrictions. Pledgor agrees that in any
----------------------------
sale of any of the Collateral whenever an Event of Default shall have occurred
and be continuing, the Collateral Agent is hereby authorized to comply with any
limitation or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including compliance with such procedures as may restrict the number of
prospective bidders and purchasers, require that such prospective bidders and
purchasers have certain qualifications and restrict such prospective bidders and
purchasers to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the distribution or
resale of such Collateral), or in order to obtain any required approval of the
sale or of the purchaser by any Governmental Authority, and Pledgor further
agrees that such compliance shall not result in such sale being considered or
deemed not to have been made in a commercially reasonable manner, nor shall the
Collateral Agent be liable nor accountable to Pledgor for any discount allowed
by reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction.
SECTION 6.4. Application of Proceeds. All cash proceeds received by the
-----------------------
Collateral Agent in respect of any sale of, collection from or other realization
upon, all or any part of the Collateral may, in the discretion of the Collateral
Agent, be held by the Collateral Agent as additional collateral security for, or
then or at any time thereafter be applied (after payment of any amounts payable
to the Collateral Agent pursuant to Section 7.07 of the Indenture and, Section
-------
6.5 below) in whole or in part by the Collateral Agent against, all or any part
- ---
of the Obligations in such order as the Collateral Agent shall elect. Any
surplus of such cash or other proceeds held by the Collateral Agent and
remaining after the Satisfaction Date, shall be paid over to Pledgor or to
whomsoever may be lawfully entitled to receive such surplus. The Pledgor shall
remain liable for any deficiency.
SECTION 6.5. Indemnity and Expenses. Pledgor hereby indemnifies and holds
----------------------
harmless the Collateral Agent from and against any and all claims, losses and
liabilities arising out of or resulting from this Pledge Agreement (including
enforcement of this Pledge Agreement), except claims, losses or liabilities
resulting from the Collateral Agent's gross negligence or willful misconduct,
and Pledgor will pay to the Collateral Agent the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which the Collateral Agent may incur, in
each case, in connection with:
(a) the administration of this Pledge Agreement,
(b) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral,
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(c) the exercise or enforcement of any of the rights of the
Collateral Agent hereunder, or
(d) the failure by Pledgor to perform or observe any of the
provisions hereof.
ARTICLE VII. LOUISIANA PROVISIONS.
SECTION 7.1. General. The provisions of this Article 7 shall apply to the
-------
Collateral and all proceeds thereof at all times during which such Collateral or
the proceeds there-of are located in Louisiana or are otherwise subject to the
application of Louisiana law in any respect. The term "Louisiana Collateral" as
used herein shall refer to all portions of the Collateral and the proceeds
thereof that are from time to time located in the State of Louisiana or are
otherwise subject to Louisiana law at all times during which such portions or
proceeds thereof are located in Louisiana or are otherwise mandatorily subject
to the application of Louisiana law under the applicable laws of other states.
SECTION 7.2. Financing Statements. Pledgor will complete and sign one or
--------------------
more appropriate Louisiana UCC-1 financing statements with regard to the
Collateral and the proceeds thereof. Pledgor authorizes Collateral Agent, at
Pledgor's expense, to file multiple originals, or photocopies, carbon copies or
facsimile copies of such Louisiana UCC-1 financing statements with the
appropriate filing officer or officers in the State of Louisiana, pursuant to
the provisions of Chapter 9 of the Louisiana Commercial Laws.
SECTION 7.3. Event of Default; Remedies. Upon the occurrence of any Event
--------------------------
of Default hereunder, Collateral Agent shall have the following rights and
remedies with respect to the Louisiana Collateral, which rights and remedies are
in addition to and are not in lieu or limitation of any other rights and
remedies that may be provided in this Pledge Agreement, the Indenture or any
related documents, under Chapter 9 of the Louisiana Commercial Laws (La. R.S.
(S)(S) 10:9-101, et seq.), under the Uniform Commercial Code of any state other
-- ---
than Louisiana, or at law or equity generally:
(a) Collateral Agent may cause the Louisiana Collateral, or any part
or parts there-of, to be immediately seized wherever found, and sold,
whether in term of court or in vacation, under ordinary or executory
process, in accordance with applicable Louisiana law, to the highest bidder
for cash, with or without appraisement, without the necessity of making
additional demand, or of notifying Pledgor or placing Pledgor in default.
(b) For purposes of foreclosure under Louisiana executory process
procedures, Pledgor confesses judgment and acknowledges to be indebted unto
and in favor of Collateral Agent and the Holder up to the full amount of
the Obligations, in principal, interest, costs, expenses, attorneys' fees
and other fees and charges. To the extent permitted under applicable
Louisiana law, Pledgor additionally waives: (a) the benefit of appraisal as
provided in Articles 2332, 2336, 2723 and 2724 of the Louisiana Code of
Civil Procedure and all other laws with regard to appraisal upon judicial
sale; (b) the demand and three (3) days' delay as provided under Articles
2639 and 2721 of the Louisiana Code of Civil Procedure; (c) the notice of
seizure as provided under Articles 2293 and 2721 of the Louisiana Code of
Civil Procedure; (d) the three (3) days' delay
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<PAGE>
provided under Articles 2331 and 2722 of the Louisiana Code of Civil
Procedure; and (e) all other benefits provided under Articles 2331, 2722
and 2723 of the Louisiana Code of Civil Procedure and all other similar
provisions of the Louisiana Code of Civil Procedure not specifically listed
hereinabove.
(c) Should any of the Louisiana Collateral be seized as an incident
to an action for the recognition or enforcement of the Obligations or this
Pledge Agreement, the Indenture or any related document, by executory
process, sequestration, attachment, writ of fieri facias or otherwise,
-------------
Pledgor agrees that the court issuing any such order shall, if requested by
Collateral Agent, appoint Collateral Agent or any person or entity named by
Collateral Agent at the time such seizure is requested, or at any time
thereafter, as keeper of the Louisiana Collateral as provided under La.
R.S. (S)(S) 9:5136, et seq., Pledgor agrees to pay the reasonable fees of
-- ---
such keeper, which compensation to the keeper shall also be a part of the
Obligations secured under this Pledge Agreement.
(d) Should it become necessary for Collateral Agent to foreclose
against the Louisiana Collateral, all declarations of fact that are made
under an authentic act before a Notary Public in the presence of two
witnesses, by a person declaring such facts to lie within his or her
knowledge, shall constitute authentic evidence for purposes of executory
process and also for purposes of La. R.S. (S) 9:3509.1, La. R.S. (S)
9:3504(D)(6) and La. R.S. (S) 10:9-508, as applicable.
SECTION 7.4. GOVERNING LAW. ANYTHING TO THE CONTRARY CONTAINED IN THIS
-------------
PLEDGE AGREEMENT NOTWITHSTANDING, THE SECURITY INTERESTS IN THE LOUISIANA
COLLATERAL GRANTED IN THIS PLEDGE AGREEMENT, AND COLLATERAL AGENT'S OR ANY
HOLDER'S REMEDIES IN THE COURTS SITTING IN AND FOR THE STATE OF LOUISIANA WITH
RESPECT TO THE LOUISIANA COLLATERAL SHALL BE GOVERNED BY LOUISIANA LAW.
ARTICLE VIII. MISCELLANEOUS PROVISIONS
SECTION 8.1. Security Agreement. This Pledge Agreement is a Security
------------------
Agreement executed pursuant to the Indenture and shall (unless otherwise
expressly indicated herein) be construed, administered and applied in accordance
with the terms and provisions thereof.
SECTION 8.2. Amendments, etc. No amendment to or waiver of any provision
---------------
of this Pledge Agreement nor consent to any departure by Pledgor herefrom shall
in any event be effective unless the same shall be in writing and signed by the
Collateral Agent (on behalf of the Holders of the Notes) and Pledgor, and then
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it is given.
SECTION 8.3. Protection of Collateral. The Collateral Agent may from time
------------------------
to time, at its option, and at the expense of the Pledgor, perform any act which
Pledgor agrees hereunder to perform and which Pledgor shall fall to perform
after being requested in writing so to perform (it being understood that no such
request need be given after the occurrence and during the continuance of an
Event of Default) and the Collateral Agent may from time to time take any
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other action which the Collateral Agent reasonably deems necessary for the
maintenance, preservation or protection of any of the Collateral or of its
security interest therein.
SECTION 8.4. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing and addressed, delivered or
transmitted, if to Pledgor, at the address or facsimile number of US Unwired,
Inc. provided for in the Indenture, and, if to the Collateral Agent, at State
Street Bank and Trust Company, Goodwin Square, 225 Asylum Street, Hartford,
Connecticut 06103, Telecopier No.: (860) 244-1889, Attn: Laurel Melody-
Casasanta, or as to any such party at such other address or facsimile number as
shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section. Any notice, (a)(i) if
mailed and properly addressed with postage prepaid or (ii) if properly addressed
and sent by pre-paid courier service, shall be deemed given when such notice has
been received or (b) if transmitted by facsimile, shall be deemed given when
transmitted (and telephonic confirmation of receipt thereof has been received).
SECTION 8.5. Headings. The various headings of this Pledge Agreement are
--------
inserted for convenience only, and shall not affect the meaning or
interpretation of this Pledge Agreement or any provisions hereof.
SECTION 8.6. Severability. Any provision of this Pledge Agreement which
------------
is prohibited or unenforceable in any jurisdiction shall, as to such provision
and such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability, without invalidating the remaining provisions of this Pledge
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.
SECTION 8.7. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE DEEMED TO BE A
-------------
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK,
EXCLUDING THE LAW OF CONFLICTS.
SECTION 8.8. Counterparts. This Pledge Agreement may be executed by the
------------
parties hereto in several counterparts, each of which shall be deemed to be an
original (whether such counterpart is originally executed or an electronic copy
of an original) and all of which shall constitute together but one and the same
agreement. This Pledge Agreement shall become effective and binding upon Pledgor
when a counterpart hereof executed on behalf of Pledgor shall have been received
by the Collateral Agent.
[Signatures commence on the following page]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the day and year first above written.
LOUISIANA UNWIRED, LLC
By /s/ Robert Piper
-------------------------------------
Title: Manager
STATE STREET BANK AND TRUST
COMPANY as Collateral Agent
By /s/ illegible signature
_____________________________________
Title: Assistant Vice President
S-1
<PAGE>
EXHIBIT 4.3
INTERCREDITOR AGREEMENT
This Intercreditor Agreement is entered into as of October 29, 1999,
between CoBank, ACB, as Administrative the Agent (the "the Agent") for the
Lenders under the Credit Agreement (as defined below), on the one hand, and
State Street Bank and Trust Company, as the Trustee (the "the Trustee") under
the Indenture, dated as of October 29, 1999 (the "Indenture"), with respect of
13 3/8% Senior Subordinated Discount Notes due 2009 (the "Notes"), on the other
hand, in light of the following:
R E C I T A L S
A. US Unwired Inc., a Louisiana corporation ("US Unwired") has
entered into that certain Credit Agreement, dated as of October 1, 1999 (the
"Credit Agreement"), with CoBank, ACB, as a lender and as the Agent, The Bank of
New York, as Documentation the Agent and a Lender, BNY Capital Markets, Inc., as
Co-Arranger, First Union Capital Markets Corp., as Syndication the Agent and a
Co-Arranger; First Union National Bank, as a Lender, and the other lenders
parties thereto (collectively, the "Lenders"), providing for up to $130.0
million of term and revolving credit borrowings.
B. US Unwired currently owns, legally and beneficially, approximately
96% of the partnership interest of Louisiana Unwired, LLC, a Louisiana limited
liability corporation ("Debtor"), which in turn will own approximately 80% of
the partnership interest of Texas Unwired, a Louisiana general partnership
("Texas Unwired"). The Debtor has guaranteed the Obligations of US Unwired under
the Credit Agreement on a senior basis and has guaranteed the payment of the
Notes under the Indenture on a senior subordinated basis.
B. As security for the prompt payment and performance of its
guarantee of the Credit Agreement Indebtedness, Debtor has pledged the
Collateral to the Agent and granted the Agent a lien on and a security interest
in the Collateral.
C. Concurrently therewith, as security for the prompt payment and
performance of its guarantee of the Notes, Debtor is granting a lien on and a
security interest in the Collateral to the Trustee pursuant to that certain
Pledge Agreement of even date herewith (the "Notes Pledge Agreement").
D. the Agent and the Trustee wish to agree as to the priority of
their respective liens upon and security interests in the Collateral, and as to
certain other rights, priorities, and interests as between the Agent and the
Trustee.
A G R E E M E N T
In consideration of the foregoing, the mutual covenants contained
herein, and for other good and valuable consideration, the receipt of which the
Agent and the Trustee hereby acknowledge, the Agent and the Trustee hereby agree
as follows:
<PAGE>
1. Definitions and Rules of Construction.
-------------------------------------
(a) Definitions. The following terms, as used in this Agreement,
-----------
have the following meanings:
"Agreement" means this Intercreditor Agreement together with any
---------
and all amendments, extensions, modifications, riders, addenda, exhibits, and
schedules hereto.
"Bankruptcy Case" means any proceeding commenced by or against
---------------
Debtor, under any provision of the Bankruptcy Code or under any other federal or
state bankruptcy or insolvency law, including assignments for the benefit of
creditors, formal or informal moratoria, compositions, extensions generally with
its creditors, or proceedings seeking reorganization, arrangement, or other
similar relief, and all converted or succeeding cases in respect thereof.
"Bankruptcy Code" means the United States Bankruptcy Code (11
---------------
U.S.C. (S) 101, et. seq.), as amended, and any successor statute.
-- ---
"Credit Agreement" has the meaning set forth in the Recitals in
----------------
this Agreement.
"Credit Agreement Indebtedness" means any and all presently
-----------------------------
existing or hereafter arising indebtedness, claims, debts, liabilities, and
obligations of Debtor owing to the Agent or Lenders under the Credit Agreement
Documents, including any guarantees of US Unwired's Obligations thereunder,
whether direct or indirect, whether contingent or of any other nature,
character, or description (including all interest and other amounts accruing
after commencement of any Bankruptcy Case, and all interest and other amounts
that, but for the provisions of the Bankruptcy Code, would have accrued and
become due or otherwise would have been allowed), and any refinancings,
renewals, refundings, or extensions of such amounts.
"Credit Agreement Documents" means, collectively, the Credit
--------------------------
Agreement, and any other document, instrument, or agreement now existing or in
the future entered into evidencing, documenting, securing, or otherwise relating
to Credit Agreement Indebtedness, together with any amendments, replacements,
substitutions, or restatements thereof.
"Collateral" means all of Debtor's partnership and any other
----------
ownership interest in Texas Unwired; all of Debtor's interest in any
intercompany notes and other documents in respect of any intercompany loans made
in the future by the Debtor to Texas Unwired; all proceeds and insurance
proceeds of the foregoing; and all of Debtors' Books relating thereto.
"Debtor's Books" means all of Debtor's books and records
--------------
concerning the Collateral and the proceeds thereof, including: ledgers; records
indicating, summarizing, or evidencing the Collateral;; and all computer
programs, disk or tape files, printouts, runs, or other computer prepared
information.
2
<PAGE>
"Lenders" means the several financial institutions that from time
-------
to time are parties to the Credit Agreement.
"Notes" has the meaning set forth in the Recitals.
-----
"Notes Documents" means, collectively, the Notes, the Indenture
---------------
and the Notes Pledge Agreement and any other document, instrument or agreement
now existing or in the future entered into evidencing, documenting, securing, or
otherwise relating to the Notes.
"Noteholders" means the holders of Notes under the Indenture.
-----------
"Notes Pledge Agreement" has the meaning set forth in the
----------------------
Recitals to this Agreement.
"Secured Party" means any of the Agent or the Trustee (or any
-------------
collateral the Agent for Lenders or Noteholders), or any successor or assignee
of any of them.
"Secured Party Remedies" means any action by a Secured Party in
----------------------
furtherance of the sale, foreclosure, realization upon, or the repossession or
liquidation of any of its collateral, including, without limitation: (i) the
exercise of any remedies or rights of a "Secured Party" under Chapter 9 of the
UCC, such as, without limitation, the notification of account debtors; (ii) the
exercise of any remedies or rights as a mortgagee or beneficiary (or by the
Trustee on behalf of the beneficiary), including, without limitation, the
appointment of a receiver, the notification of tenants on any real property to
make rental payments to such Secured Party, or the commencement of any
foreclosure proceedings or the exercise of any power of sale, including, without
limitation, the placing of any advertisement for the sale of any real property;
(iii) the exercise of any remedies available to a judgment creditor; or (iv) any
other remedy available in respect of the Collateral available to such Secured
Party under any Secured Party's Agreement to which it is a party.
"Secured Party's Agreements" means either the Credit Agreement
--------------------------
Documents or the Notes Documents, as the context requires.
"Secured Party's Indebtedness" means either the Credit Agreement
------------------------------
Indebtedness or the Notes, as the context requires.
"Texas Unwired" means Texas Unwired, a Louisiana general
-------------
partnership.
"UCC" means the Uniform Commercial Code as adopted in the State of
---
Colorado, or in such other jurisdiction as governs the perfection of the liens
and security interests in the Collateral for the purposes of the provisions
hereof relating to such perfection or effect of perfection.
(b) Other Definitional Provisions. When used in this Agreement:
-----------------------------
(i) the words "herein," "hereof," and "hereunder" and words of similar import
shall refer to this Agreement as a whole and not to any provision of this
Agreement; (ii) the words "include," "includes," and "including" are not
limiting; the word "or" has, except where otherwise required by the context, the
inclusive meaning represented by the phrase "and/or"; (iii) unless otherwise
3
<PAGE>
specified, the words "Section," "Schedule" and "Exhibit" refer to Sections of,
and Schedules and Exhibits to, this Agreement unless otherwise specified; and
(iv) the singular number includes the plural, and vice versa, whenever the
context so requires.
2. Relative Priorities. As between the Secured Parties,
-------------------
notwithstanding: the terms (including the description of collateral), dating,
execution, or delivery of any document, instrument, or agreement; the time,
order, occurrence, method, or manner of granting, or perfection of any security
interest or lien; the time of filing or recording of any financing statements,
assignments, deeds of trust, mortgages, or any other documents, instruments, or
agreements under the UCC or any other applicable law; the existence of (or the
order in which any Secured Party becomes a party to or a beneficiary of) any
collateral agency arrangement with any party other than a Secured Party, or the
appointment of such other party as a collateral the Agent to perfect the Secured
Parties' liens and security interests, in all or in any part of the Collateral;
the existence of any control agreement in favor of any Secured Party; and any
provision of the UCC or any other applicable law to the contrary, the Secured
Parties agree:
(a) the Agent shall have a first priority security interest
and lien upon the Collateral to secure the Credit Agreement Indebtedness; and
(b) the Trustee, for and on behalf of the Noteholders, shall
secure the Note Obligations.
For purposes of the foregoing allocation of priorities, any claim of right of
reclamation or a right to a setoff shall be treated in all respects as a
security interest and no claimed right of reclamation or right of setoff shall
be asserted to defeat or diminish the rights or priorities provided for herein.
3. No Alteration of Priority. The lien and security
-------------------------
interest priorities provided in Section 2 shall not be altered or otherwise
affected by any amendment, modification, supplement, extension, renewal,
restatement, or refinancing of any of the Credit Agreement Indebtedness, the
Indenture or the Notes nor by any action or inaction which either Secured Party
may take or fail to take in respect of the Collateral, or otherwise. Each
Secured Party consents to Debtor's granting to the other Secured Party the liens
and security interests reflected in Section 2 and agrees that such grant shall
not be a default or event of default under the applicable Secured Party's
Agreements.
4. Nonavoidability and Perfection. Each of the Secured Parties
------------------------------
shall be solely responsible for perfecting and maintaining the perfection of its
lien or security interest in any of the Collateral in which such party has been
granted a lien or security interest. The provisions of this Agreement are
intended solely to govern the respective priorities as among the Secured
Parties, pursuant to the applicable documents. Each of the Agent and the Trustee
agrees that it will not directly or indirectly take any action to contest or
challenge the validity, legality, perfection, priority (as established
hereunder), avoidability, or enforceability of the liens or security interests
of the other Secured Party upon its Collateral or seek to have the same avoided,
disallowed, set aside, or otherwise invalidated in any judicial proceeding or
otherwise. In the event that the Agent or the Trustee (either individually or
together with others) breaches or causes to be breached the terms of the
preceding sentence, resulting (directly or indirectly) in the
4
<PAGE>
avoidance, imperfection or unenforceability of the other Secured Party's lien or
security interest in some or all of its Collateral, then the priority of the
lien or security interest of such breaching Secured Party in any such affected
Collateral shall continue to be governed by the terms of Section 2 irrespective
of the avoidance, imperfection or unenforceability of the other Secured Party's
lien or security interest.
5. Management of Collateral. Notwithstanding anything to the
------------------------
contrary contained in any of the Credit Agreement Documents or the Notes
Documents:
(a) Until the Credit Agreement Indebtedness has been fully
paid in cash, and all obligations of the Agent or the Lenders to extend credit
under the Credit Agreement Documents have been terminated: (i) the Agent shall
have the exclusive right to manage the Collateral, including the exclusive right
to perform and enforce the terms of the Credit Agreement Documents with respect
to the Collateral and to exercise and enforce all privileges and rights
thereunder according to their sole discretion, including, without limitation,
the exclusive right to enforce or settle insurance claims with respect to
Collateral, take or retake control or possession of Collateral and to hold,
prepare for sale, process, sell, lease, dispose of, or liquidate Collateral;
(ii) neither the Trustee nor any party acting on its behalf, shall exercise any
Secured Party Remedies with respect to Collateral; and (iii) any and all
proceeds of Collateral which shall come into the possession, control, or custody
of the Trustee will be deemed to have been received for the account of the Agent
and shall be immediately paid over to the Agent. In connection with the
provisions of clause 5(a)(i) above, except for any requirement under the UCC for
the Agent, as secured party, to act in a commercially reasonable manner with
respect to the Collateral, the Trustee waives any and all rights to affect the
method or challenge the appropriateness of any action by the Agent with respect
to the Collateral, and waives any claims or defenses it may have against the
Agent, including any such claims or defenses based on any actions or omissions
of any such person in connection with the perfection, maintenance, enforcement,
foreclosure, sale, liquidation, or release of any lien or security interest
therein, or any modification or waiver of any Credit Agreement Documents.
(b) The rights and priorities set forth in this Agreement
shall remain binding irrespective of the terms of any plan of reorganization in
a Bankruptcy Case or other provisions of the Bankruptcy Code or any similar
federal or state statute.
6. Sale of Collateral. Until the Credit Agreement Indebtedness
------------------
has been fully paid in cash, and all obligations of the Agent or the Lenders to
extend credit under the Credit Agreement Documents have been terminated: (i)
only the Agent shall have the right to restrict or permit, or approve or
disapprove, the sale of the Collateral; and (ii) the Trustee will, immediately
upon the request of the Agent, release or otherwise terminate its liens and
security interests upon the Collateral, to the extent such Collateral is sold by
Debtor with the consent of the Agent in accordance with the Credit Agreement
Documents, and the Trustee will promptly deliver (at Debtor's expense) such
release documents as the Agent or Debtor may reasonably require in connection
therewith.
7. Waiver of Marshalling. the Trustee waives any right to compel
---------------------
the Agent to marshal any of the Collateral or to seek payment from any
particular assets of Debtor or from any third party.
5
<PAGE>
8. Bankruptcy Issues.
-----------------
(a) This Agreement shall continue in full force and effect
after the commencement of a Bankruptcy Case (all references herein to Debtor
being deemed to apply to Debtor as debtor-in-possession and to a the Trustee for
Debtor's estate in a Bankruptcy Case), and shall apply with full force and
effect with respect to all Collateral acquired by Debtor, and to all Notes
incurred by such Debtor, subsequent to such commencement.
(b) If Debtor shall become subject to a Bankruptcy Case, and
if the Agent or Lenders shall desire to permit the use of cash collateral or to
provide post-petition financing to Debtor, the Trustee agrees as follows: (i)
adequate notice to the Trustee shall be deemed to have been provided for such
use of cash collateral or post-petition financing if the Trustee receives notice
thereof at least one business day prior to any hearing on a request to approve
such use of cash collateral or post-petition financing; and (ii) no objection
will be raised by the Trustee to any such use of cash collateral or such post-
petition financing by the Agent or Lenders on the grounds of a failure to
provide adequate protection for the Trustee's junior liens and security
interests in the Collateral, provided that the Trustee is granted the same
rights, benefits, and protections as the Agent, including the same liens and
security interests on the post-petition Collateral, that may be granted to or
for the benefit of the Agent, junior only to the liens or security interests of
the Agent therein. No objection will be raised by the Trustee to the Agent's
motion for relief from the automatic stay in any proceeding under the Bankruptcy
Code to foreclose on and sell, or to collect, the Collateral.
9. Assignments. The Trustee agrees that any assignment or
-----------
transfer of an interest in any of the Notes shall be null and void unless it is
made expressly subject to the terms of this Agreement.
10. Binding Effect; Other. This Agreement shall be a continuing
---------------------
agreement, shall be binding upon and shall inure to the benefit of the parties
hereto from time to time and their respective successors and assigns, shall be
irrevocable, and shall remain in full force and effect until the Credit
Agreement Indebtedness shall have been paid in full in cash, and the Credit
Agreement shall have been irrevocably terminated, but shall continue to be
effective, or be reinstated, as the case may be, if any payment, or any part
thereof, of any amount paid by or on behalf of Debtor with regard to any Credit
Agreement Indebtedness is rescinded or must otherwise be restored or returned
upon or as a result of any Bankruptcy Case, or for any other reason, all as
though such payments had not been made. Any waiver or amendment hereunder must
be evidenced by a signed writing of the party to be bound thereby, and shall
only be effective in the specific instance. This Agreement shall be governed by
and construed in accordance with the laws of the State of Colorado. The parties
agree that actions may be tried and litigated in the state and federal courts
located in the City of Denver, in the State of Colorado. The headings in this
Agreement are for convenience of reference only, and shall not alter or
otherwise affect the meaning hereof.
11. Parties Intended to be Benefitted. All of the understandings,
---------------------------------
covenants, and agreements contained herein are solely for the benefit of the
Secured Parties, their successors and assigns, and future holders of the Secured
Parties' Indebtedness, respectively, and there are
6
<PAGE>
no other parties, including Debtor or any of its creditors, successors, or
assigns, which are intended to be benefitted, in any way, by this Agreement.
12. No Limitation Intended. Nothing contained in this Agreement
----------------------
is intended to or shall affect or limit, in any way, the rights that with
respect to any third parties. The Secured Parties hereby specifically reserve
all of their respective rights against Debtor and all other third parties.
13. Notice. Whenever it is provided herein that any notice,
------
demand, request, consent, approval, declaration, or other communication shall or
may be given to or served upon any of the parties hereto, or whenever any of the
parties desires to give or serve upon the other communication with respect to
this Agreement, each such notice, demand, request, consent, approval,
declaration, or other communication shall be in writing and shall be delivered
either in person, with receipt acknowledged, or by regular, registered, or
certified United States mail, postage prepaid, by facsimile, or by recognized
overnight courier service, addressed as follows:
If to the Agent, at:
CoBank, ACB
200 Galleria Parkway, Suite 1900
Atlanta, Georgia 30339
Attention: Rural Utility Banking Group
Fax: (770) 618-3202
If to the Trustee, at:
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street, 23rd Floor
Hartford, Connecticut 06103
Fax: (860) 244-1889
Attention: Laurel Melody-Casasanta
or at such other address as may be substituted by notice given as herein
provided. Giving of any notice required hereunder may be waived in writing by
the party entitled to receive such notice. Every notice, demand, request,
consent, approval, declaration or other communication hereunder shall be deemed
to have been duly given when received.
14. Severability. Whenever possible, each provision of this
------------
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
15. Complete Agreement. This Agreement constitutes the complete
------------------
agreement and understanding of each of the Secured Parties, and supersedes all
prior or
7
<PAGE>
contemporaneous oral and written negotiations, agreements and understandings,
express or implied, with respect to the subject matter hereof.
16. No Joint Venture. Each of the Secured Parties acknowledges
----------------
and confirms that this Agreement shall not create a joint venture, agency or
fiduciary relationship.
17. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and by the parties each in separate counterparts, each of which
shall be an original, but all of which shall together constitute one and the
same Agreement.
18. Attorneys Fees and Expenses. If any action is brought to
---------------------------
enforce the provisions of this Agreement, the prevailing party in such action
shall be entitled to recover its reasonable attorneys fees and costs.
19. Waiver of Jury Trial. EACH OF THE SECURED PARTIES HEREBY
--------------------
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN
ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE SECURED
PARTIES WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE. EACH
OF THE SECURED PARTIES HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT JURY, AND THAT ANY OF
THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT
AS WRITTEN EVIDENCE OF THE CONSENT TO THE WAIVER OF RIGHT TO TRIAL BY JURY.
8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first herein above set forth
COBANK, ACB, as Administrative the Agent
under the Credit Agreement
By: /s/ Rick Freen
--------------------------------------
Title: Vice President
-----------------------------------
STATE STREET BANK AND TRUST COMPANY, as
the Trustee under the Indenture
By: /s/ illegible signature
--------------------------------------
Title: Assistant Vice President
-----------------------------------
9
<PAGE>
ACKNOWLEDGMENT
--------------
The undersigned, ("Debtor") hereby acknowledges that it has
received a copy of the foregoing Intercreditor Agreement and consents thereto,
and agrees to recognize all rights granted thereby to the parties thereto, and
will not do any act or perform any obligation which is not in accordance with
the agreements set forth in such Intercreditor Agreement. Debtor further
acknowledges that it is not an intended beneficiary or third party beneficiary
under the lntercreditor Agreement.
Dated as of October 29, 1999.
LOUISIANA UNWIRED, LLC
a Louisiana limited liability corporation
By: Robert Piper
--------------------------------------
Title: Manager
-----------------------------------
10
<PAGE>
EXHIBIT 4.4
================================================================================
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of October 29, 1999
by and among
US Unwired Inc.
Louisiana Unwired, LLC
Unwired Telecom Corp.
and
Donaldson Lufkin & Jenrette Securities Corporation
First Union Securities, Inc.
BNY Capital Markets, Inc.
================================================================================
<PAGE>
This A/B Exchange Registration Rights Agreement (this "Agreement") is made
---------
and entered into as of October 29, 1999, by and among US Unwired Inc., a
Louisiana corporation (the "Company"); Louisiana Unwired, LLC and Unwired
-------
Telecom Corp. (the "Guarantors"); and Donaldson, Lufkin & Jenrette Securities
----------
Corporation; First Union Securities, Inc. and BNY Capital Markets, Inc. (the
"Initial Purchasers"), which have agreed to purchase the Company's 13 3/8%
------------------
Series A Senior Subordinated Discount Notes due 2009 (the "Series A Notes")
--------------
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated October
26, 1999 (the "Purchase Agreement"), by and among the Company, the Guarantors
------------------
and the Initial Purchasers. In order to induce the Initial Purchasers to
purchase the Series A Notes, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
3 of the Purchase Agreement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them by the Indenture, dated October
29, 1999, between the Company and State Street Bank and Trust Company, as
Trustee, relating to the Series A Notes and the Series B Notes (the
"Indenture").
---------
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
---
Affiliate: As defined in Rule 144 under the Act.
---------
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
-------------
Certificated Securities: Definitive Notes, as defined in the Indenture.
-----------------------
Closing Date: The date hereof.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
----------
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
Consummation Deadline: As defined in Section 3(b) hereof.
---------------------
1
<PAGE>
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
----------------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Exchange Offer: The exchange and issuance by the Company of a principal
--------------
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement relating
-------------------------------------
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
--------------
to sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and pursuant to Regulation S under
the Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
---------------
Holders: As defined in Section 2 hereof.
-------
Prospectus: The prospectus included in a Registration Statement at the
----------
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
-------------------
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Statement: Any registration statement of the Company and the
----------------------
Guarantors relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) that is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including post-
effective amendments) and all exhibits and material incorporated by reference
therein.
Regulation S: Regulation S promulgated under the Act.
------------
Rule 144: Rule 144 promulgated under the Act.
--------
Series B Notes: The Company's 13 3/8% Series B Senior Subordinated Discount
--------------
Notes due 2009 to be issued pursuant to the Indenture: (i) in the Exchange Offer
or (ii) as contemplated by Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
----------------------------
Suspension Notice: As defined in Section 6(d) hereof.
-----------------
2
<PAGE>
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
---
in effect on the date of the Indenture.
Transfer Restricted Securities: Each (A) Series A Note, until the earliest
------------------------------
to occur of (i) the date on which such Series A Note is exchanged in the
Exchange Offer for a Series B Note which is entitled to be resold to the public
by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (ii) the date on which such Series A Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Notes), or (iii) the date on which
such Series A Note is distributed pursuant to Rule 144 under the Act; and (B)
Series B Note held by a Broker-Dealer until the date on which such Series B Note
is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
------
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as practicable
after the Closing Date, but in no event later than 45 days after the Closing
Date (such 45th day being the "Filing Deadline"), (ii) use its commercially
---------------
reasonable efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest practicable time, but in no event later than 150 days
after the Closing Date (such 150th day being the "Effectiveness Deadline"),
----------------------
(iii) in connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to cause
it to become effective, (B) file, if applicable, a post-effective amendment to
such Exchange Offer Registration Statement pursuant to Rule 430A under the Act
and (C) cause all necessary filings, if any, in connection with the registration
and qualification of the Series B Notes to be made under the Blue Sky laws of
such jurisdictions as are necessary to permit Consummation of the Exchange
Offer, and (iv) upon the effectiveness of such Exchange Offer Registration
Statement and the making of such Blue Sky law filings, commence and Consummate
the Exchange Offer. The Exchange Offer Registration Statement shall be on the
appropriate form permitting (i) registration of the Series B Notes to be offered
in exchange for the Series A Notes that are Transfer Restricted Securities and
(ii) resales of Series B Notes by Broker-Dealers that tendered into the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective commercially
reasonable efforts to cause the Exchange Offer Registration Statement to be
effective continuously during, and shall keep the Exchange Offer open for a
period of not less than, the minimum period (if any) required under applicable
federal and state securities laws to Consummate the Exchange Offer;
3
<PAGE>
provided, however, that in no event shall such period be less than 20 Business
Days. The Company and the Guarantors shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the Series B Notes shall be included in the Exchange Offer Registration
Statement. The Company and the Guarantors shall use their respective
commercially reasonable efforts to cause the Exchange Offer to be Consummated on
the earliest practicable date after the Exchange Offer Registration Statement
has become effective, but in no event later than 30 business days thereafter
(such 30/th/ day being the "Consummation Deadline").
---------------------
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission.
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Series B Notes by Broker-Dealers, the Company and the Guarantors agree to use
their respective commercially reasonable efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented, amended and current
as required by and subject to the provisions of Section 6(a) and (c) hereof and
in conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of one year from the Consummation Deadline or such shorter period as will
terminate when all such Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto. The Company and the
Guarantors shall provide sufficient copies of the latest version of such
Prospectus to such Broker-Dealers, promptly upon request, and in no event later
than one day after such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
------------------
applicable law or Commission policy (after the Company and the Guarantors have
complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any
Holder of Transfer Restricted Securities shall notify the Company within 20
Business Days following the Consummation Deadline that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange Offer
or (B) such Holder may not resell the Series B Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a Broker-
4
<PAGE>
Dealer and holds Series A Notes acquired directly from the Company or any of its
Affiliates, then the Company and the Guarantors shall:
(x) cause to be filed, on or prior to 30 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above, (30
days after the earlier date in (i) or (ii) above, the "Filing Deadline"), a
---------------
shelf registration statement pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement (the "Shelf Registration
------------------
Statement")), relating to all Transfer Restricted Securities, and
- ---------
(y) shall use their respective commercially reasonable efforts to cause such
Shelf Registration Statement to become effective on or prior to 90 days after
the Filing Deadline for the Shelf Registration Statement of, if later, the date
by which the Exchange Offer Registration Statement would otherwise have been
required to be declared effective if the obligation to file the Shelf
Registration Statement had not arisen (such 90th day the "Effectiveness
-------------
Deadline").
- --------
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Company shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
the Guarantors shall use their respective commercially reasonable efforts to
keep any Shelf Registration Statement required by this Section 4(a) continuously
effective, supplemented, amended and current as required by and subject to the
provisions of Sections 6(b) and (c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of at least two
years (as extended pursuant to Section 6(c)(i)) following the Closing Date, or
such shorter period as will terminate when (x) all Transfer Restricted
Securities covered by such Shelf Registration Statement have been sold pursuant
thereto or (y) the only remaining Transfer Restricted Securities have been
determined in good faith by the Company, after reasonable inquiry, to be
eligible for resale under Rule 144(k).
(b) Provision by Holders of Certain Information in Connection with the
------------------------------------------------------------------
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
- ----------------------------
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 and 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information by the time herein provided. Each selling Holder agrees to promptly
furnish
5
<PAGE>
additional information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded by a post-effective amendment to
such Registration Statement that cures such failure and that is itself declared
effective within three business days after such cessation or failure (each such
event referred to in clauses (i) through (iv), a "Registration Default"), then
--------------------
the Company and the Guarantors hereby jointly and severally agree to pay to each
Holder of Transfer Restricted Securities affected thereby liquidated damages in
an amount equal to $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such Holder for each week (prorated for any
portion thereof) that the Registration Default continues for the first 90-day
period immediately following the occurrence of such Registration Default. The
amount of the liquidated damages shall increase by an additional $.05 per week
per $1,000 in principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of liquidated damages of $.50 per week per $1,000 in
principal amount of Transfer Restricted Securities; provided that the Company
and the Guarantors shall in no event be required to pay liquidated damages for
more than one Registration Default at any given time. Notwithstanding anything
to the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, or (5) upon the Transfer Restricted Securities being
salable under Rule 144(k), the liquidated damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Company and the Guarantors to pay accrued liquidated damages with respect to
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.
Notwithstanding the foregoing, if the Company has complied with its
obligations under Section 6 of this Agreement, no Holder of Series A Notes shall
be entitled to receive any liquidated
6
<PAGE>
damages with respect to such Series A Notes if such Holder was eligible to
exchange, and did not validly tender, such Notes for Series B Notes in the
Exchange Offer.
The subordination provisions of Section 10 of the Indenture are hereby
incorporated in this Section 5 and made applicable to the Liquidated Damages
payments as if such provisions were set forth verbatim herein.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
-------------------------------------
Exchange Offer, the Company and the Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use their respective
commercially reasonable efforts to effect such exchange and to permit the resale
of Series B Notes by Broker-Dealers that tendered in the Exchange Offer Series A
Notes that such Broker-Dealer acquired for its own account as a result of its
market making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its Affiliates) being sold in
accordance with the intended method or methods of distribution thereof, and (z)
comply with all of the following provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantors hereby agree to seek
a no-action letter or other favorable decision from the Commission allowing
the Company and the Guarantors to Consummate an Exchange Offer for such
Transfer Restricted Securities. The Company and the Guarantors hereby agree
to pursue the issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Company and the Guarantors hereby agree
to take all such other actions as may be requested by the Commission or
otherwise required in connection with the issuance of such decision,
including without limitation (A) participating in telephonic conferences
with the Commission, (B) delivering to the Commission staff an analysis
prepared by counsel to the Company setting forth the legal bases, if any,
upon which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution (which need not be
favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker-Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (which may be contained in
the letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an Affiliate of the Company,
(B) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Series B Notes to be issued in the Exchange Offer and
(C) it is acquiring the Series B Notes in its ordinary course of business.
As a condition to its participation in the Exchange Offer each Holder using
the Exchange Offer to participate in a distribution of the Series B Notes
shall acknowledge and agree that, if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired directly
from the Company or an Affiliate thereof, it (1) could not, under
7
<PAGE>
Commission policy as in effect on the date of this Agreement, rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
----------------------------
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
----------------------------------
May 13, 1988), as interpreted in the Commission's letter to Shearman &
----------
Sterling dated July 2, 1993, and similar no-action letters (including, if
--------
applicable, any no-action letter obtained pursuant to clause (i) above),
and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction
and that such a secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 and 508, as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
----------------------------------
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as
----------------------------
interpreted in the Commission's letter to Shearman & Sterling dated July 2,
-------------------
1993, and, if applicable, any no-action letter obtained pursuant to clause
(i) above, (B) including a representation that neither the Company nor any
Guarantor has entered into any arrangement or understanding with any Person
to distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's and each Guarantor's information and
belief, each Holder participating in the Exchange Offer is acquiring the
Series B Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer and (C) any other undertaking
or representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above, if applicable; in each above
case if such representation is correct.
(b) Shelf Registration Statement. In connection with the Shelf
----------------------------
Registration Statement, the Company and the Guarantors shall: (i) comply with
all the provisions of Section 6(c) below and use their respective commercially
reasonable efforts to effect such registration to permit the sale of the
Transfer Restricted Securities being sold in accordance with the intended method
or methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
and the Guarantors will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the Act,
which form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof, and
(ii) issue, upon the request of any Holder or purchaser of Series A Notes
covered by any Shelf Registration Statement contemplated by this Agreement,
Series B Notes having an aggregate principal amount equal to the aggregate
principal amount of Series A Notes sold pursuant to the Shelf Registration
Statement and surrendered to the Company for cancellation; the Company shall
register Series B Notes on the Shelf Registration Statement for this purpose and
issue the Series B Notes to the purchaser(s) of securities subject to the Shelf
Registration Statement in the names as such purchaser(s) shall designate.
(c) General Provisions. In connection with any Registration Statement and
------------------
any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
8
<PAGE>
(i) use their respective commercially reasonable efforts to keep
such Registration Statement continuously effective and provide all
requisite financial statements for the period specified in Section 3 or 4
of this Agreement, as applicable. Upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus contained
therein (A) to contain an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein not
misleading or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Company and the Guarantors shall file promptly an appropriate amendment to
such Registration Statement curing such defect, and, if Commission review
is required, use their respective commercially reasonable efforts to cause
such amendment to be declared effective as soon as practicable.
(ii) prepare and file with the Commission such amendments and post-
effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462, as applicable, under the Act in
a timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise each Holder promptly and, if requested by such Holder,
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to
any applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws, the
Company and the Guarantors shall use their respective commercially
reasonable efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
9
<PAGE>
(iv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to each selling Holder in connection with such exchange
or sale, if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such Holders in connection with such sale, if any, for a period
of at least five Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which such Holders shall reasonably object
within five Business Days after the receipt thereof. A Holder shall be
deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed
to be filed, contains an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading or fails to comply with the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus
included therein, provide copies of such document to each selling Holder in
connection with such exchange or sale, if any, make the Company's and the
Guarantors' representatives available for discussion of such document and
other customary due diligence matters, and include such information in such
document prior to the filing thereof as such Holders may reasonably
request;
(vii) make available, at reasonable times, for inspection by each
Holder and any attorney or accountant retained by such Holders, all
financial and other records, pertinent corporate documents of the Company
and the Guarantors and cause the Company's and the Guarantors' officers,
directors and employees to supply all information reasonably requested by
any such Holder, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto subsequent
to the filing thereof and prior to its effectiveness, subject to such
Holder entering into a customary confidentiality agreement;
(viii) if requested by any Holders in connection with such exchange or
sale, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Transfer Restricted Securities; and make all
required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after the
10
<PAGE>
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(ix) furnish to each Holder in connection with such exchange or sale,
without charge, at least one copy of the Registration Statement, as first
filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company and
the Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each selling Holder
in connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(xi) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such representations and
warranties (subject to the accuracy thereof) and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
applicable Registration Statement contemplated by this Agreement as may be
reasonably requested by any Holder in connection with any sale or resale
pursuant to any applicable Registration Statement. In such connection, the
Company and the Guarantors shall:
(A) upon request of any Holder, furnish (or in the case of
paragraphs (2) and (3), use its commercially reasonable efforts to cause
to be furnished) to each Holder, upon Consummation of the Exchange Offer
or upon the effectiveness of the Shelf Registration Statement, as the
case may be:
(1) a certificate, dated such date, signed on behalf of the Company
and each Guarantor by (x) the President or any Vice President (or
person serving in a position of comparable responsibility of a limited
liability company) and (y) a principal financial or accounting officer
of the Company and such Guarantor, confirming, as of the date thereof,
the matters set forth in Sections 6(y), 9(a) and 9(b) of the Purchase
Agreement and such other similar matters as such Holders may
reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange Offer
or the date of effectiveness of the Shelf Registration Statement, as
the case may be, of counsel for the Company and the Guarantors
covering matters comparable to those set forth in paragraphs (e) and
(f) of Section 9 of the Purchase Agreement and such other matter as
such Holder may reasonably request, and in any event including a
statement to the effect that although such counsel has not checked the
accuracy and completeness of, or otherwise verified, and is not
passing upon and assumes no responsibility for the accuracy or
completeness of, the statements contained in the applicable
Registration Statement, in the course of such counsel's review and
discussion of the contents of the applicable Registration Statement
with
11
<PAGE>
certain employees of the Company and its independent accountants but
without independent verification, no facts have come to such counsel's
attention which cause such counsel to believe that the applicable
Registration Statement (other than the financial statements, notes and
schedules and other financial data and information contained therein,
as to which such counsel need not express any belief), at the time
such Registration Statement or any post-effective amendment thereto
became effective and, in the case of the Exchange Offer Registration
Statement, as of the date of Consummation of the Exchange Offer,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus contained in
such Registration Statement (other than the financial statements,
notes and schedules and other financial data and information contained
therein, as to which such counsel need not express any belief) as of
its date and, in the case of the opinion dated the date of
Consummation of the Exchange Offer, as of the date of Consummation,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and
(3) a customary comfort letter, dated the date of Consummation of
the Exchange Offer, or as of the date of effectiveness of the Shelf
Registration Statement, as the case may be, from the Company's
independent accountants, in the customary form and covering matters of
the type customarily covered in comfort letters to underwriters in
connection with underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section 9(h) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance with
the matters covered in clause (A) above and with any customary conditions
contained in the any agreement entered into by the Company and the
Guarantors pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Transfer Restricted Securities under
the securities or Blue Sky laws of such jurisdictions as the selling
Holders may reasonably request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Transfer Restricted Securities covered by the applicable Registration
Statement; provided, however, that neither the Company nor any Guarantor
shall be required to register or qualify as a foreign corporation where it
is not now so qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted
12
<PAGE>
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations and such
names as the selling Holders may request at least two Business Days prior
to such sale of Transfer Restricted Securities;
(xiv) use their respective commercially reasonable efforts to cause
the disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xii)
above;
(xv) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(xvi) otherwise use their respective commercially reasonable efforts
to comply with all applicable rules and regulations of the Commission, and
make generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning after the effective date
of the Registration Statement (as such term is defined in paragraph (c) of
Rule 158 under the Act);
(xvii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee and
the Holders to effect such changes to the Indenture as may be required for
such Indenture to be so qualified in accordance with the terms of the TIA;
and execute and use its commercially reasonable efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
-----------------------
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
-----------------
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "Recommencement
--------------
Date"). Each Holder receiving a Suspension Notice hereby agrees that it will
- ----
either (i) destroy any Prospectuses, other
13
<PAGE>
than permanent file copies, then in such Holder's possession which have been
replaced by the Company with more recently dated Prospectuses or (ii) deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of the
Suspension Notice. The time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall
be extended by a number of days equal to the number of days in the period from
and including the date of delivery of the Suspension Notice to the date of
delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including printing certificates for the
Series B Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company, the Guarantors and, to the extent provided in
Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the Series B Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes in the Exchange Offer and/or selling
or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins,
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors agree, jointly and severally, to
indemnify and hold harmless each Holder, its directors, officers and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments, (including without limitation, any
legal
14
<PAGE>
or other expenses incurred in connection with investigating or defending any
matter, including any action that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto)
provided by the Company to any Holder or any prospective purchaser of Series B
Notes or registered Series A Notes, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission or alleged untrue statement or omission that is based upon
information relating to any of the Holders furnished in writing to the Company
by any of the Holders; and further provided that no Holder (or director, officer
or Person who controls such Holder shall be entitled to indemnification
hereunder to the extent that any such losses, claims, damages, liabilities, or
judgments arise with respect to (i) any untrue statement or alleged untrue
statement of material fact contained in any Registration Statement, preliminary
prospectus or Prospectus (or any amendment or supplement thereto), or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, if
both (A) such untrue statement or omission (or alleged untrue statement or
omission) was corrected by any Prospectus (or any amendment or supplement
thereto) that had been delivered to the Holder by or in behalf of the Company
prior to the sale of Series A or B Notes to the Person asserting such untrue
statement or omission, and (B) such corrective Prospectus (or amendment or
supplement thereto) was not delivered to such Person by such Holder prior to
such sale; or (ii) any sale of Series A or B Notes by a Holder following such
Holder's receipt of a Suspension Notice and prior to the Recommencement Date.
(b) Each Holder of Transfer Restricted agrees, severally and not jointly,
to indemnify and hold harmless the Company and the Guarantors, and their
respective managers, directors and officers (or positions of comparable
authority), and each person, if any, who controls (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) the Company, or the Guarantors
to the same extent as the foregoing indemnity from the Company and the
Guarantors set forth in section (a) above, but only with reference to
information relating to such Holder furnished in writing to the Company by such
Holder expressly for use in any Registration Statement. In no event shall any
Holder, its directors, officers or any Person who controls such Holder be liable
or responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages that such Holder, its directors, officers or any Person who controls
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
-----------------
against whom such indemnity may be sought (the "indemnifying person") in writing
-------------------
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but
15
<PAGE>
may employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by a majority of the Holders, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with the indemnifying party's written consent or (ii) effected without
the indemnifying party's written consent if the settlement is entered into more
than thirty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the reasonable fees and
expenses of counsel (in any case where such fees and expenses are at the expense
of the indemnifying party in accordance with Section 8(a) or 8(b) of this
Agreement) and, prior to the date of such settlement, the indemnifying party
shall have failed to comply with such reimbursement request. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement or compromise of, or consent to the entry of judgment with
respect to, any pending or threatened action in respect of which the indemnified
party is or could have been a party and indemnity or contribution may be or
could have been sought hereunder by the indemnified party, unless such
settlement, compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability on claims that are or could have been the
subject matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein (and such unavailability
or insufficiency is otherwise than in accordance with the express terms of
Section 8(a) or 8(b)), then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
judgments (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors, on the one hand, and the
Holders, on the other hand, from their sale of Transfer Restricted Securities or
(ii) if the allocation provided by clause 8(d)(i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(d)(i) above but also the relative fault of the
Company and the Guarantors, on the one hand, and of the Holder, on the other
16
<PAGE>
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company and the Guarantors,
on the one hand, and of the Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or such Guarantor, on the one
hand, or by the Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Guarantors and each Holder agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any matter,
including any action that could have given rise to such losses, claims, damages,
liabilities or judgments. Notwithstanding the provisions of this Section 8, no
Holder, its directors, its officers or any Person, if any, who controls such
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the total received by such Holder with respect to the
sale or exchange of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.
SECTION 9. RULE 144A and RULE 144
The Company and each Guarantor agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in which
the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of
the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144 if the making of such filings is required for such resales to be made.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors acknowledge and agree that
--------
any failure by the Company and/or the Guarantors to comply with their respective
obligations under Sections 3
17
<PAGE>
and 4 hereof may result in material irreparable injury to the Initial Purchasers
or the Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such relief
as may be required to specifically enforce the Company's and the Guarantors'
obligations under Sections 3 and 4 hereof. The Company and the Guarantors
further agree to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor
--------------------------
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any Guarantor has previously entered into any agreement
granting any registration rights with respect to its securities to any Person
except pursuant to the Shareholders' Agreement dated September 24, 1999 or in
favor of The 1818 Fund III, L.P. and its affiliates. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's and the Guarantors'
securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
18
<PAGE>
(ii) if to the Company or the Guarantors:
US Unwired Inc.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
Telecopier No.: (318) 497-3197
Attention: Thomas G. Henning, Esq.
With a copy to:
Correro Fishman Haygood
201 St. Charles Avenue, Suite 4600
New Orleans, Louisiana 70170
Telecopier No.: (504) 586-5250
Attention: Sterling Scott Willis, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
19
<PAGE>
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
US UNWIRED INC.
By: /s/ Robert Piper
------------------------------------
Name: Robert Piper
Title: President
LOUISIANA UNWIRED, LLC
By: /s/ Robert Piper
------------------------------------
Name: Robert Piper
Title: Manager
UNWIRED TELECOM CORP.
By: /s/ Robert Piper
------------------------------------
Name: Robert Piper
Title: President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Steven D. Smith
-----------------------------
Name: Steven D. Smith
Title: Senior Vice President
FIRST UNION SECURITIES, INC.
By: /s/ John J. Braden
-----------------------------
Name: John J. Braden
Title: Managing Director
BNY CAPITAL MARKETS, INC.
By: /s/ Timothy Parker
------------------------------
Name: Timothy Parker
Title: Vice President
S-1
<PAGE>
EXHIBIT A
NOTICE OF FILING OF
A/B EXCHANGE OFFER REGISTRATION STATEMENT
To: Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Louise Guarneri (Compliance Department)
Fax: (212) 892-7272
From: US Unwired Inc.
13 3/8% Senior Subordinated Discount Notes due 2009
Date: ___, ___
For your information only (NO ACTION REQUIRED):
Today, ______, ____, we filed [an A/B Exchange Registration Statement/a
Shelf Registration Statement] with the Securities and Exchange Commission. We
have agreed to use commercially reasonable efforts to cause this registration
statement to be declared effective within __ business days of the date hereof.
1
<PAGE>
EXHIBIT 10.1
US Unwired Inc.
Louisiana Unwired, LLC
Unwired Telecom Corp.
$400 million
13 3/8% Senior Subordinated Discount Notes due 2009
Purchase Agreement
October 26, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FIRST UNION SECURITIES, INC.
BNY CAPITAL MARKETS, INC.
<PAGE>
$400 million
13 3/8% Senior Subordinated Discount Notes Due 2009
of US Unwired Inc.
PURCHASE AGREEMENT
October 26, 1999
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
FIRST UNION SECURITIES, INC.
BNY CAPITAL MARKETS, INC.
c/o DONALDSON LUFKIN & JENRETTE
SECURITIES CORPORATION
277 Park Avenue
New York, New York 10172
Dear Sirs:
US Unwired Inc., a Louisiana corporation (the "Company"), proposes to
-------
issue and sell to Donaldson, Lufkin & Jenrette Securities Corporation, First
Union Securities, Inc. and BNY Capital Markets, Inc. (the "Initial Purchasers")
------------------
an aggregate of $400 million in principal amount at maturity of its 13 3/8%
Senior Subordinated Discount Notes due 2009 (the "Series A Notes"), subject to
--------------
the terms and conditions set forth herein. The Series A Notes are to be issued
pursuant to the provisions of an indenture (the "Indenture"), to be dated as of
---------
the Closing Date (as defined below), among the Company, the Guarantors (as
defined below) and State Street Bank and Trust Company, as trustee (the
"Trustee"). The Series A Notes and the Series B Notes (as defined below)
-------
issuable in exchange therefor are collectively referred to herein as the
"Notes." The Notes will be guaranteed (the "Subsidiary Guarantees") by each of
----- ---------------------
the entities listed on Schedule A, hereto (each, a "Guarantor" and collectively
---------
the "Guarantors"). Capitalized terms used but not defined herein shall have the
----------
meanings given to such terms in the Indenture.
1. Offering Memorandum. The Series A Notes will be offered and sold
-------------------
to the Initial Purchasers pursuant to one or more exemptions from the
registration requirements under the Securities Act of 1933, as amended (the
"Act"). The Company and the Guarantors have prepared a preliminary offering
---
memorandum, dated October 11, 1999 (the "Preliminary Offering Memorandum") and a
--------------------------------
final offering memorandum, dated October 26, 1999 (the "Offering Memorandum"),
-------------------
relating to the Series A Notes and the Subsidiary Guarantees.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
<PAGE>
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:
(1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT)(A "QIB"), (B) IT HAS
ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
REGULATION S UNDER THE SECURITIES ACT OR (C) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
OF REGULATION D UNDER THE SECURITIES ACT (AN "IAI"),
(2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (E) TO AN IAI THAT, PRIOR TO SUCH TRANSFER, FURNISHES THE TRUSTEE
A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE TRANSFER OF THIS NOTE (THE FORM OF WHICH CAN BE
OBTAINED FROM THE TRUSTEE) AND, IF SUCH TRANSFER IS IN RESPECT OF AN
AGGREGATE PRINCIPAL AMOUNT OF NOTES LESS THAN $250,000, AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE
WITH THE SECURITIES ACT, (F) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (G) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH
THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND
(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING."
2
<PAGE>
2. Agreements to Sell and Purchase. On the basis of the
-------------------------------
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchasers, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, the principal amounts
of Series A Notes set forth opposite the name of such Initial Purchaser on
Schedule B hereto at a purchase price equal to 50.736820% of the principal
amount thereof (the "Purchase Price").
--------------
3. Terms of Offering. The Initial Purchasers have advised the
-----------------
Company that the Initial Purchasers will make offers (the "Exempt Resales") of
--------------
the Series A Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchasers reasonably believe to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBs"), and (ii) persons permitted to purchase the
----
Series A Notes in offshore transactions in reliance upon Regulation S under the
Act (each, a "Regulation S Purchaser") (such persons specified in clauses (i)
----------------------
and (ii) being referred to herein as the "Eligible Purchasers"). The Initial
-------------------
Purchasers will offer the Series A Notes to Eligible Purchasers initially at a
price equal to 52.306000% of the principal amount thereof. Such price may be
changed at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will
have the registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated the Closing Date, in substantially
-----------------------------
the form of Exhibit A hereto, for so long as such Series A Notes constitute
"Transfer Restricted Securities" (as defined in the Registration Rights
------------------------------
Agreement). Pursuant to the Registration Rights Agreement, the Company and the
Guarantors will agree to file with the Securities and Exchange Commission (the
"Commission") under the circumstances set forth therein, (i) a registration
----------
statement under the Act (the "Exchange Offer Registration Statement") relating
-------------------------------------
to the Company's 13 3/8% Series B Senior Subordinated Discount Notes due 2009
(the "Series B Notes"), to be offered in exchange for the Series A Notes (such
--------------
offer to exchange being referred to as the "Exchange Offer") and the Subsidiary
--------------
Guarantees thereof and (ii) a shelf registration statement pursuant to Rule 415
under the Act (the "Shelf Registration Statement" and, together with the
----------------------------
Exchange Offer Registration Statement, the "Registration Statements") relating
-----------------------
to the resale by certain holders of the Series A Notes and to use its best
efforts to cause such Registration Statements to be declared and remain
effective and usable for the periods specified in the Registration Rights
Agreement and to consummate the Exchange Offer. This Agreement, the Indenture,
the Notes, the Subsidiary Guarantees, the Pledge Agreement and the Registration
Rights Agreement are hereinafter sometimes referred to collectively as the
"Operative Documents."
-------------------
4. Delivery and Payment.
--------------------
(a) Delivery of, and payment of the Purchase Price for, the
Series A Notes shall be made at the offices of Latham & Watkins, 885 Third
Avenue, Suite 1000, New York, New York 10022 or such other location as may be
mutually acceptable. Such delivery and payment shall be made at 9:00 a.m. New
York City time, on October 29, 1999 or at such other time on the same date or
such other date as shall be agreed upon by the Initial Purchasers and the
Company in writing. The time and date of such delivery and the payment for the
Series A Notes are herein called the "Closing Date."
------------
3
<PAGE>
(b) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"), having an aggregate principal amount corresponding to the aggregate
---
principal amount of the Series A Notes (collectively, the "Global Note"), shall
-----------
be delivered by the Company to the Initial Purchasers (or as the Initial
Purchasers direct) in each case with any transfer taxes thereon duly paid by the
Company against payment by the Initial Purchasers of the Purchase Price thereof
by wire transfer in same day funds to the order of the Company. The Global Note
shall be made available to the Initial Purchasers for inspection not later than
9:30 a.m., New York City time, on the business day immediately preceding the
Closing Date.
5. Agreements of the Company and the Guarantors. Each of the Company
--------------------------------------------
and the Guarantors hereby agrees with the Initial Purchasers as follows:
(a) To advise the Initial Purchasers promptly and, if requested
by the Initial Purchasers, confirm such advice in writing, (i) of the issuance
by any state securities commission of any stop order suspending the
qualification or exemption from qualification of any Series A Notes for offering
or sale in any jurisdiction designated by the Initial Purchasers pursuant to
Section 5(e) hereof, or the initiation of any proceeding by any state securities
commission or any other federal or state regulatory authority for such purpose
and (ii) of the happening of any event during the period referred to in Section
5(c) below that makes any statement of a material fact made in the Preliminary
Offering Memorandum or the Offering Memorandum untrue or that requires any
additions to or changes in the Preliminary Offering Memorandum or the Offering
Memorandum in order to make the statements therein not misleading. The Company
and the Guarantors shall use their best efforts to prevent the issuance of any
stop order or order suspending the qualification or exemption of any Series A
Notes under any state securities or Blue Sky laws and, if at any time any state
securities commission or other federal or state regulatory authority shall issue
an order suspending the qualification or exemption of any Series A Notes under
any state securities or Blue Sky laws, the Company and the Guarantors shall use
their best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(b) To furnish the Initial Purchasers and those persons
identified by the Initial Purchasers to the Company as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
or supplements thereto, as the Initial Purchasers may reasonably request for the
time period specified in Section 5(c). Subject to the Initial Purchasers'
compliance with their representations and warranties and agreements set forth in
Section 7 hereof, the Company consents to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto required pursuant hereto, by the Initial Purchasers in connection with
Exempt Resales.
(c) During such period as in the opinion of counsel for the
Initial Purchasers an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchasers and in connection with
market-making activities of the Initial Purchasers for so long as any Series A
Notes are outstanding, (i) not to make any amendment or supplement to the
Offering Memorandum of which the Initial Purchasers shall not previously have
been advised or to which the Initial Purchasers shall reasonably object after
being so advised provided that such objections and the rationale therefor shall
have been delivered to the Company in writing and counsel for the Company shall
not have notified it in
4
<PAGE>
writing that such amendment or supplement is nevertheless required by law
despite such objections and (ii) to prepare promptly upon the Initial
Purchasers' reasonable request, any amendment or supplement to the Offering
Memorandum which may be necessary or advisable in connection with such Exempt
Resales or such market-making activities.
(d) If, during the period referred to in Section 5(c) above, any
event shall occur or condition shall exist as a result of which, in the opinion
of counsel to the Initial Purchasers, it becomes necessary to amend or
supplement the Offering Memorandum in order to make the statements therein, in
the light of the circumstances when such Offering Memorandum is delivered to an
Eligible Purchaser, not misleading, or if, in the opinion of counsel to the
Initial Purchasers, it is necessary to amend or supplement the Offering
Memorandum to comply with any applicable law, forthwith to prepare an
appropriate amendment or supplement to such Offering Memorandum so that the
statements therein, as so amended or supplemented, will not, in the light of the
circumstances when it is so delivered, be misleading, or so that such Offering
Memorandum will comply with applicable law, and to furnish to the Initial
Purchasers and such other persons as the Initial Purchasers may designate such
number of copies thereof as the Initial Purchasers may reasonably request.
(e) Prior to the sale of all Series A Notes pursuant to Exempt
Resales as contemplated hereby, to cooperate with the Initial Purchasers and
counsel to the Initial Purchasers in connection with any required registration
or qualification of the Series A Notes for offer and sale to the Initial
Purchasers and pursuant to Exempt Resales under the securities or Blue Sky laws
of such jurisdictions as the Initial Purchasers may reasonably request and to
continue such registration or qualification in effect so long as required for
Exempt Resales and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification; provided, however, that neither the Company nor any Guarantor
shall be required in connection therewith to qualify as a foreign corporation in
any jurisdiction in which it is not now so qualified or to take any action that
would subject it to general consent to service of process or taxation other than
as to matters and transactions relating to the Preliminary Offering Memorandum,
the Offering Memorandum or Exempt Resales, in any jurisdiction in which it is
not now so subject.
(f) So long as the Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, together
with a report thereon by the Company's independent public accountants and (ii)
to mail and make generally available as soon as practicable after the end of
each quarterly period (except for the last quarterly period of each fiscal year)
to such holders, a consolidated balance sheet, a consolidated statement of
operations and a consolidated statement of cash flows (and similar financial
reports of all unconsolidated subsidiaries, if any) as of the end of and for
such period, and for the period from the beginning of such year to the close of
such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
5
<PAGE>
(g) So long as the Notes are outstanding, to furnish to the
Initial Purchasers as soon as available copies of all reports or other
communications furnished by the Company or any of the Guarantors to its security
holders or furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company or any of the
Guarantors is listed and such other publicly available information concerning
the Company and/or its subsidiaries as the Initial Purchasers may reasonably
request.
(h) So long as any of the Series A Notes remain outstanding and
during any period in which the Company and the Guarantors are not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), to make available to any holder of Series A Notes in connection
------------
with any sale thereof and any prospective purchaser of such Series A Notes from
such holder, the information ("Rule 144A Information") required by Rule
---------------------
144A(d)(4) under the Act.
(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of the obligations of the Company
and the Guarantors under this Agreement, including: (i) the fees, disbursements
and expenses of counsel to the Company and the Guarantors and accountants of the
Company and the Guarantors in connection with the sale and delivery of the
Series A Notes to the Initial Purchaser and pursuant to Exempt Resales, and all
other fees and expenses (other than overhead expenses and legal fees of counsel
to the Initial Purchasers) in connection with the preparation, printing, filing
and distribution of the Preliminary Offering Memorandum, the Offering Memorandum
and all amendments and supplements to any of the foregoing (including financial
statements), including the mailing and delivering of copies thereof to the
Initial Purchasers and persons designated by them in the quantities specified
herein, (ii) all costs and expenses related to the transfer and delivery of the
Series A Notes to the Initial Purchasers and pursuant to Exempt Resales,
including any transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Series A Notes, (iv) all expenses in connection with the
registration or qualification of the Series A Notes and the Subsidiary
Guarantees for offer and sale under the securities or Blue Sky laws of the
several states and all costs of printing or producing any preliminary and
supplemental Blue Sky memoranda in connection therewith (including the filing
fees and fees and disbursements of counsel for the Initial Purchasers in
connection with such registration or qualification and customary memoranda
relating thereto), (v) the cost of printing certificates representing the Series
A Notes and the Subsidiary Guarantees, (vi) all expenses and listing fees in
connection with the application for quotation of the Series A Notes in the
National Association of Securities Dealers, Inc. ("NASD") Automated Quotation
----
System - PORTAL ("PORTAL"), (vii) the fees and expenses of the Trustee and the
------
Trustee's counsel in connection with the Indenture, the Notes and the Subsidiary
Guarantees, (viii) the costs and charges of any transfer agent, registrar and/or
depositary (including DTC), (ix) any fees charged by rating agencies for the
rating of the Notes, (x) all costs and expenses of the Exchange Offer and any
Registration Statement, as and to the extent set forth in the Registration
Rights Agreement, and (xi) and all other costs and expenses incident to the
performance of the obligations of the Company and the Guarantors hereunder for
which provision is not otherwise made in this Section.
6
<PAGE>
(j) To use its reasonable best efforts to effect the inclusion
of the Series A Notes in PORTAL and to maintain the listing of the Series A
Notes on PORTAL for so long as the Series A Notes are outstanding.
(k) To comply with all of its agreements set forth in the
representation letters of the Company and the Guarantors to DTC relating to the
approval of the Notes by DTC for "book-entry" transfer.
(l) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell, contract to
sell or otherwise transfer or dispose of any debt securities of the Company or
any Guarantor or any warrants, rights or options to purchase or otherwise
acquire debt securities of the Company or any Guarantor which, in any such case,
are substantially similar to the Notes and the Subsidiary Guarantees (other than
(i) the Notes and the Subsidiary Guarantees and (ii) commercial paper issued in
the ordinary course of business), without the prior written consent of the
Initial Purchasers.
(m) Not to sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act) that
would be integrated with the sale of the Series A Notes to the Initial
Purchasers or pursuant to Exempt Resales in a manner that would require the
registration of any such sale of the Series A Notes under the Act.
(n) Not to voluntarily claim, and to actively resist any
attempts to claim, the benefit of any usury laws against the holders of any
Notes and the related Subsidiary Guarantees.
(o) To use its reasonable best efforts to cause the Exchange
Offer to be made in the appropriate form to permit Series B Notes and guarantees
thereof by the Guarantors registered pursuant to the Act to be offered in
exchange for the Series A Notes and the Subsidiary Guarantees and to comply with
all applicable federal and state securities laws in connection with the Exchange
Offer.
(p) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(q) To use its reasonable best efforts to do and perform all
things required or necessary to be done and performed under this Agreement by it
prior to the Closing Date and to satisfy all conditions precedent to the
delivery of the Series A Notes and the Subsidiary Guarantees.
6. Representations, Warranties and Agreements of the Company and the
-----------------------------------------------------------------
Guarantors. As of the date hereof, each of the Company and the Guarantors
- ----------
represents and warrants to, and agrees with, the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and the Offering
Memorandum do not, and any supplement or amendment to them will not, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not apply
to statements in or omissions from the Preliminary Offering Memorandum or
7
<PAGE>
the Offering Memorandum (or any supplement or amendment thereto) based upon
information relating to the Initial Purchasers furnished to the Company in
writing by the Initial Purchasers expressly for use therein. No stop order
preventing the use of the Preliminary Offering Memorandum or the Offering
Memorandum, or any amendment or supplement thereto, or any order asserting that
any of the transactions contemplated by this Agreement are subject to the
registration requirements of the Act, has been issued.
(b) Each of the Company and its subsidiaries has been duly
incorporated or formed, as the case may be, is validly existing as a
corporation, limited liability company or partnership, as the case may be, in
good standing under the laws of its jurisdiction of incorporation or formation,
as the case may be, and has the corporate or other power and authority to carry
on its business as described in the Preliminary Offering Memorandum and the
Offering Memorandum and to own, lease and operate its properties, and each is
duly qualified and is in good standing as a foreign corporation, limited
liability company or partnership, as the case may be, authorized to do business
in each jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure to be
so qualified would not have a material adverse effect on the business,
prospects, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect").
-----------------------
(c) All outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights.
(d) The entities listed on Schedule C hereto are the only
subsidiaries, direct or indirect, of the Company. For purposes of this
Agreement, a subsidiary of the Company means any corporation, association or
other business entity of which the Company owns or controls, directly or
indirectly, more than 50% of the voting power with respect to the election of
directors, managers or trustees thereof, and any partnership of which the
Company or a subsidiary of the Company is the sole general partner or the
managing general partner or of which the only general partners are the Company
and one or more of its subsidiaries. All of the outstanding shares of capital
stock of, or other ownership interests in, each of the Company's subsidiaries
have been duly authorized and validly issued and are fully paid and non-
assessable, and, except as set forth in the Offering Memorandum, are owned by
the Company, directly or indirectly through one or more subsidiaries, free and
clear of any security interest, claim, lien, encumbrance or adverse interest of
any nature (each, a "Lien").
----
(e) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors.
(f) The Indenture has been duly authorized by the Company and
each of the Guarantors and, on the Closing Date, will have been validly executed
and delivered by the Company and each of the Guarantors. When the Indenture has
been duly executed and delivered by the Company and each of the Guarantors, the
Indenture will be a valid and binding agreement of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance with
its terms except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general
8
<PAGE>
applicability. On the Closing Date, the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act of 1939, as amended (the
"TIA" or "Trust Indenture Act"), and the rules and regulations of the Commission
--- -------------------
applicable to an indenture which is qualified thereunder.
(g) The Series A Notes have been duly authorized and, on the
Closing Date, will have been validly executed and delivered by the Company. When
the Series A Notes have been issued, executed and authenticated in accordance
with the provisions of the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the terms of this Agreement, the Series A
Notes will be entitled to the benefits of the Indenture and will be valid and
binding obligations of the Company, enforceable in accordance with their terms
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the Series A
Notes will conform as to legal matters to the description thereof contained in
the Offering Memorandum.
(h) On the Closing Date, the Series B Notes will have been duly
authorized by the Company. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture, the Series B Notes will be entitled to the benefits of the Indenture
and will be the valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
(i) The Subsidiary Guarantee to be endorsed on the Series A
Notes by each Guarantor has been duly authorized by such Guarantor and, on the
Closing Date, will have been duly executed and delivered by each such Guarantor.
When the Series A Notes have been issued, executed and authenticated in
accordance with the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, the Subsidiary
Guarantee of each Guarantor endorsed thereon will be entitled to the benefits of
the Indenture and will be the valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration and
the availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, the Subsidiary Guarantees to be
endorsed on the Series A Notes will conform as to legal matters to the
description thereof contained in the Offering Memorandum.
(j) The Subsidiary Guarantee to be endorsed on the Series B
Notes by each Guarantor has been duly authorized by such Guarantor and, when
issued, will have been duly executed and delivered by each such Guarantor. When
the Series B Notes have been issued, executed and authenticated in accordance
with the terms of the Exchange Offer and the Indenture, the Subsidiary Guarantee
of each Guarantor endorsed thereon will be entitled to the benefits of the
Indenture and will be the valid and binding obligation of such Guarantor,
enforceable against such Guarantor in accordance with its terms, except as (i)
the enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights
9
<PAGE>
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. When
the Series B Notes are issued, authenticated and delivered, the Subsidiary
Guarantees to be endorsed on the Series B Notes will conform as to legal matters
to the description thereof in the Offering Memorandum.
(k) The Registration Rights Agreement has been duly authorized
by the Company and each of the Guarantors and, on the Closing Date, will have
been duly executed and delivered by the Company and each of the Guarantors. When
the Registration Rights Agreement has been duly executed and delivered, the
Registration Rights Agreement will be a valid and binding agreement of the
Company and each of the Guarantors, enforceable against the Company and each
Guarantor in accordance with its terms except as (i) the enforceability thereof
may be limited by bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (ii) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability. On the Closing Date, the Registration Rights Agreement will
conform as to legal matters to the description thereof in the Offering
Memorandum.
(l) Neither the Company nor any of its subsidiaries is in
violation of its respective charter, by-laws, operating agreement or partnership
agreement or in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
lease or other agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or their
respective property is bound.
(m) The execution, delivery and performance of this Agreement
and the other Operative Documents by the Company and each of the Guarantors, the
compliance by the Company and each of the Guarantors with all provisions hereof
and thereof and the consummation of the transactions contemplated hereby and
thereby will not (i) require any consent, approval, authorization or other order
of, or qualification with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of the various states
and such as are contemplated by the Registration Rights Agreement), (ii)
conflict with or constitute a breach of any of the terms or provisions of, or a
default under, the respective charter, by-laws, operating agreement or
partnership agreement of the Company or any of its subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement or instrument that
is material to the Company and its subsidiaries, taken as a whole, to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or their respective property is bound, (iii) violate or
conflict with any applicable law or any rule, regulation, judgment, order or
decree of any court or any governmental body or agency having jurisdiction over
the Company, any of its subsidiaries or their respective property, (iv) result
in the imposition or creation of (or the obligation to create or impose) a Lien
under, any agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound, or (v) result in the termination, suspension
or revocation of any Authorization (as defined below) of the Company or any of
its subsidiaries or result in any other impairment of the rights of the holder
of any such Authorization.
(n) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is or is threatened
to be made a party
10
<PAGE>
or to which any of their respective property is or could be subject, which might
result, singly or in the aggregate, in a Material Adverse Effect.
(o) Neither the Company nor any of its subsidiaries has violated
any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), any
------------------
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or any provisions of the Foreign Corrupt Practices Act or the rules
-----
and regulations promulgated thereunder, except for such violations which, singly
or in the aggregate, would not have a Material Adverse Effect.
(p) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any Authorization, any related constraints on operating
activities and any potential liabilities to third parties) which would, singly
or in the aggregate, have a Material Adverse Effect.
(q) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, subject to the exception set forth in this sentence, an "Authorization")
-------------
of, and has made all filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and other
tribunals, including without limitation, under any applicable Environmental
Laws, as are necessary to own, lease, license and operate its respective
properties and to conduct its business, except where the failure to have any
such Authorization or to make any such filing or notice would not, singly or in
the aggregate, have a Material Adverse Effect. Each such Authorization is valid
and in full force and effect and each of the Company and its subsidiaries is in
compliance with all the terms and conditions thereof and with the rules and
regulations of the authorities and governing bodies having jurisdiction with
respect thereto; and no event has occurred (including, without limitation, the
receipt of any notice from any authority or governing body) which allows or,
after notice or lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the holder
of any such Authorization; and such Authorizations contain no restrictions that
are burdensome to the Company or any of its subsidiaries; except where such
failure to be valid and in full force and effect or to be in compliance, the
occurrence of any such event or the presence of any such restriction would not,
singly or in the aggregate, have a Material Adverse Effect.
(r) The accountants, Ernst & Young LLP and KPMG Peat Marwick
LLP, that have certified the financial statements and supporting schedules
included in the Preliminary Offering Memorandum and the Offering Memorandum are
independent public accountants with respect to the Company and the Guarantors,
as required by the Act and the Exchange Act. The historical financial
statements, together with related schedules and notes, set forth in the
Preliminary Offering Memorandum and the Offering Memorandum comply as to form in
all material respects with the requirements applicable to registration
statements on Form S-1 under the Act.
(s) The historical financial statements, together with related
schedules and notes forming part of the Offering Memorandum (and any amendment
or supplement
11
<PAGE>
thereto), present fairly the consolidated financial position, results of
operations and changes in financial position of the Company and its subsidiaries
on the basis stated in the Offering Memorandum at the respective dates or for
the respective periods to which they apply; such statements and related
schedules and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved,
except as disclosed therein; and the other financial and statistical information
and data set forth in the Offering Memorandum (and any amendment or supplement
thereto) are, in all material respects, accurately presented and prepared on a
basis consistent with such financial statements and the books and records of the
Company.
(t) The Company is not and, after giving effect to the offering
and sale of the Series A Notes and the application of the net proceeds thereof
as described in the Offering Memorandum, will not be, an "investment company,"
as such term is defined in the Investment Company Act of 1940, as amended.
(u) Except for (i) registration rights granted in favor of
certain holders of Class B common stock of the Company pursuant to the
shareholder agreement dated September 24, 1999 (the "Shareholder Agreement") and
---------------------
(ii) registration rights granted in favor of The 1818 Fund III, L.P. and its
affiliates in connection with the issuance of 500,000 shares of the Company's
Senior Redeemable Preferred Stock to The 1818 Fund III, L.P. on October 29, 1999
for $50 million (the "Preferred Stock Offering"), there are no contracts,
------------------------
agreements or understandings between the Company or any Guarantor and any person
granting such person the right to require the Company or such Guarantor to file
a registration statement under the Act with respect to any securities of the
Company or such Guarantor or to require the Company or such Guarantor to include
such securities with the Notes and Subsidiary Guarantees registered pursuant to
any Registration Statement.
(v) Neither the Company nor any of its subsidiaries nor any
agent thereof acting on the behalf of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of the
Series A Notes to violate Regulation G (12 C.F.R. Part 207), Regulation T (12
C.F.R. Part 220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R.
Part 224) of the Board of Governors of the Federal Reserve System.
(w) No "nationally recognized statistical rating organization"
as such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company or any Guarantor that it is considering
imposing) any condition (financial or otherwise) on the Company's or any
Guarantor's retaining any rating assigned to the Company or any Guarantor, or
any securities of the Company or any Guarantor or (ii) has indicated to the
Company or any Guarantor that it is considering (a) the downgrading, suspension,
or withdrawal of, or any review for a possible change that does not indicate the
direction of the possible change in, any rating so assigned or (b) any change in
the outlook for any rating of the Company, any Guarantor or any securities of
the Company or any Guarantor.
(x) Since the respective dates as of which information is given
in the Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there has not occurred any material adverse change or any
development involving a prospective material adverse change in the condition,
financial or otherwise, or the earnings, business, management or
12
<PAGE>
operations of the Company and its subsidiaries, taken as a whole, (ii) there has
not been any material adverse change or any development involving a prospective
material adverse change in the capital stock or in the long-term debt of the
Company or any of its subsidiaries and (iii) neither the Company nor any of its
subsidiaries has incurred any material liability or obligation, direct or
contingent, not in the ordinary course of business.
(y) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, contains all the information specified in,
and meeting the requirements of, Rule 144A(d)(4) under the Act.
(z) When the Series A Notes and the Subsidiary Guarantees are
issued and delivered pursuant to this Agreement, neither the Series A Notes nor
the Subsidiary Guarantees will be of the same class (within the meaning of Rule
144A under the Act) as any security of the Company or the Guarantors that is
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated inter-dealer
quotation system.
(aa) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company, the Guarantors
or any of their respective representatives (other than the Initial Purchasers,
as to whom the Company and the Guarantors make no representation) in connection
with the offer and sale of the Series A Notes contemplated hereby, including,
but not limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. No securities of the same class as the
Series A Notes have been issued and sold by the Company within the six-month
period immediately prior to the date hereof.
(bb) Prior to the effectiveness of any Registration Statement,
the Indenture is not required to be qualified under the TIA.
(cc) None of the Company, the Guarantors nor any of their
respective affiliates or any person acting on its or their behalf (other than
the Initial Purchasers, as to whom the Company and the Guarantors make no
representation) has engaged or will engage in any directed selling efforts
within the meaning of Regulation S under the Act ("Regulation S") with respect
------------
to the Series A Notes or the Subsidiary Guarantees.
(dd) None of the Company, the Guarantors nor any of their
respective affiliates or any person acting on its or their behalf (other than
the Initial Purchasers, as to whom the Company and the Guarantors make no
representation) has taken or will take any action to cause the offering or sale
of the Series A Notes to violate any provision of Regulation S.
(ee) The sale of the Series A Notes pursuant to Regulation S is
not part of a plan or scheme to evade the registration provisions of the Act.
(ff) The Company, the Guarantors and their respective affiliates
and all persons acting on their behalf (other than the Initial Purchasers, as to
whom the Company and the Guarantors make no representation) have complied with
and will comply with the offering restrictions requirements of Regulation S in
connection with the offering of the Series A Notes
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outside the United States and, in connection therewith, the Offering Memorandum
will contain the disclosure required by Rule 902(g)(2).
(gg) The Series A Notes sold in reliance on Regulation S will be
represented upon issuance by a temporary global security that may not be
exchanged for definitive securities until the expiration of the 40-day
distribution compliance period referred to in Rule 903(c)(3) of the Act and only
upon certification of beneficial ownership of such Series A Notes by non-U.S.
persons or U.S. Persons who purchased such Series A Notes in transactions that
were exempt from the registration requirements of the Act.
(hh) No registration under the Act of the Series A Notes or the
Subsidiary Guarantees is required for the sale of the Series A Notes and the
Subsidiary Guarantees to the Initial Purchasers as contemplated hereby or for
the Exempt Resales assuming the accuracy of the Initial Purchasers'
representations and warranties and agreements set forth in Section 7 hereof.
(ii) Each certificate signed by any officer of the Company or
any Guarantor and delivered to the Initial Purchasers or counsel for the Initial
Purchasers at the closing shall be deemed to be a representation and warranty by
the Company or such Guarantor to the Initial Purchasers as to the matters
covered thereby.
(jj) The Company and its subsidiaries have good and marketable
title to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
subsidiaries, in each case free and clear of all Liens and defects, except such
as are described in the Offering Memorandum or such as do not materially affect
the value of such property and do not interfere with the use made and proposed
to be made of such property by the Company and its subsidiaries; and any real
property and buildings held under lease by the Company and its subsidiaries are
held by them under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company and its subsidiaries, in each
case except as described in the Offering Memorandum.
(kk) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names ("intellectual property") currently
---------------------
employed by them in connection with the business now operated by them except
where the failure to own or possess or otherwise be able to acquire such
intellectual property would not, singly or in the aggregate, have a Material
Adverse Effect; and neither the Company nor any of its subsidiaries has received
any notice of infringement of or conflict with asserted rights of others with
respect to any of such intellectual property which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(ll) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; and neither the Company nor any of its subsidiaries (i) has
received notice from any insurer or agent of such insurer that
14
<PAGE>
substantial capital improvements or other material expenditures will have to be
made in order to continue such insurance or (ii) has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers at a cost
that would not have a Material Adverse Effect.
(mm) Except as disclosed in the Offering Memorandum, no
relationship, direct or indirect, exists between or among the Company or any of
its subsidiaries on the one hand, and the directors, officers, stockholders,
other affiliates, customers or suppliers of the Company or any of its
subsidiaries on the other hand, which would be required by the Act to be
described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 filed with the
Commission.
(nn) There is no (i) significant unfair labor practice
complaint, grievance or arbitration proceeding pending or, to the best knowledge
of the Company, threatened against the Company or any of its subsidiaries before
the National Labor Relations Board or any state or local labor relations board,
(ii) strike, labor dispute, slowdown or stoppage pending or, to the best
knowledge of the Company, threatened against the Company or any of its
subsidiaries or (iii) union representation question existing with respect to the
employees of the Company or any of its subsidiaries, except in the case of
clauses (i), (ii) and (iii) for such actions which, singly or in the aggregate,
would not have a Material Adverse Effect. To the best knowledge of the Company,
no collective bargaining organizing activities are taking place with respect to
the Company or any of its subsidiaries.
(oo) The Company and each of its subsidiaries maintains a system
of internal accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(pp) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been filed, other
than those filings being contested in good faith, and all material taxes,
including withholding taxes, penalties and interest, assessments, fees and other
charges due pursuant to such returns or pursuant to any assessment received by
the Company or any of its subsidiaries have been paid, other than those being
contested in good faith and for which adequate reserves have been provided.
(qq) All indebtedness of the Company and the Guarantors that
will be repaid with the proceeds of the issuance and sale of the Series A Notes
was incurred, and the indebtedness represented by the Series A Notes is being
incurred, for proper purposes and in good faith and each of the Company and the
Guarantors was, at the time of the incurrence of such indebtedness that will be
repaid with the proceeds of the issuance and sale of the Series A Notes, and
will be on the Closing Date (after giving effect to the application of the
proceeds from the issuance of the Series A Notes) solvent, and had at the time
of the incurrence of such indebtedness that will be repaid with the proceeds of
the issuance and sale of the Series A Notes, and will have on the Closing Date
(after giving effect to the application of the proceeds from the
15
<PAGE>
issuance of the Series A Notes) sufficient capital for carrying on their
respective business and were, at the time of the incurrence of such indebtedness
that will be repaid with the proceeds of the issuance and sale of the Series A
Notes, and will be on the Closing Date (after giving effect to the application
of the proceeds from the issuance of the Series A Notes) able to pay their
respective debts as they mature.
(rr) No action has been taken and no law, statute, rule or
regulation or order has been enacted, adopted or issued by any governmental
agency or body which prevents the execution, delivery and performance of any of
the Operative Documents, the issuance of the Series A Notes or the Subsidiary
Guarantees, or suspends the sale of the Series A Notes or the Subsidiary
Guarantees in any jurisdiction referred to in Section 5(e); and no injunction,
restraining order or other order or relief of any nature by a federal or state
court or other tribunal of competent jurisdiction has been issued with respect
to the Company or any of its subsidiaries which would prevent or suspend the
issuance or sale of the Series A Notes or the Subsidiary Guarantees in any
jurisdiction referred to in Section 5(e).
(ss) The Company and each of its subsidiaries validly holds the
Federal Communication Commission ("FCC") licenses set forth opposite each
---
entity's name on Schedule 6(ss) attached hereto (the "PCS Licenses"). The PCS
------------
Licenses are in full force and effect and are not subject to any conditions
other than those conditions listed thereon and those conditions generally
applicable to entities holding similar licenses issued by the FCC. The PCS
Licenses constitute all of the licenses, permits, consents or authorizations
required by the FCC to permit operation of a PCS system in each of the markets
indicated opposite each license on Schedule 6(ss). The PCS Licenses expire on
April 28, 2007. The five-year buildout periods for the PCS Licenses expire on
April 28, 2002 and the ten-year buildout periods expire on April 28, 2007. All
applicable administrative and judicial appeal, review and reconsideration
periods of the orders granting the PCS Licenses have expired, without the timely
filing of any such appeal or request for review or reconsideration and without
the FCC having instituted review of the grant of the PCS Licenses on its own
motion.
(tt) The Company validly holds the FCC licenses listed on
Schedule 6(tt) attached hereto (the "Cellular Licenses"). The Cellular Licenses
-----------------
are in full force and effect and are not subject to any conditions other than
those conditions listed thereon and those conditions generally applicable to
entities holding similar licenses issued by the FCC. The Cellular Licenses
constitute all of the licenses, permits, consents or authorizations required by
the FCC to permit operation of the Company's cellular telephone system, as
identified in the Offering Memorandum. The Cellular Licenses expire on the dates
set forth opposite each license listed on Schedule 6(tt). All applicable
administrative and judicial appeal, review and reconsideration periods of the
orders granting the Cellular Licenses have expired, without the timely filing of
any such appeal or request for review or reconsideration and without the FCC
having instituted review of the grant of the Cellular Licenses on its own
motion.
(uu) There are no judgments, decrees or orders issued by the FCC
that could result in suspension, revocation, material impairment, termination
prior to its expiration date, non-renewal or adverse modification of the PCS
Licenses or the Cellular Licenses, or that could have a Material Adverse Effect
upon, or cause material disruption to, the PCS operations pursuant to the PCS
Licenses or the cellular operations pursuant to the Cellular Licenses. To the
best of the Company's knowledge, there is no complaint, investigation, action or
proceeding
16
<PAGE>
pending or threatened relative to the PCS Licenses relating to the PCS
operations or the Cellular Licenses relating to the cellular operations,
including, without limitation, any Notice of Violation, Notice of Apparent
Liability or Order to Show Cause, other than proceedings that affect the PCS or
the cellular telephone industry generally, that could result in a suspension,
revocation, material impairment, termination prior to its expiration date, non-
renewal or adverse modification of the PCS Licenses or the Cellular Licenses or
which could have a Material Adverse Effect upon, or cause material disruption
to, the Company's PCS or cellular operations.
(vv) The Company and each of its subsidiaries has, or has timely
filed applications for, all permits, license, franchises and other
authorizations ("permits") of governmental or regulatory authorities (including,
-------
as appropriate, the state public utilities commissions of Alabama, Arkansas,
Florida, Louisiana, Mississippi and Texas) necessary to engage in the wireless
and competitive local exchange businesses currently conducted by the Company,
except where the failure to hold such permits would not have a Material Adverse
Effect on the Company and its subsidiaries, taken as a whole; and there is no
reason to believe that any governmental body or agency is considering limiting,
suspending or revoking any such permit, except where the limitation, suspension
or revocation of such permits would not have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole. All such permits are valid and
in full force and effect, except where the limitation, suspension or revocation
of such permits would not have a Material Adverse Effect on the Company and its
subsidiaries, taken as a whole.
(ww) All fees required by the FCC in connection with the PCS
Licenses, including any and all down payments or installment payments required
by FCC rules to be paid as of the date hereof have been timely and fully paid.
(xx) The Company and each of its subsidiaries validly holds all
FCC licenses necessary for the operation of its paging system, as described in
the Offering Memorandum (the "Paging Licenses"). Except as set forth in Schedule
---------------
6(x)(x), the Paging Licenses are in full force and effect and are not subject to
any conditions other than those conditions listed thereon and those conditions
generally applicable to entities holding similar licenses issued by the FCC.
The Paging Licenses constitute all of the licenses, permits, consents or
authorizations required by the FCC to permit operation of the paging system, as
described in the Offering Memorandum.
(yy) There does not exist any FCC complaint, investigation,
action or proceeding pending or threatened relative to the Paging Licenses,
including, without limitation, any Notice of Violation, Notice of Apparent
Liability or Order to Show Cause, other than proceedings that affect the paging
industry generally, that could result in a denial of any of the Paging Licenses,
or suspension, revocation, material impairment, termination prior to its
expiration date, non-renewal or adverse modification of any of the Paging
Licenses or which could have a Material Adverse Effect upon, or cause material
disruption to, the Company's paging operations.
(zz) LA Unwired was qualified to participate in the FCC's PCS
license auctions as a "Small Business," as defined by FCC Rules, and is
qualified to hold the licenses for LA Unwired's PCS operations according to the
rules of the FCC. The Company's investment in LA Unwired does not violate the
rules of the FCC.
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<PAGE>
(aaa) To the Company's best knowledge, Sprint Spectrum L.P. and
SprintCom, Inc. validly hold the FCC licenses set forth on Schedule 6(aaa) (the
"Sprint PCS Licenses"). To the Company's best knowledge, the Sprint PCS
-------------------
Licenses are in full force and effect and are not subject to any conditions
other than those conditions listed thereon and those conditions generally
applicable to entities holding similar licenses issued by the FCC. The Sprint
PCS Licenses, together with the PCS Licenses, constitute all of the licenses,
permits, consents or authorizations required by the FCC to permit operation of
the PCS operations of the Company and its subsidiaries, including the Company's
planned PCS network buildout, as described in the Offering Memorandum. All
applicable administrative and judicial appeal, review and reconsideration
periods of the orders granting the Sprint PCS Licenses have expired, without the
timely filing of any such appeal or request for review or reconsideration and
without the FCC having instituted review of the grant of the Sprint PCS Licenses
on its own motion.
(bbb) Since the date of the Offering Memorandum, there have been
no material changes to the Company's PCS network buildout plan, as described in
the Offering Memorandum. The proceeds from the sale of the Series A Notes,
together with the other existing financing sources described in the Offering
Memorandum, are sufficient to fund the entire PCS network buildout plan as set
forth in the Offering Memorandum.
(ccc) The Preferred Stock Offering will be consummated in
accordance with the description of the Preferred Stock Offering contained in the
Offering Memorandum.
(ddd) The Pledge Agreement has been duly authorized by the
Company and, on the Closing Date, will have been duly executed and delivered by
the Company. When the Pledge Agreement has been duly executed and delivered, the
Pledge Agreement will be a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (ii) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability. On the Closing Date, the Pledge Agreement will conform as
to legal matters to the description thereof in the Offering Memorandum.
The Company acknowledges that the Initial Purchaser and, for purposes
of the opinions to be delivered to the Initial Purchaser pursuant to Section 9
hereof, counsel to the Company and the Guarantors and counsel to the Initial
Purchaser will rely upon the accuracy and truth of the foregoing representations
and hereby consents to such reliance.
7. Initial Purchasers' Representations and Warranties. Each of the
--------------------------------------------------
Initial Purchasers, severally and not jointly, represents and warrants to, and
agrees with, the Company and the Guarantors:
(a) Such Initial Purchaser is a QIB with such knowledge and
experience in financial and business matters as is necessary in order to
evaluate the merits and risks of an investment in the Series A Notes.
(b) Such Initial Purchaser (A) is not acquiring the Series A
Notes with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
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<PAGE>
Series A Notes only to (x) QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and (y) in offshore
transactions in reliance upon Regulation S under the Act.
(c) Such Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by such Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series A Notes
pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) Such Initial Purchaser agrees that, in connection with
Exempt Resales, such Initial Purchaser will solicit offers to buy the Series A
Notes only from, and will offer to sell the Series A Notes only to, Eligible
Purchasers. Such Initial Purchaser further agrees that it will offer to sell the
Series A Notes only to, and will solicit offers to buy the Series A Notes only
from (A) Eligible Purchasers that the Initial Purchaser reasonably believes are
QIBs, and (B) Regulation S Purchasers, in each case, that agree that (x) the
Series A Notes purchased by them may be resold, pledged or otherwise transferred
within the time period referred to under Rule 144(k) (taking into account the
provisions of Rule 144(d) under the Act, if applicable) under the Act, as in
effect on the date of the transfer of such Series A Notes, only (I) to the
Company or any of its subsidiaries, (II) to a person whom the seller reasonably
believes is a QIB purchasing for its own account or for the account of a QIB in
a transaction meeting the requirements of Rule 144A under the Act, (III) in an
offshore transaction (as defined in Rule 902 under the Act) meeting the
requirements of Rule 904 of the Act, (IV) in a transaction meeting the
requirements of Rule 144 under the Act, (V) to an Accredited Institution that,
prior to such transfer, furnishes the Trustee a signed letter containing certain
representations and agreements relating to the registration of transfer of such
Series A Note (the form of which is substantially the same as Annex A to the
------
Offering Memorandum) and, if such transfer is in respect of an aggregate
principal amount of Series A Notes less than $250,000, an opinion of counsel
acceptable to the Company that such transfer is in compliance with the Act, (VI)
in accordance with another exemption from the registration requirements of the
Act (and based upon an opinion of counsel acceptable to the Company) or (VII)
pursuant to an effective registration statement and, in each case, in accordance
with the applicable securities laws of any state of the United States or any
other applicable jurisdiction and (y) they will deliver to each person to whom
such Series A Notes or an interest therein is transferred a notice substantially
to the effect of the foregoing.
(e) Such Initial Purchaser and its affiliates or any person
acting on its or their behalf have not engaged or will not engage in any
directed selling efforts within the meaning of Regulation S with respect to the
Series A Notes or the Subsidiary Guarantees.
(f) The Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S have been and will be
offered and sold only in offshore transactions.
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<PAGE>
(g) The sale of the Series A Notes offered and sold by such
Initial Purchaser pursuant hereto in reliance on Regulation S is not part of a
plan or scheme to evade the registration provisions of the Act.
(h) Such Initial Purchaser agrees that it has not offered or
sold and will not offer or sell the Series A Notes in the United States or to,
or for the benefit or account of, a U.S. Person (other than a distributor), in
each case, as defined in Rule 902 under the Act (i) as part of its distribution
at any time and (ii) otherwise until 40 days after the later of the commencement
of the offering of the Series A Notes pursuant hereto and the Closing Date,
other than in accordance with Regulation S of the Act or another exemption from
the registration requirements of the Act. Such Initial Purchaser agrees that,
during such 40-day distribution compliance period, it will not cause any
advertisement with respect to the Series A Notes (including any "tombstone"
advertisement) to be published in any newspaper or periodical or posted in any
public place and will not issue any circular relating to the Series A Notes,
except such advertisements as permitted by and include the statements required
by Regulation S.
(i) Such Initial Purchaser agrees that, at or prior to
confirmation of a sale of Series A Notes by it to any distributor, dealer or
person receiving a selling concession, fee or other remuneration during the 40-
day distribution compliance period referred to in Rule 903(c)(3) under the Act,
it will send to such distributor, dealer or person receiving a selling
concession, fee or other remuneration a confirmation or notice to substantially
the following effect:
"The Series A Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities Act"), and
--------------
may not be offered and sole within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of your distribution
at any time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
case in accordance with Regulation S under the Securities Act (or Rule
144A or to Accredited Institutions in transactions that are exempt
from the registration requirements of the Securities Act), and in
connection with any subsequent sale by you of the Series A Notes
covered hereby in reliance on Regulation S during the period referred
to above to any distributor, dealer or person receiving a selling
concession, fee or other remuneration, you must deliver a notice to
substantially the foregoing effect. Terms used above have the
meanings assigned to them in Regulation S."
(j) Such Initial Purchaser agrees that the Series A Notes
offered and sold in reliance on Regulation S will be represented upon issuance
by a global security that may not be exchanged for definitive securities until
the expiration of the 40-day distribution compliance period referred to in Rule
903(c)(3) of the Act and only upon certification of beneficial ownership of such
Series A Notes by non-U.S. persons or U.S. persons who purchased such Series A
Notes in transactions that were exempt from the registration requirements of the
Act.
Such Initial Purchaser acknowledges that the Company and the
Guarantors and, for purposes of the opinions to be delivered to each Initial
Purchaser pursuant to Section 9 hereof, counsel to the Company and the
Guarantors and counsel to the Initial Purchaser will rely
20
<PAGE>
upon the accuracy and truth of the foregoing representations and such Initial
Purchaser hereby consents to such reliance.
8. Indemnification.
---------------
(a) The Company and each Guarantor agree, jointly and severally,
to indemnify and hold harmless the Initial Purchasers, their directors, their
officers and each person, if any, who controls such Initial Purchasers within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, liabilities and judgments
(including, without limitation, any legal or other expenses incurred in
connection with investigating or defending any matter, including any action,
that could give rise to any such losses, claims, damages, liabilities or
judgments) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Offering Memorandum (or any amendment or
supplement thereto), the Preliminary Offering Memorandum or any Rule 144A
Information provided by the Company or any Guarantor to any holder or
prospective purchaser of Series A Notes pursuant to Section 5(h) or caused by
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or judgments are
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to an Initial Purchaser furnished in
writing to the Company by such Initial Purchaser; provided, however, that the
foregoing indemnity agreement with respect to any Preliminary Offering
Memorandum shall not inure to the benefit of any Initial Purchaser who failed to
deliver a Final Offering Memorandum, as then amended or supplemented, (so long
as the Final Offering Memorandum and any amendment or supplement thereto was
provided by the Company to such Initial Purchaser in the requested quantity and
on a timely basis to permit proper delivery on or prior to the Closing Date) to
the person asserting any losses, claims, damages, liabilities or judgments
caused by any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Offering Memorandum, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, if such material
misstatement or omission or alleged material misstatement or omission was cured
in the Final Offering Memorandum, as so amended or supplemented.
(b) Each Initial Purchaser agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Guarantors, and their respective
directors, managers and officers (or persons serving in a position of comparable
responsibility of a limited liability company) and each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) the Company or the Guarantors, to the same extent as the foregoing
indemnity from the Company and the Guarantors to the Initial Purchasers but only
with reference to information relating to such Initial Purchaser furnished in
writing to the Company by such Initial Purchaser expressly for use in the
Preliminary Offering Memorandum or the Offering Memorandum.
(c) In case any action shall be commenced involving any person
in respect of which indemnity may be sought pursuant to Section 8(a) or 8(b)
(the "indemnified party"), the indemnified party shall promptly notify the
-----------------
person against whom such indemnity may be sought (the "indemnifying party") in
------------------
writing and the indemnifying party shall assume the defense of such action,
including the employment of counsel reasonably satisfactory to the
21
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indemnified party and the payment of all fees and expenses of such counsel, as
incurred (except that in the case of any action in respect of which indemnity
may be sought pursuant to both Sections 8(a) and 8(b), the Initial Purchasers
shall not be required to assume the defense of such action pursuant to this
Section 8(c), but may employ separate counsel and participate in the defense
thereof, but the fees and expenses of such counsel, except as provided below,
shall be at the expense of the Initial Purchasers). Any indemnified party shall
have the right to employ separate counsel in any such action and participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of the indemnified party unless (i) the employment of such counsel shall
have been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by Donaldson, Lufkin & Jenrette Securities
Corporation, in the case of the parties indemnified pursuant to Section 8(a),
and by the Company, in the case of parties indemnified pursuant to Section 8(b).
The indemnifying party shall indemnify and hold harmless the indemnified party
from and against any and all losses, claims, damages, liabilities and judgments
by reason of any settlement of any action (i) effected with the indemnifying
party's written consent or (ii) effected without the indemnifying party's
written consent if the settlement is entered into more than thirty business days
after the indemnifying party shall have received a request from the indemnified
party for reimbursement for the reasonable fees and expenses of counsel (in any
case where such fees and expenses are at the expense of the indemnifying party
pursuant to Section 8(a) or 8(b)) and, prior to the date of such settlement, the
indemnifying party shall have failed to comply with such reimbursement request.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened action in respect
of which the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in respect of
any losses, claims, damages, liabilities or judgments referred to therein, and
such unavailability or insufficiency is otherwise than in accordance with the
express terms of Section 8(a) or 8(b), then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities and judgments (i) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the
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Guarantors, on the one hand, and the Initial Purchasers on the other hand from
the offering of the Series A Notes or (ii) if the allocation provided by clause
8(d)(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
8(d)(i) above but also the relative fault of the Company and the Guarantors, on
the one hand, and the Initial Purchasers, on the other hand, in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the
Guarantors, on the one hand and the Initial Purchasers, on the other hand, shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Series A Notes (after underwriting discounts and commissions,
but before deducting expenses) received by the Company, and the total discounts
and commissions received by the Initial Purchasers bear to the total price to
investors of the Series A Notes, in each case as set forth in the table on the
cover page of the Offering Memorandum. The relative fault of the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Guarantors, on the one hand, or the Initial Purchasers, on the other hand, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.
The Company and the Guarantors, and the Initial Purchasers agree that
it would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation (even if the Initial Purchasers were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses incurred
by such indemnified party in connection with investigating or defending any
matter, including any action, that could have given rise to such losses, claims,
damages, liabilities or judgments. Notwithstanding the provisions of this
Section 8, no Initial Purchaser shall be required to contribute any amount in
excess of the amount by which the total discounts and commissions received by
such Initial Purchaser exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
9. Conditions of Initial Purchasers' Obligations. The obligations
---------------------------------------------
of the Initial Purchasers to purchase the Series A Notes under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and
the Guarantors contained in this Agreement shall be true and correct on the
Closing Date with the same force and effect as if made on and as of the Closing
Date.
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(b) On or after the date hereof, (i) there shall not have
occurred any downgrading, suspension or withdrawal of, nor shall any notice have
been given of any potential or intended downgrading, suspension or withdrawal
of, or of any review (or of any potential or intended review) for a possible
change that does not indicate the direction of the possible change in, any
rating of the Company or any Guarantor or any securities of the Company or any
Guarantor (including, without limitation, the placing of any of the foregoing
ratings on credit watch with negative or developing implications or under review
with an uncertain direction) by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436(g)(2) under the
Act, (ii) there shall not have occurred any change, nor shall any notice have
been given of any potential or intended change, in the outlook for any rating of
the Company or any Guarantor or any securities of the Company or any Guarantor
by any such rating organization and (iii) no such rating organization shall have
given notice that it has assigned (or is considering assigning) a lower rating
to the Notes than that on which the Notes were marketed.
(c) Since the respective dates as of which information is given
in the Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the condition, financial or otherwise, or the
earnings, business, management or operations of the Company and its
subsidiaries, taken as a whole, (ii) there shall not have been any change or any
development involving a prospective change in the capital stock or in the long-
term debt of the Company or any of its subsidiaries and (iii) neither the
Company nor any of its subsidiaries shall have incurred any liability or
obligation, direct or contingent, the effect of which, in any such case
described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in your judgment, is
material and adverse and, in your judgment, makes it impracticable to market the
Series A Notes on the terms and in the manner contemplated in the Offering
Memorandum.
(d) You shall have received on the Closing Date a certificate
dated the Closing Date, signed by the President (or Manager/President) and the
Chief Financial Officer (or Assistant Manager/Secretary) of the Company and each
of the Guarantors, confirming the matters set forth in Sections 6(x), 9(a) and
9(b) and stating that each of the Company and the Guarantors has complied with
all the agreements and satisfied all of the conditions herein contained and
required to be complied with or satisfied on or prior to the Closing Date.
(e) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P., counsel for
the Company and the Guarantors, to the effect that:
(i) each of the Company and its subsidiaries has been
duly incorporated or formed, as the case may be, is validly
existing as a corporation, partnership or limited liability
company, as the case may be, in good standing under the laws of
Louisiana, and has the corporate or other power and authority to
carry on its business as described in the Offering Memorandum and
to own, lease and operate its properties as described therein;
(ii) each of the Company and its subsidiaries is duly
qualified
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and is in good standing as a foreign corporation, partnership or
limited liability company authorized to do business in each
jurisdiction in which the nature of its business or its ownership
or leasing of property requires such qualification, except where
the failure to be so qualified would not have a Material Adverse
Effect;
(iii) all the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are
fully paid, non-assessable and not subject to any preemptive or
similar rights;
(iv) all of the outstanding shares of capital stock of, or
other ownership interest in, each of the Company's subsidiaries
have been duly authorized and validly issued and are fully paid
and non-assessable, and except as described in the Offering
Memorandum are owned by the Company, free and clear of any Lien;
(v) the Series A Notes have been duly authorized by all
necessary corporate action by the Company and, when executed and
authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be entitled to
the benefits of the Indenture;
(vi) the Subsidiary Guarantees have been duly authorized
and, when the Series A Notes are executed and authenticated in
accordance with the provisions of the Indenture and delivered to
and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, the Subsidiary Guarantees endorsed
thereon will be entitled to the benefits of the Indenture;
(vii) the Indenture has been duly authorized, executed and
delivered by the Company and each Guarantor;
(viii) this Agreement has been duly authorized, executed
and delivered by the Company and the Guarantors;
(ix) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and the
Guarantors;
(x) the Series B Senior Notes have been duly authorized
by all necessary corporate action by the Company;
(xi) the statements under the captions "Certain
Relationships and Related Transactions," "Sprint PCS Management
Agreements," "Management-1999 Equity Incentive Plan," "Certain
Indebtedness," "Description of Capital Stock," "Description of
Notes" and "Plan of Distribution" in the Offering Memorandum,
insofar as such statements constitute a summary of the legal
matters, contracts or legal proceedings referred to therein (but
not factual matters), fairly present in all material respects
such legal matters, contracts and legal proceedings;
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<PAGE>
(xii) to such counsel's knowledge, (i) neither the Company
nor any of its subsidiaries is in violation of its respective
articles of incorporation, by-laws, operating agreement or
partnership agreement, (ii) and neither the Company nor any of
its subsidiaries is in default in the performance of any
obligation, agreement, covenant or condition contained in any
indenture, loan agreement, mortgage, lease or other agreement or
instrument known to us that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries or their respective property is bound;
(xiii) the execution, delivery and performance of this
Agreement and the other Operative Documents by the Company and
each of the Guarantors, the compliance by the Company and each of
the Guarantors with all provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby
will not (i) require any consent, approval, authorization or
other order of, or qualification with, any court or governmental
body or agency (except such as may be required by the Purchase
Agreement and Registration Rights Agreement or under the
securities or Blue Sky laws of the various states), (ii) conflict
with or constitute a breach of any of the terms or provisions of,
or a default under, the articles of incorporation, by-laws,
operating agreement or partnership agreement of the Company or
any of its subsidiaries or any indenture, loan agreement,
mortgage, lease or other agreement or instrument known by such
counsel that is material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or
their respective property is bound, (iii) violate or conflict
with any applicable Louisiana or federal law or any rule,
regulation, judgment, order or decree known to us of any court or
any governmental body or agency having jurisdiction over the
Company, any of its subsidiaries or their respective property,
(iv) result in the imposition or creation of (or the obligation
to create or impose) a Lien under, any agreement or instrument
known to us to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or their
respective property is bound, or (v) result in the termination,
suspension or revocation of any Authorization (other than any
Authorization relating to federal taxation law or any
communications matters including without limitation matters
regulated by the Federal Communications Commission, the
Communications Act of 1934 or the Louisiana Public Service
Commission) of the Company or any of its subsidiaries known to us
or result in any other impairment of the rights of the holder of
any such Authorization;
(xiv) such counsel does not know of any legal or
governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of
their respective property is subject, which might result, singly
or in the aggregate, in a Material
26
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Adverse Effect;
(xv) to such counsel's knowledge, neither the Company nor
any of its subsidiaries has violated any Environmental Law or any
provisions of ERISA, any provisions of the Foreign Corrupt
Practices Act or the rules and regulations promulgated
thereunder, except, in each case, for such violations which,
singly or in the aggregate, would not have a Material Adverse
Effect;
(xvi) to such counsel's knowledge, each of the Company and
its subsidiaries has such Authorizations of, and has made all
filings with and notices to, all governmental or regulatory
authorities and self-regulatory organizations and all courts and
other tribunals, including without limitation, under any
applicable Environmental Laws, as are necessary to own, lease,
license and operate its respective properties and to conduct its
business (excluding, in each case, those relating to
communications), except where the failure to have any such
Authorization or to make any such filing or notice would not,
singly or in the aggregate, have a Material Adverse Effect. To
such counsel's knowledge: (i) each such Authorization (excluding,
in each case, those relating to communications) is valid and in
full force and effect and each of the Company and its
subsidiaries is in compliance with all the terms and conditions
thereof and with the rules and regulations of the authorities and
governing bodies having jurisdiction with respect thereto; (ii)
no event has occurred (including the receipt of any notice from
any authority or governing body) which allows or, after notice or
lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization (other than any
Authorization relating to federal taxation law or any
communications matters including without limitation matters
regulated by the Federal Communications Commission, the
Communications Act of 1934 or the Louisiana Public Service
Commission) or results or, after notice or lapse of time or both,
would result in any other impairment of the rights of the holder
of any such Authorization; and (iii) such Authorization (other
than any Authorization relating to federal taxation law or any
communications matters including without limitation matters
regulated by the Federal Communications Commission, the
Communications Act of 1934 or the Louisiana Public Service
Commission) contains no restrictions that are burdensome to the
Company or any of its subsidiaries; except where such failure to
be valid and in full force and effect or to be in compliance, the
occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, have a
Material Adverse Effect;
(xvii) the Company is not and, after giving effect to the
offering and sale of the Series A Notes and the application of
the net proceeds thereof as described in the Offering Memorandum,
will not be, an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended;
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<PAGE>
(xviii) to such counsel's knowledge, there are no
contracts, agreements or understandings between the Company or
any Guarantor and any person granting such person the right to
require the Company or such Guarantor to file a registration
statement under the Act with respect to any securities of the
Company or such Guarantor or to require the Company or such
Guarantor to include such securities with the Notes and
Subsidiary Guarantees registered pursuant to any Registration
Statement, except for registration rights granted in favor of
certain holders of Class B common stock of the Company pursuant
to the Shareholder Agreement and registration rights granted in
favor of The 1818 Fund III, L.P. and its affiliates in connection
with the Preferred Stock Offering;
(xix) the Indenture complies as to form in all material
respects with the requirements of the TIA, and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder. It is not necessary in connection with the
offer, sale and delivery of the Series A Notes to the Initial
Purchasers in the manner contemplated by this Agreement or in
connection with the Exempt Resales to qualify the Indenture under
the TIA;
(xx) no registration under the Act of the Series A Notes
is required for the sale of the Series A Notes to the Initial
Purchaser as contemplated by this Agreement or for the Exempt
Resales assuming (i) that each Initial Purchaser is a QIB, or a
Regulation S Purchaser, (ii) the accuracy of, and compliance
with, the Initial Purchaser's representations and agreements
contained in Section 7 of this Agreement, and (iii) the accuracy
of the representations of the Company and the Guarantors set
forth in Sections 6(cc), (dd) and (ee) of this Agreement; and
(xxi) the Pledge Agreement has been duly authorized,
executed and delivered by the Company.
In addition, the opinion of Correro Fishman Haygood Phelps Walmsley &
Casteix, L.L.P. will state that although such counsel has not checked the
accuracy and completeness of, or otherwise verified, and is not passing upon and
assumes no responsibility for the accuracy or completeness of, the statements
contained in the Offering Memorandum, except to the limited extent stated in
section (e)(xi) above, in the course of such counsel's review and discussion of
the contents of the Offering Memorandum with certain officers and employees of
the Company and its independent accountants, but without independent check or
verification, no facts have come to such counsel's attention which cause such
counsel to believe that the Offering Memorandum (other than the financial
statements, notes and schedules and other financial data and information
contained therein, as to which such counsel need not express any belief) as of
the date of the Offering Memorandum or as of the Closing Date contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements contained therein not
misleading.
The opinion of Correro Fishman Haygood Phelps Walmsley & Casteix,
L.L.P. described in Section 9(e) above shall be rendered to you at the request
of the Company and the
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<PAGE>
Guarantors and shall so state therein and shall be limited to the laws of the
United States of America and those of the state of Louisiana.
(f) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Lukas, Nace, Gutierrez & Sachs, Chartered, special communications
counsel for the Company, to the effect that:
(i) the statements in the Offering Memorandum under the
captions "Risk Factors -- Government Regulation" and "Business of
the Company," insofar as such statements constitute a summary of
Communications Act of 1934, as amended, and the rules and
regulations of the FCC promulgated thereunder (the
"Communications Act"), are accurate in all material respects and
------------------
fairly summarize all matters referred to therein;
(ii) the Company holds the PCS Licenses, the Cellular
Licenses and the Paging Licenses (together, the "Licenses"). The
--------
Licenses are in full force and effect and are not subject to any
conditions other than those conditions listed on the Licenses and
those conditions generally applicable to entities holding similar
licenses issued by the FCC. All applicable administrative and
judicial appeal, review and reconsideration periods of the FCC's
grant of the Licenses have expired, without the timely filing of
any such appeal or request for review or reconsideration and
without the FCC having instituted review of the grant of the
Licenses on its own motion;
(iii) the Licenses (along with the Sprint PCS Licenses)
provide all necessary FCC certificates, orders, permits,
licenses, authorizations, consents or approvals required by the
FCC for the Company to construct and operate a wireless
communications network in the respective markets designated in
the Licenses and to conduct its business in the manner described
in the Offering Memorandum;
(iv) the Company has made all reports, filings and
registrations with, and paid all fees required by the FCC,
including any and all down payments or installment payments,
except where such failure would not have Material Adverse Effect
on the Company's operations as a whole;
(v) to such counsel's knowledge, (a) there is no
unsatisfied adverse FCC order, decree or ruling outstanding
against the Company, or any of the Licenses; (b) there is no
litigation, proceeding (including any rulemaking proceeding),
complaint, inquiry or investigation against the Company or in
respect of any of the Licenses, pending or threatened before the
FCC (including any pending judicial review of such an action by
the FCC), including without limitation, any Notice of Violation,
Notice of Apparent Liability or Order to Show Cause, except for
proceedings affecting the wireless industry generally to which
the Company is not a
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specified party; (c) neither the Company nor any Guarantor has
received any notice of proceedings relating to the violation,
revocation or modification of any of the Licenses, certificates,
orders, permits, licenses, authorizations, consents or approvals
or the qualification or rejection of any FCC filing, the effect
of which, singly or in the aggregate, would have a Material
Adverse Effect upon, or cause material disruption to, the
Company's operations, taken as a whole;
(vi) to such counsel's knowledge, the Company is not in
violation of, or in default under, the Communications Act, the
effect of which, singly or in the aggregate, would have a
Material Adverse Effect on the Company or the Licenses, taken as
a whole;
(vii) the execution and delivery of the Transaction
Documents and the performance of the Company of their
obligations thereunder, will not violate the Communications Act
or, to our such counsel's knowledge, the terms of any order,
writ, judgment, award, injunction or decree of the FCC;.
(viii) except to the extent that prior FCC approval is
required in connection with the exercise of creditors' rights in
the event of a default, no consent or approval by the FCC is
required for the execution delivery or performance of the
Transaction Documents by the Company or the Guarantors or for the
consummation of the transactions described therein;
(ix) LA Unwired was qualified to participate in the FCC's
PCS license auctions as a "Small Business," as defined by FCC
Rules, and is qualified to hold the licenses for LA Unwired's PCS
operations according to the FCC's rules. The Company's ownership
interest in LA Unwired does not violate the FCC's rules;
(x) to such counsel's knowledge, (i) the Sprint PCS
Licenses are in full force and effect and are not subject to any
conditions other than those conditions listed thereon and those
conditions listed thereon and those conditions generally
applicable to entities holding similar licenses issued by the
FCC; (ii) all applicable administrative and judicial appeal,
review and reconsideration periods of the Sprint PCS Licenses
have expired, without the timely filing of any such appeal or
request for review or reconsideration and without the FCC having
instituted review of the grant of the Sprint PCS Licenses on its
own motion; and
(xi) the Company and each of its subsidiaries has, or has
timely filed applications for, all permits of governmental or
regulatory authorities (including, as appropriate, the state
public utilities commissions of Alabama, Arkansas, Florida,
Louisiana, Mississippi and Texas) necessary to engage in the
wireless and competitive local exchange businesses currently
conducted by the Company, except where the failure to hold such
permits would not have a Material Adverse Effect on the Company
and its
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subsidiaries, taken as a whole; and such counsel has no reason to
believe that any governmental body or agency is considering
limiting, suspending or revoking any such permit. All such
permits are valid and in full force and effect.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Jones, Walker, Waechter, Poltevent, Carrere & Denegre LLP, tax counsel
for the Company and the Guarantors, to the effect that the statements under the
caption "Certain U.S. Federal Tax Considerations" in the Offering Memorandum,
insofar as such statements constitute a summary of the legal matters, documents
or proceedings referred to therein, fairly present in all material respects such
legal matters, documents and proceedings.
(h) The Initial Purchasers shall have received on the Closing
Date an opinion, dated the Closing Date, of Latham & Watkins, counsel for the
Initial Purchasers, in form and substance reasonably satisfactory to the Initial
Purchasers.
(i) The Initial Purchasers shall have received, at the time this
Agreement is executed and at the Closing Date, letters dated the date hereof or
the Closing Date, as the case may be, in form and substance satisfactory to the
Initial Purchasers from Ernst & Young LLP, independent public accountants,
containing the information and statements of the type ordinarily included in
accountants' "comfort letters" to the Initial Purchasers with respect to the
financial statements and certain financial information contained in the Offering
Memorandum.
(j) You shall have received on the Closing Date an opinion
(satisfactory to you and counsel for the Initial Purchasers), dated the Closing
Date, of Swidler Berlin Shereff Friedman LLP, special New York counsel to the
Company and the Guarantors, to the effect that:
(i) the Series A Notes,when executed and authenticated in
accordance with the provisions of the Indenture and delivered to
and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, will be valid and binding obligations of
the Company, enforceable in accordance with their terms except as
(x) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally
and (y) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability;
(ii) the Subsidiary Guarantees, when the Series A Notes
are executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will
be valid and binding obligations of the Guarantors, enforceable
in accordance with their terms except as (x) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (y) rights of
acceleration and the availability of equitable remedies may be
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limited by equitable principles of general applicability;
(iii) the Indenture is a valid and binding agreement of the
Company and each Guarantor, enforceable against the Company and
each Guarantor in accordance with its terms except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and (y)
rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability;
(iv) the Registration Rights Agreement is a valid and
binding agreement of the Company and each Guarantor, enforceable
against the Company and each Guarantor in accordance with its
terms, except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency or similar laws affecting creditors'
rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability; and
(v) the Pledge Agreement is a valid and binding agreement
of Louisiana Unwired, LLC, enforceable against Louisiana Unwired,
LLC in accordance with its terms, except as (x) the
enforceability thereof may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally and (y)
rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability.
(k) The Series A Notes shall have been approved by the NASD for
trading and duly listed in PORTAL.
(l) The Initial Purchasers shall have received a counterpart,
conformed as executed, of the Indenture which shall have been entered into by
the Company, the Guarantors and the Trustee.
(m) The Company and the Guarantors shall have executed the
Registration Rights Agreement and the Initial Purchasers shall have received an
original copy thereof, duly executed by the Company and the Guarantors.
(n) Neither the Company nor the Guarantors shall have failed at
or prior to the Closing Date to perform or comply with any of the agreements
herein contained and required to be performed or complied with by the Company or
the Guarantors, as the case may be, at or prior to the Closing Date.
(o) The Company shall have obtained the approval of DTC for
"book entry" transfer of the Notes.
10. Effectiveness of Agreement and Termination. This Agreement shall
------------------------------------------
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the
Closing Date by the Initial Purchasers by written notice to the Company if any
of the following has occurred:
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(i) any outbreak or escalation of hostilities or other national or international
calamity or crisis or change in economic conditions or in the financial markets
of the United States or elsewhere that, in the Initial Purchasers' judgment, is
material and adverse and, in the Initial Purchasers' judgment, makes it
impracticable to market the Series A Notes on the terms and in the manner
contemplated in the Offering Memorandum, (ii) the suspension or material
limitation of trading in securities or other instruments on the New York Stock
Exchange, the American Stock Exchange, or the Nasdaq National Market or
limitation on prices for securities or other instruments on any such exchange or
the Nasdaq National Market, (iii) the suspension of trading of any securities of
the Company or any Guarantor on any exchange or in the over-the-counter market,
(iv) the enactment, publication, decree or other promulgation of any federal or
state statute, regulation, rule or order of any court or other governmental
authority which in your opinion materially and adversely affects, or will
materially and adversely affect, the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole, (v)
the declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date any one or more of the Initial Purchasers shall
fail or refuse to purchase the Series A Notes which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of the Series
A Notes which such defaulting Initial Purchaser or Initial Purchasers, as the
case may be, agreed but failed or refused to purchase is not more than one-tenth
of the aggregate principal amount of the Series A Notes to be purchased on such
date by all Initial Purchasers, each non-defaulting Initial Purchaser shall be
obligated severally, in the proportion which the principal amount of the Series
A Notes set forth opposite its name in Schedule B bears to the aggregate
principal amount of the Series A Notes which all the non-defaulting Initial
Purchasers, as the case may be, have agreed to purchase, or in such other
proportion as you may specify, to purchase the Series A Notes which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase on such date; provided that in no event shall the aggregate
principal amount of the Series A Notes which any Initial Purchaser has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 10
by an amount in excess of one-ninth of such principal amount of the Series A
Notes without the written consent of such Initial Purchaser. If on the Closing
Date any Initial Purchaser or Initial Purchasers shall fail or refuse to
purchase the Series A Notes and the aggregate principal amount of the Series A
Notes with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of the Series A Notes to be purchased by all Initial
Purchasers and arrangements satisfactory to the Initial Purchasers and the
Company for purchase of such the Series A Notes are not made within 48 hours
after such default, this Agreement will terminate without liability on the part
of any non-defaulting Initial Purchasers and the Company. In any such case
which does not result in termination of this Agreement, either the non-
defaulting Initial Purchasers or the Company shall have the right to postpone
the Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Offering Memorandum or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect of any
default of any such Initial Purchaser under this Agreement.
11. Initial Purchasers' Information. The Company and the Initial
-------------------------------
33
<PAGE>
Purchasers severally acknowledge and agree for all purposes under this Agreement
that the statements with respect to the offering of the Notes set forth in the
last paragraph of the outside front cover page; the stabilization language in
the first paragraph of page (ii); and the first sentence of the third paragraph,
the fourth sentence of the fourth paragraph and the sixth paragraph under the
caption "Plan of Distribution" in such Offering Memorandum constitute the only
information furnished to the Company in writing by the Initial Purchasers
expressly for use in the Offering Memorandum.
12. Miscellaneous. Notices given pursuant to any provision of this
-------------
Agreement shall be addressed as follows: (i) if to the Company or any Guarantor,
to US Unwired Inc., One Lakeshore Drive, Suite 1900, Lake Charles, Louisiana
70629, Attention: General Counsel and (ii) if to the Initial Purchaser,
Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York,
New York 10172, Attention: Syndicate Department, or in any case to such other
address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Guarantors and the Initial
Purchasers set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive delivery of and payment
for the Series A Notes, regardless of (i) any investigation, or statement as to
the results thereof, made by or on behalf of the Initial Purchasers, the
officers or directors of the Initial Purchasers, any person controlling the
Initial Purchasers, the Company, any Guarantor, the officers, managers or
directors (or persons serving in a position of comparable responsibility of a
limited liability company) of the Company or any Guarantor, or any person
controlling the Company or any Guarantor, (ii) acceptance of the Series A Notes
and payment for them hereunder and (iii) termination of this Agreement.
If for any reason the Series A Notes are not delivered by or on behalf
of the Company as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), the Company and each Guarantor, jointly
and severally, agree to reimburse the Initial Purchasers for all out-of-pocket
expenses (including the fees and disbursements of counsel) incurred by them.
Notwithstanding any termination of this Agreement, the Company shall be liable
for all expenses which it has agreed to pay pursuant to Section 5(i) hereof.
The Company and each Guarantor also agree, jointly and severally, to reimburse
the Initial Purchasers and their officers, directors and each person, if any,
who controls an Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act for any and all fees and expenses (including
without limitation the fees and expenses of counsel) incurred by them in
connection with enforcing their rights under this Agreement (including without
limitation their rights under Section 8). The Initial Purchasers agree,
severally, to reimburse the Company and each Guarantor, and their officers,
managers, directors (or persons serving in a position of comparable
responsibility of a limited liability company) and each person, if any, who
controls the Company or a Guarantor within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act for any and all fees and expenses (including
without limitation the fees and expenses of counsel) incurred by them in
connection with enforcing their rights under this Agreement (including without
limitation their rights under Section 8).
Except as otherwise expressly provided, this Agreement has been and is
made solely for the benefit of and shall be binding upon the Company, the
Guarantors, the Initial
34
<PAGE>
Purchasers, the Initial Purchasers' directors and officers, any controlling
persons referred to herein, the directors, managers and officers (or persons
serving in a position of comparable responsibility of a limited liability
company) of the Company and the Guarantors and their respective successors and
assigns, all as and to the extent provided in this Agreement, and no other
person shall acquire or have any right under or by virtue of this Agreement. The
term "successors and assigns" shall not include a purchaser of any of the Series
A Notes from the Initial Purchasers merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
35
<PAGE>
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Guarantors and the Initial Purchasers.
Very truly yours,
US UNWIRED INC.
By: /s/ Robert Piper
------------------------------------
Name: Robert Piper
Title: President
LOUISIANA UNWIRED, LLC
By: /s/ Robert Piper
------------------------------------
Name: Robert Piper
Title: Manager/President
UNWIRED TELECOM CORP.
By: /s/ Robert Piper
------------------------------------
Name: Robert Piper
Title: President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: Steven D. Smith
------------------------------
Name: Steven D. Smith
Title: Senior Vice President
FIRST UNION SECURITIES, INC.
By: Eric J. Lloyd
------------------------------
Name: Eric J. Lloyd
Title: Managing Director
BNY CAPITAL MARKETS, INC.
By: /s/ Timothy Parker
-------------------------------
Name: Timothy Parker
Title: Vice President
36
<PAGE>
SCHEDULE A
Guarantors
Louisiana Unwired, LLC
Unwired Telecom Corp.
<PAGE>
SCHEDULE B
Principal Amount
----------------
Initial Purchaser at Maturity of Notes
----------------- --------------------
Donaldson, Lufkin & Jenrette $320,000,000
Securities Corporation
First Union Securities, Inc. $ 40,000,000
BNY Capital Markets, Inc. $ 40,000,000
------------
Total $400,000,000
============
<PAGE>
SCHEDULE C
Subsidiaries
Louisiana Unwired, LLC
Unwired Telecom Corp.
LEC Unwired, LLC
Command Connect, LLC
Texas Unwired
<PAGE>
SCHEDULE 6(ss)
Louisiana Unwired, LLC
<TABLE>
<CAPTION>
Expiration
Type of License Call Sign Location Date
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
PCS KNLF 928 Alexandria, LA 4/28/07
PCS KNLG 891 Lake Charles, LA 4/28/07
PCS KNLG 894 Monroe, LA 4/28/07
PCS KNLG 900 Shreveport, LA 4/28/07
Command Connect, LLC
Expiration
Type of License Call Sign Location Date
- -------------------------------------------------------------------------------
PCS KNLG 885 Bartlesville, OK 4/28/07
PCS KNLG 886 Coffeyville, KS 4/28/07
PCS KNLG 887 Columbus-Starkville, MS 4/28/07
PCS KNLG 888 *Eldorado, Magnolia, Camden, AR 4/28/07
PCS KNLG 890 Hutchinson, KS 4/28/07
PCS KNLG 892 *Longview-Marshall, TX 4/28/07
PCS KNLG 895 Natchez, MS 4/28/07
PCS KNLG 896 *Paris, TX 4/28/07
PCS KNLG 897 *Pine Bluff, AR 4/28/07
PCS KNLG 898 Pueblo, CO 4/28/07
PCS KNLG 899 Salina, KS 4/28/07
PCS KNLG 901 *Texarkana, TX 4/28/07
PCS KNLG 902 Topeka, KS 4/28/07
PCS KNLG 903 Tupelo-Corinth, MS 4/28/07
PCS KNLG 904 Tuscaloosa, AL 4/28/07
PCS KNLG 905 Wichita, KS 4/28/07
PCS KNLG 893 Manhattan-Junction City, KS 4/28/07
PCS KNLG 889 Emporia, KS 4/28/07
</TABLE>
* These licenses will be assigned to Louisiana Unwired, LLC as soon as payment
is made to the FCC.
<PAGE>
SCHEDULE 6(tt)
Unwired Telecom Corp.
<TABLE>
<CAPTION>
Expiration
Type of License Call Sign Location Date
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Cellular KNKA631 Lake Charles, LA - MSA 10/1/06
Cellular KNKN803 Beauregard, LA - RSA 10/1/00
Cellular KNKN920 DeSoto, LA - RSA 10/1/00
</TABLE>
<PAGE>
SCHEDULE 6(xx)
Paging Licenses
Paging licenses KNKP448 and KNLM672 are now being operated under a Station
Temporary Authority and are expected to be renewed by the FCC in the ordinary
course.
<PAGE>
SCHEDULE 6(aaa)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Sprint PCS
Sprint PCS Spectrum
BTA# BTA Name County Spectrum Block MHZ
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 Alexandria New Orleans A 30
- ---------------------------------------------------------------------------------------------
17 Anniston Birmingham A 30
- ---------------------------------------------------------------------------------------------
44 Birmingham Coose Birmingham A 30
- ---------------------------------------------------------------------------------------------
44 Birmingham Chilton Birmingham A 30
- ---------------------------------------------------------------------------------------------
44 Birmingham Tallapoosa Birmingham A 30
- ---------------------------------------------------------------------------------------------
44 Birmingham Cuffman Birmingham A 30
- ---------------------------------------------------------------------------------------------
44 Birmingham Teladega Birmingham A 30
- ---------------------------------------------------------------------------------------------
94 Columbus-Starkville D 10
- ---------------------------------------------------------------------------------------------
108 Decatur Birmingham A 30
- ---------------------------------------------------------------------------------------------
125 El Dorado-Magnolia-Camden Little Rock B 30
- ---------------------------------------------------------------------------------------------
146 Florence Birmingham A 30
- ---------------------------------------------------------------------------------------------
154 Ft. Walton Beach New Orleans A 30
- ---------------------------------------------------------------------------------------------
158 Gadsden Birmingham A 30
- ---------------------------------------------------------------------------------------------
175 Greenville-Greenwood D 10
- ---------------------------------------------------------------------------------------------
186 Hallesburg New Orleans A 10
- ---------------------------------------------------------------------------------------------
193 Hot Springs Little Rock B 30
- ---------------------------------------------------------------------------------------------
195 Houma-Thibodaux E 30
- ---------------------------------------------------------------------------------------------
198 Huntsville Birmingham A 30
- ---------------------------------------------------------------------------------------------
210 Jackson O&E 20
- ---------------------------------------------------------------------------------------------
238 Lake Charles D 10
- ---------------------------------------------------------------------------------------------
246 Laurel New Orleans A 30
- ---------------------------------------------------------------------------------------------
257 Little Rock (County Only) Dallas Little Rock B 30
- ---------------------------------------------------------------------------------------------
257 Little Rock (County Only) Nevada Little Rock B 30
- ---------------------------------------------------------------------------------------------
257 Little Rock (County Only) Grant Little Rock B 30
- ---------------------------------------------------------------------------------------------
257 Little Rock (County Only) Clark Little Rock B 30
- ---------------------------------------------------------------------------------------------
260 Longview-Marshall Dallas B 30
- ---------------------------------------------------------------------------------------------
265 Lufkin-Nacogdoches D 10
- ---------------------------------------------------------------------------------------------
269 McComb-Brookhaven New Orleans A 30
- ---------------------------------------------------------------------------------------------
290 Memphis (County Only) Montgomery D 10
- ---------------------------------------------------------------------------------------------
290 Memphis (County Only) Yalobusha D 10
- ---------------------------------------------------------------------------------------------
290 Memphis (County Only) Tallahatchie D 10
- ---------------------------------------------------------------------------------------------
290 Memphis (County Only) Grenada D 10
- ---------------------------------------------------------------------------------------------
292 Meridian E 10
- ---------------------------------------------------------------------------------------------
302 Mobile New Orleans A 30
- ---------------------------------------------------------------------------------------------
304 Monroe Dallas B 30
- ---------------------------------------------------------------------------------------------
305 Montgomery Birmingham A 30
- ---------------------------------------------------------------------------------------------
314 Nashville Maury Nashville A 30
- ---------------------------------------------------------------------------------------------
314 Nashville Giles Nashville A 30
- ---------------------------------------------------------------------------------------------
315 Natchez D 10
- ---------------------------------------------------------------------------------------------
340 Panama City E 10
- ---------------------------------------------------------------------------------------------
341 Paris Dallas B 30
- ---------------------------------------------------------------------------------------------
343 Pensacola New Orleans A 30
- ---------------------------------------------------------------------------------------------
348 Pine Bluff Little Rock B 30
- ---------------------------------------------------------------------------------------------
415 Selma Birmingham A 30
- ---------------------------------------------------------------------------------------------
419 Shreveport Dallas B 30
- ---------------------------------------------------------------------------------------------
439 Tallahassee Jackson D 10
- ---------------------------------------------------------------------------------------------
443 Texarkana Dallas B 30
- ---------------------------------------------------------------------------------------------
449 Tupelo-Corinth D 10
- ---------------------------------------------------------------------------------------------
450 Tuscaloosa Birmingham A 30
- ---------------------------------------------------------------------------------------------
462 Tyler Dallas B 30
- ---------------------------------------------------------------------------------------------
465 Vicksburg D 10
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT A
Form of Registration Rights Agreement
i
<PAGE>
EXHIBIT A
================================================================================
A/B EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of October 29, 1999
by and among
US Unwired Inc.
Louisiana Unwired, LLC
Unwired Telecom Corp.
and
Donaldson Lufkin & Jenrette Securities Corporation
First Union Securities, Inc.
BNY Capital Markets, Inc.
================================================================================
<PAGE>
This A/B Exchange Registration Rights Agreement (this "Agreement") is made
---------
and entered into as of October 29, 1999, by and among US Unwired Inc., a
Louisiana corporation (the "Company"); Louisiana Unwired, LLC and Unwired
-------
Telecom Corp. (the "Guarantors"); and Donaldson, Lufkin & Jenrette Securities
----------
Corporation; First Union Securities, Inc. and BNY Capital Markets, Inc. (the
"Initial Purchasers"), which have agreed to purchase the Company's 13 3/8%
------------------
Series A Senior Subordinated Discount Notes due 2009 (the "Series A Notes")
--------------
pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated October
26, 1999 (the "Purchase Agreement"), by and among the Company, the Guarantors
------------------
and the Initial Purchasers. In order to induce the Initial Purchasers to
purchase the Series A Notes, the Company has agreed to provide the registration
rights set forth in this Agreement. The execution and delivery of this Agreement
is a condition to the obligations of the Initial Purchasers set forth in Section
3 of the Purchase Agreement. Capitalized terms used herein and not otherwise
defined shall have the meaning assigned to them by the Indenture, dated October
29, 1999, between the Company and State Street Bank and Trust Company, as
Trustee, relating to the Series A Notes and the Series B Notes (the
"Indenture").
---------
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
---
Affiliate: As defined in Rule 144 under the Act.
---------
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
-------------
Certificated Securities: Definitive Notes, as defined in the Indenture.
-----------------------
Closing Date: The date hereof.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: An Exchange Offer shall be deemed "Consummated" for purposes
----------
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such Exchange
Offer Registration Statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Registrar under
the Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
Consummation Deadline: As defined in Section 3(b) hereof.
---------------------
1
<PAGE>
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
----------------------
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Exchange Offer: The exchange and issuance by the Company of a principal
--------------
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement relating
-------------------------------------
to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers propose
--------------
to sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act and pursuant to Regulation S under
the Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
---------------
Holders: As defined in Section 2 hereof.
-------
Prospectus: The prospectus included in a Registration Statement at the
----------
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
-------------------
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Statement: Any registration statement of the Company and the
----------------------
Guarantors relating to (a) an offering of Series B Notes pursuant to an Exchange
Offer or (b) the registration for resale of Transfer Restricted Securities
pursuant to the Shelf Registration Statement, in each case, (i) that is filed
pursuant to the provisions of this Agreement and (ii) including the Prospectus
included therein, all amendments and supplements thereto (including post-
effective amendments) and all exhibits and material incorporated by reference
therein.
Regulation S: Regulation S promulgated under the Act.
------------
Rule 144: Rule 144 promulgated under the Act.
--------
Series B Notes: The Company's 13 3/8% Series B Senior Subordinated Discount
--------------
Notes due 2009 to be issued pursuant to the Indenture: (i) in the Exchange Offer
or (ii) as contemplated by Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
----------------------------
Suspension Notice: As defined in Section 6(d) hereof.
-----------------
2
<PAGE>
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb) as
---
in effect on the date of the Indenture.
Transfer Restricted Securities: Each (A) Series A Note, until the earliest
------------------------------
to occur of (i) the date on which such Series A Note is exchanged in the
Exchange Offer for a Series B Note which is entitled to be resold to the public
by the Holder thereof without complying with the prospectus delivery
requirements of the Act, (ii) the date on which such Series A Note has been
disposed of in accordance with a Shelf Registration Statement (and the
purchasers thereof have been issued Series B Notes), or (iii) the date on which
such Series A Note is distributed pursuant to Rule 144 under the Act; and (B)
Series B Note held by a Broker-Dealer until the date on which such Series B Note
is disposed of by a Broker-Dealer pursuant to the "Plan of Distribution"
contemplated by the Exchange Offer Registration Statement (including the
delivery of the Prospectus contained therein).
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities.
------
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause the Exchange Offer
Registration Statement to be filed with the Commission as soon as practicable
after the Closing Date, but in no event later than 45 days after the Closing
Date (such 45th day being the "Filing Deadline"), (ii) use its commercially
---------------
reasonable efforts to cause such Exchange Offer Registration Statement to become
effective at the earliest practicable time, but in no event later than 150 days
after the Closing Date (such 150th day being the "Effectiveness Deadline"),
----------------------
(iii) in connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to cause
it to become effective, (B) file, if applicable, a post-effective amendment to
such Exchange Offer Registration Statement pursuant to Rule 430A under the Act
and (C) cause all necessary filings, if any, in connection with the registration
and qualification of the Series B Notes to be made under the Blue Sky laws of
such jurisdictions as are necessary to permit Consummation of the Exchange
Offer, and (iv) upon the effectiveness of such Exchange Offer Registration
Statement and the making of such Blue Sky law filings, commence and Consummate
the Exchange Offer. The Exchange Offer Registration Statement shall be on the
appropriate form permitting (i) registration of the Series B Notes to be offered
in exchange for the Series A Notes that are Transfer Restricted Securities and
(ii) resales of Series B Notes by Broker-Dealers that tendered into the Exchange
Offer Series A Notes that such Broker-Dealer acquired for its own account as a
result of market making activities or other trading activities (other than
Series A Notes acquired directly from the Company or any of its Affiliates) as
contemplated by Section 3(c) below.
(b) The Company and the Guarantors shall use their respective commercially
reasonable efforts to cause the Exchange Offer Registration Statement to be
effective continuously during, and shall keep the Exchange Offer open for a
period of not less than, the minimum period (if any) required under applicable
federal and state securities laws to Consummate the Exchange Offer;
3
<PAGE>
provided, however, that in no event shall such period be less than 20 Business
Days. The Company and the Guarantors shall cause the Exchange Offer to comply
with all applicable federal and state securities laws. No securities other than
the Series B Notes shall be included in the Exchange Offer Registration
Statement. The Company and the Guarantors shall use their respective
commercially reasonable efforts to cause the Exchange Offer to be Consummated on
the earliest practicable date after the Exchange Offer Registration Statement
has become effective, but in no event later than 30 business days thereafter
(such 30/th/ day being the "Consummation Deadline").
---------------------
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any Affiliate of the Company), may exchange such
Transfer Restricted Securities pursuant to the Exchange Offer. Such "Plan of
Distribution" section shall also contain all other information with respect to
such sales by such Broker-Dealers that the Commission may require in order to
permit such sales pursuant thereto, but such "Plan of Distribution" shall not
name any such Broker-Dealer or disclose the amount of Transfer Restricted
Securities held by any such Broker-Dealer, except to the extent required by the
Commission.
Because such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer, the Company and
Guarantors shall permit the use of the Prospectus contained in the Exchange
Offer Registration Statement by such Broker-Dealer to satisfy such prospectus
delivery requirement. To the extent necessary to ensure that the prospectus
contained in the Exchange Offer Registration Statement is available for sales of
Series B Notes by Broker-Dealers, the Company and the Guarantors agree to use
their respective commercially reasonable efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented, amended and current
as required by and subject to the provisions of Section 6(a) and (c) hereof and
in conformity with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of one year from the Consummation Deadline or such shorter period as will
terminate when all such Transfer Restricted Securities covered by such
Registration Statement have been sold pursuant thereto. The Company and the
Guarantors shall provide sufficient copies of the latest version of such
Prospectus to such Broker-Dealers, promptly upon request, and in no event later
than one day after such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
------------------
applicable law or Commission policy (after the Company and the Guarantors have
complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any
Holder of Transfer Restricted Securities shall notify the Company within 20
Business Days following the Consummation Deadline that (A) such Holder was
prohibited by law or Commission policy from participating in the Exchange Offer
or (B) such Holder may not resell the Series B Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and the Prospectus
contained in the Exchange Offer Registration Statement is not appropriate or
available for such resales by such Holder or (C) such Holder is a Broker-
4
<PAGE>
Dealer and holds Series A Notes acquired directly from the Company or any of its
Affiliates, then the Company and the Guarantors shall:
(x) cause to be filed, on or prior to 30 days after the earlier of (i) the
date on which the Company determines that the Exchange Offer Registration
Statement cannot be filed as a result of clause (a)(i) above and (ii) the date
on which the Company receives the notice specified in clause (a)(ii) above, (30
days after the earlier date in (i) or (ii) above, the "Filing Deadline"), a
---------------
shelf registration statement pursuant to Rule 415 under the Act (which may be an
amendment to the Exchange Offer Registration Statement (the "Shelf Registration
------------------
Statement")), relating to all Transfer Restricted Securities, and
- ---------
(y) shall use their respective commercially reasonable efforts to cause such
Shelf Registration Statement to become effective on or prior to 90 days after
the Filing Deadline for the Shelf Registration Statement of, if later, the date
by which the Exchange Offer Registration Statement would otherwise have been
required to be declared effective if the obligation to file the Shelf
Registration Statement had not arisen (such 90th day the "Effectiveness
-------------
Deadline").
- --------
If, after the Company has filed an Exchange Offer Registration Statement
that satisfies the requirements of Section 3(a) above, the Company is required
to file and make effective a Shelf Registration Statement solely because the
Exchange Offer is not permitted under applicable federal law (i.e., clause
(a)(i) above), then the filing of the Exchange Offer Registration Statement
shall be deemed to satisfy the requirements of clause (x) above; provided that,
in such event, the Company shall remain obligated to meet the Effectiveness
Deadline set forth in clause (y).
To the extent necessary to ensure that the Shelf Registration Statement is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a) and the other securities required
to be registered therein pursuant to Section 6(b)(ii) hereof, the Company and
the Guarantors shall use their respective commercially reasonable efforts to
keep any Shelf Registration Statement required by this Section 4(a) continuously
effective, supplemented, amended and current as required by and subject to the
provisions of Sections 6(b) and (c) hereof and in conformity with the
requirements of this Agreement, the Act and the policies, rules and regulations
of the Commission as announced from time to time, for a period of at least two
years (as extended pursuant to Section 6(c)(i)) following the Closing Date, or
such shorter period as will terminate when (x) all Transfer Restricted
Securities covered by such Shelf Registration Statement have been sold pursuant
thereto or (y) the only remaining Transfer Restricted Securities have been
determined in good faith by the Company, after reasonable inquiry, to be
eligible for resale under Rule 144(k).
(b) Provision by Holders of Certain Information in Connection with the
------------------------------------------------------------------
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
- ----------------------------
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 and 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information by the time herein provided. Each selling Holder agrees to promptly
furnish
5
<PAGE>
additional information required to be disclosed in order to make the information
previously furnished to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not filed
with the Commission on or prior to the applicable Filing Deadline, (ii) any such
Registration Statement has not been declared effective by the Commission on or
prior to the applicable Effectiveness Deadline, (iii) the Exchange Offer has not
been Consummated on or prior to the Consummation Deadline or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded by a post-effective amendment to
such Registration Statement that cures such failure and that is itself declared
effective within three business days after such cessation or failure (each such
event referred to in clauses (i) through (iv), a "Registration Default"), then
--------------------
the Company and the Guarantors hereby jointly and severally agree to pay to each
Holder of Transfer Restricted Securities affected thereby liquidated damages in
an amount equal to $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such Holder for each week (prorated for any
portion thereof) that the Registration Default continues for the first 90-day
period immediately following the occurrence of such Registration Default. The
amount of the liquidated damages shall increase by an additional $.05 per week
per $1,000 in principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of liquidated damages of $.50 per week per $1,000 in
principal amount of Transfer Restricted Securities; provided that the Company
and the Guarantors shall in no event be required to pay liquidated damages for
more than one Registration Default at any given time. Notwithstanding anything
to the contrary set forth herein, (1) upon filing of the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (i) above, (2) upon the effectiveness of the Exchange
Offer Registration Statement (and/or, if applicable, the Shelf Registration
Statement), in the case of (ii) above, (3) upon Consummation of the Exchange
Offer, in the case of (iii) above, or (4) upon the filing of a post-effective
amendment to the Registration Statement or an additional Registration Statement
that causes the Exchange Offer Registration Statement (and/or, if applicable,
the Shelf Registration Statement) to again be declared effective or made usable
in the case of (iv) above, or (5) upon the Transfer Restricted Securities being
salable under Rule 144(k), the liquidated damages payable with respect to the
Transfer Restricted Securities as a result of such clause (i), (ii), (iii) or
(iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. Notwithstanding the fact that any securities for which liquidated damages
are due cease to be Transfer Restricted Securities, all obligations of the
Company and the Guarantors to pay accrued liquidated damages with respect to
securities shall survive until such time as such obligations with respect to
such securities shall have been satisfied in full.
Notwithstanding the foregoing, if the Company has complied with its
obligations under Section 6 of this Agreement, no Holder of Series A Notes shall
be entitled to receive any liquidated
6
<PAGE>
damages with respect to such Series A Notes if such Holder was eligible to
exchange, and did not validly tender, such Notes for Series B Notes in the
Exchange Offer.
The subordination provisions of Section 10 of the Indenture are hereby
incorporated in this Section 5 and made applicable to the Liquidated Damages
payments as if such provisions were set forth verbatim herein.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
-------------------------------------
Exchange Offer, the Company and the Guarantors shall (x) comply with all
applicable provisions of Section 6(c) below, (y) use their respective
commercially reasonable efforts to effect such exchange and to permit the resale
of Series B Notes by Broker-Dealers that tendered in the Exchange Offer Series A
Notes that such Broker-Dealer acquired for its own account as a result of its
market making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its Affiliates) being sold in
accordance with the intended method or methods of distribution thereof, and (z)
comply with all of the following provisions:
(i) If, following the date hereof there has been announced a change
in Commission policy with respect to exchange offers such as the Exchange
Offer, that in the reasonable opinion of counsel to the Company raises a
substantial question as to whether the Exchange Offer is permitted by
applicable federal law, the Company and the Guarantors hereby agree to seek
a no-action letter or other favorable decision from the Commission allowing
the Company and the Guarantors to Consummate an Exchange Offer for such
Transfer Restricted Securities. The Company and the Guarantors hereby agree
to pursue the issuance of such a decision to the Commission staff level. In
connection with the foregoing, the Company and the Guarantors hereby agree
to take all such other actions as may be requested by the Commission or
otherwise required in connection with the issuance of such decision,
including without limitation (A) participating in telephonic conferences
with the Commission, (B) delivering to the Commission staff an analysis
prepared by counsel to the Company setting forth the legal bases, if any,
upon which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution (which need not be
favorable) by the Commission staff.
(ii) As a condition to its participation in the Exchange Offer, each
Holder of Transfer Restricted Securities (including, without limitation,
any Holder who is a Broker-Dealer) shall furnish, upon the request of the
Company, prior to the Consummation of the Exchange Offer, a written
representation to the Company and the Guarantors (which may be contained in
the letter of transmittal contemplated by the Exchange Offer Registration
Statement) to the effect that (A) it is not an Affiliate of the Company,
(B) it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a
distribution of the Series B Notes to be issued in the Exchange Offer and
(C) it is acquiring the Series B Notes in its ordinary course of business.
As a condition to its participation in the Exchange Offer each Holder using
the Exchange Offer to participate in a distribution of the Series B Notes
shall acknowledge and agree that, if the resales are of Series B Notes
obtained by such Holder in exchange for Series A Notes acquired directly
from the Company or an Affiliate thereof, it (1) could not, under
7
<PAGE>
Commission policy as in effect on the date of this Agreement, rely on the
position of the Commission enunciated in Morgan Stanley and Co., Inc.
----------------------------
(available June 5, 1991) and Exxon Capital Holdings Corporation (available
----------------------------------
May 13, 1988), as interpreted in the Commission's letter to Shearman &
----------
Sterling dated July 2, 1993, and similar no-action letters (including, if
--------
applicable, any no-action letter obtained pursuant to clause (i) above),
and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction
and that such a secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 and 508, as applicable, of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the position of the
Commission enunciated in Exxon Capital Holdings Corporation (available May
----------------------------------
13, 1988), Morgan Stanley and Co., Inc. (available June 5, 1991) as
----------------------------
interpreted in the Commission's letter to Shearman & Sterling dated July 2,
-------------------
1993, and, if applicable, any no-action letter obtained pursuant to clause
(i) above, (B) including a representation that neither the Company nor any
Guarantor has entered into any arrangement or understanding with any Person
to distribute the Series B Notes to be received in the Exchange Offer and
that, to the best of the Company's and each Guarantor's information and
belief, each Holder participating in the Exchange Offer is acquiring the
Series B Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer and (C) any other undertaking
or representation required by the Commission as set forth in any no-action
letter obtained pursuant to clause (i) above, if applicable; in each above
case if such representation is correct.
(b) Shelf Registration Statement. In connection with the Shelf
----------------------------
Registration Statement, the Company and the Guarantors shall: (i) comply with
all the provisions of Section 6(c) below and use their respective commercially
reasonable efforts to effect such registration to permit the sale of the
Transfer Restricted Securities being sold in accordance with the intended method
or methods of distribution thereof (as indicated in the information furnished to
the Company pursuant to Section 4(b) hereof), and pursuant thereto the Company
and the Guarantors will prepare and file with the Commission a Registration
Statement relating to the registration on any appropriate form under the Act,
which form shall be available for the sale of the Transfer Restricted Securities
in accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof, and
(ii) issue, upon the request of any Holder or purchaser of Series A Notes
covered by any Shelf Registration Statement contemplated by this Agreement,
Series B Notes having an aggregate principal amount equal to the aggregate
principal amount of Series A Notes sold pursuant to the Shelf Registration
Statement and surrendered to the Company for cancellation; the Company shall
register Series B Notes on the Shelf Registration Statement for this purpose and
issue the Series B Notes to the purchaser(s) of securities subject to the Shelf
Registration Statement in the names as such purchaser(s) shall designate.
(c) General Provisions. In connection with any Registration Statement and
------------------
any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
8
<PAGE>
(i) use their respective commercially reasonable efforts to keep
such Registration Statement continuously effective and provide all
requisite financial statements for the period specified in Section 3 or 4
of this Agreement, as applicable. Upon the occurrence of any event that
would cause any such Registration Statement or the Prospectus contained
therein (A) to contain an untrue statement of material fact or omit to
state any material fact necessary to make the statements therein not
misleading or (B) not to be effective and usable for resale of Transfer
Restricted Securities during the period required by this Agreement, the
Company and the Guarantors shall file promptly an appropriate amendment to
such Registration Statement curing such defect, and, if Commission review
is required, use their respective commercially reasonable efforts to cause
such amendment to be declared effective as soon as practicable.
(ii) prepare and file with the Commission such amendments and post-
effective amendments to the applicable Registration Statement as may be
necessary to keep such Registration Statement effective for the applicable
period set forth in Section 3 or 4 hereof, as the case may be; cause the
Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the Act, and to
comply fully with Rules 424, 430A and 462, as applicable, under the Act in
a timely manner; and comply with the provisions of the Act with respect to
the disposition of all securities covered by such Registration Statement
during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such
Registration Statement or supplement to the Prospectus;
(iii) advise each Holder promptly and, if requested by such Holder,
confirm such advice in writing, (A) when the Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to
any applicable Registration Statement or any post-effective amendment
thereto, when the same has become effective, (B) of any request by the
Commission for amendments to the Registration Statement or amendments or
supplements to the Prospectus or for additional information relating
thereto, (C) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement under the Act or of the
suspension by any state securities commission of the qualification of the
Transfer Restricted Securities for offering or sale in any jurisdiction, or
the initiation of any proceeding for any of the preceding purposes, (D) of
the existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making of
any additions to or changes in the Registration Statement in order to make
the statements therein not misleading, or that requires the making of any
additions to or changes in the Prospectus in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. If at any time the Commission shall issue any stop order
suspending the effectiveness of the Registration Statement, or any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of the
Transfer Restricted Securities under state securities or Blue Sky laws, the
Company and the Guarantors shall use their respective commercially
reasonable efforts to obtain the withdrawal or lifting of such order at the
earliest possible time;
9
<PAGE>
(iv) subject to Section 6(c)(i), if any fact or event contemplated
by Section 6(c)(iii)(D) above shall exist or have occurred, prepare a
supplement or post-effective amendment to the Registration Statement or
related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to each selling Holder in connection with such exchange
or sale, if any, before filing with the Commission, copies of any
Registration Statement or any Prospectus included therein or any amendments
or supplements to any such Registration Statement or Prospectus (including
all documents incorporated by reference after the initial filing of such
Registration Statement), which documents will be subject to the review and
comment of such Holders in connection with such sale, if any, for a period
of at least five Business Days, and the Company will not file any such
Registration Statement or Prospectus or any amendment or supplement to any
such Registration Statement or Prospectus (including all such documents
incorporated by reference) to which such Holders shall reasonably object
within five Business Days after the receipt thereof. A Holder shall be
deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed
to be filed, contains an untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading or fails to comply with the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus
included therein, provide copies of such document to each selling Holder in
connection with such exchange or sale, if any, make the Company's and the
Guarantors' representatives available for discussion of such document and
other customary due diligence matters, and include such information in such
document prior to the filing thereof as such Holders may reasonably
request;
(vii) make available, at reasonable times, for inspection by each
Holder and any attorney or accountant retained by such Holders, all
financial and other records, pertinent corporate documents of the Company
and the Guarantors and cause the Company's and the Guarantors' officers,
directors and employees to supply all information reasonably requested by
any such Holder, attorney or accountant in connection with such
Registration Statement or any post-effective amendment thereto subsequent
to the filing thereof and prior to its effectiveness, subject to such
Holder entering into a customary confidentiality agreement;
(viii) if requested by any Holders in connection with such exchange or
sale, promptly include in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such Holders may reasonably request to have included
therein, including, without limitation, information relating to the "Plan
of Distribution" of the Transfer Restricted Securities; and make all
required filings of such Prospectus supplement or post-effective amendment
as soon as practicable after the
10
<PAGE>
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(ix) furnish to each Holder in connection with such exchange or sale,
without charge, at least one copy of the Registration Statement, as first
filed with the Commission, and of each amendment thereto, including all
documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
(x) deliver to each Holder without charge, as many copies of the
Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company and
the Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each selling Holder
in connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(xi) upon the request of any Holder, enter into such agreements
(including underwriting agreements) and make such representations and
warranties (subject to the accuracy thereof) and take all such other
actions in connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
applicable Registration Statement contemplated by this Agreement as may be
reasonably requested by any Holder in connection with any sale or resale
pursuant to any applicable Registration Statement. In such connection, the
Company and the Guarantors shall:
(A) upon request of any Holder, furnish (or in the case of
paragraphs (2) and (3), use its commercially reasonable efforts to cause
to be furnished) to each Holder, upon Consummation of the Exchange Offer
or upon the effectiveness of the Shelf Registration Statement, as the
case may be:
(1) a certificate, dated such date, signed on behalf of the Company
and each Guarantor by (x) the President or any Vice President (or
person serving in a position of comparable responsibility of a limited
liability company) and (y) a principal financial or accounting officer
of the Company and such Guarantor, confirming, as of the date thereof,
the matters set forth in Sections 6(y), 9(a) and 9(b) of the Purchase
Agreement and such other similar matters as such Holders may
reasonably request;
(2) an opinion, dated the date of Consummation of the Exchange Offer
or the date of effectiveness of the Shelf Registration Statement, as
the case may be, of counsel for the Company and the Guarantors
covering matters comparable to those set forth in paragraphs (e) and
(f) of Section 9 of the Purchase Agreement and such other matter as
such Holder may reasonably request, and in any event including a
statement to the effect that although such counsel has not checked the
accuracy and completeness of, or otherwise verified, and is not
passing upon and assumes no responsibility for the accuracy or
completeness of, the statements contained in the applicable
Registration Statement, in the course of such counsel's review and
discussion of the contents of the applicable Registration Statement
with
11
<PAGE>
certain employees of the Company and its independent accountants but
without independent verification, no facts have come to such counsel's
attention which cause such counsel to believe that the applicable
Registration Statement (other than the financial statements, notes and
schedules and other financial data and information contained therein,
as to which such counsel need not express any belief), at the time
such Registration Statement or any post-effective amendment thereto
became effective and, in the case of the Exchange Offer Registration
Statement, as of the date of Consummation of the Exchange Offer,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus contained in
such Registration Statement (other than the financial statements,
notes and schedules and other financial data and information contained
therein, as to which such counsel need not express any belief) as of
its date and, in the case of the opinion dated the date of
Consummation of the Exchange Offer, as of the date of Consummation,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and
(3) a customary comfort letter, dated the date of Consummation of
the Exchange Offer, or as of the date of effectiveness of the Shelf
Registration Statement, as the case may be, from the Company's
independent accountants, in the customary form and covering matters of
the type customarily covered in comfort letters to underwriters in
connection with underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section 9(h) of the
Purchase Agreement; and
(B) deliver such other documents and certificates as may be
reasonably requested by the selling Holders to evidence compliance with
the matters covered in clause (A) above and with any customary conditions
contained in the any agreement entered into by the Company and the
Guarantors pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted Securities,
cooperate with the selling Holders and their counsel in connection with the
registration and qualification of the Transfer Restricted Securities under
the securities or Blue Sky laws of such jurisdictions as the selling
Holders may reasonably request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Transfer Restricted Securities covered by the applicable Registration
Statement; provided, however, that neither the Company nor any Guarantor
shall be required to register or qualify as a foreign corporation where it
is not now so qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to matters and
transactions relating to the Registration Statement, in any jurisdiction
where it is not now so subject;
(xiii) in connection with any sale of Transfer Restricted Securities
that will result in such securities no longer being Transfer Restricted
Securities, cooperate with the Holders to facilitate the timely preparation
and delivery of certificates representing Transfer Restricted
12
<PAGE>
Securities to be sold and not bearing any restrictive legends; and to
register such Transfer Restricted Securities in such denominations and such
names as the selling Holders may request at least two Business Days prior
to such sale of Transfer Restricted Securities;
(xiv) use their respective commercially reasonable efforts to cause
the disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such Transfer
Restricted Securities, subject to the proviso contained in clause (xii)
above;
(xv) provide a CUSIP number for all Transfer Restricted Securities
not later than the effective date of a Registration Statement covering such
Transfer Restricted Securities and provide the Trustee under the Indenture
with printed certificates for the Transfer Restricted Securities which are
in a form eligible for deposit with the Depository Trust Company;
(xvi) otherwise use their respective commercially reasonable efforts
to comply with all applicable rules and regulations of the Commission, and
make generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) covering a twelve-month period beginning after the effective date
of the Registration Statement (as such term is defined in paragraph (c) of
Rule 158 under the Act);
(xvii) cause the Indenture to be qualified under the TIA not later
than the effective date of the first Registration Statement required by
this Agreement and, in connection therewith, cooperate with the Trustee and
the Holders to effect such changes to the Indenture as may be required for
such Indenture to be so qualified in accordance with the terms of the TIA;
and execute and use its commercially reasonable efforts to cause the
Trustee to execute, all documents that may be required to effect such
changes and all other forms and documents required to be filed with the
Commission to enable such Indenture to be so qualified in a timely manner;
and
(xviii) provide promptly to each Holder, upon request, each document
filed with the Commission pursuant to the requirements of Section 13 or
Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
-----------------------
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
-----------------
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "Recommencement
--------------
Date"). Each Holder receiving a Suspension Notice hereby agrees that it will
- ----
either (i) destroy any Prospectuses, other
13
<PAGE>
than permanent file copies, then in such Holder's possession which have been
replaced by the Company with more recently dated Prospectuses or (ii) deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the Prospectus covering such
Transfer Restricted Securities that was current at the time of receipt of the
Suspension Notice. The time period regarding the effectiveness of such
Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall
be extended by a number of days equal to the number of days in the period from
and including the date of delivery of the Suspension Notice to the date of
delivery of the Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses; (ii) all fees and
expenses of compliance with federal securities and state Blue Sky or securities
laws; (iii) all expenses of printing (including printing certificates for the
Series B Notes to be issued in the Exchange Offer and printing of Prospectuses),
messenger and delivery services and telephone; (iv) all fees and disbursements
of counsel for the Company, the Guarantors and, to the extent provided in
Section 7(b) below, the Holders of Transfer Restricted Securities; (v) all
application and filing fees in connection with listing the Series B Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities who are tendering Series A Notes in the Exchange Offer and/or selling
or reselling Series A Notes or Series B Notes pursuant to the "Plan of
Distribution" contained in the Exchange Offer Registration Statement or the
Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins,
unless another firm shall be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors agree, jointly and severally, to
indemnify and hold harmless each Holder, its directors, officers and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments, (including without limitation, any
legal
14
<PAGE>
or other expenses incurred in connection with investigating or defending any
matter, including any action that could give rise to any such losses, claims,
damages, liabilities or judgments) caused by any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement,
preliminary prospectus or Prospectus (or any amendment or supplement thereto)
provided by the Company to any Holder or any prospective purchaser of Series B
Notes or registered Series A Notes, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by an untrue
statement or omission or alleged untrue statement or omission that is based upon
information relating to any of the Holders furnished in writing to the Company
by any of the Holders; and further provided that no Holder (or director, officer
or Person who controls such Holder shall be entitled to indemnification
hereunder to the extent that any such losses, claims, damages, liabilities, or
judgments arise with respect to (i) any untrue statement or alleged untrue
statement of material fact contained in any Registration Statement, preliminary
prospectus or Prospectus (or any amendment or supplement thereto), or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, if
both (A) such untrue statement or omission (or alleged untrue statement or
omission) was corrected by any Prospectus (or any amendment or supplement
thereto) that had been delivered to the Holder by or in behalf of the Company
prior to the sale of Series A or B Notes to the Person asserting such untrue
statement or omission, and (B) such corrective Prospectus (or amendment or
supplement thereto) was not delivered to such Person by such Holder prior to
such sale; or (ii) any sale of Series A or B Notes by a Holder following such
Holder's receipt of a Suspension Notice and prior to the Recommencement Date.
(b) Each Holder of Transfer Restricted agrees, severally and not jointly,
to indemnify and hold harmless the Company and the Guarantors, and their
respective managers, directors and officers (or positions of comparable
authority), and each person, if any, who controls (within the meaning of Section
15 of the Act or Section 20 of the Exchange Act) the Company, or the Guarantors
to the same extent as the foregoing indemnity from the Company and the
Guarantors set forth in section (a) above, but only with reference to
information relating to such Holder furnished in writing to the Company by such
Holder expressly for use in any Registration Statement. In no event shall any
Holder, its directors, officers or any Person who controls such Holder be liable
or responsible for any amount in excess of the amount by which the total amount
received by such Holder with respect to its sale of Transfer Restricted
Securities pursuant to a Registration Statement exceeds (i) the amount paid by
such Holder for such Transfer Restricted Securities and (ii) the amount of any
damages that such Holder, its directors, officers or any Person who controls
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in respect
of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
-----------------
against whom such indemnity may be sought (the "indemnifying person") in writing
-------------------
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), a Holder shall not be required to assume the
defense of such action pursuant to this Section 8(c), but
15
<PAGE>
may employ separate counsel and participate in the defense thereof, but the fees
and expenses of such counsel, except as provided below, shall be at the expense
of the Holder). Any indemnified party shall have the right to employ separate
counsel in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the indemnified party
unless (i) the employment of such counsel shall have been specifically
authorized in writing by the indemnifying party, (ii) the indemnifying party
shall have failed to assume the defense of such action or employ counsel
reasonably satisfactory to the indemnified party or (iii) the named parties to
any such action (including any impleaded parties) include both the indemnified
party and the indemnifying party, and the indemnified party shall have been
advised by such counsel that there may be one or more legal defenses available
to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of the indemnified party).
In any such case, the indemnifying party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all indemnified parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by a majority of the Holders, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall indemnify and hold
harmless the indemnified party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with the indemnifying party's written consent or (ii) effected without
the indemnifying party's written consent if the settlement is entered into more
than thirty business days after the indemnifying party shall have received a
request from the indemnified party for reimbursement for the reasonable fees and
expenses of counsel (in any case where such fees and expenses are at the expense
of the indemnifying party in accordance with Section 8(a) or 8(b) of this
Agreement) and, prior to the date of such settlement, the indemnifying party
shall have failed to comply with such reimbursement request. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement or compromise of, or consent to the entry of judgment with
respect to, any pending or threatened action in respect of which the indemnified
party is or could have been a party and indemnity or contribution may be or
could have been sought hereunder by the indemnified party, unless such
settlement, compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability on claims that are or could have been the
subject matter of such action and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of the
indemnified party.
(d) To the extent that the indemnification provided for in this Section 8
is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein (and such unavailability
or insufficiency is otherwise than in accordance with the express terms of
Section 8(a) or 8(b)), then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities or
judgments (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Guarantors, on the one hand, and the
Holders, on the other hand, from their sale of Transfer Restricted Securities or
(ii) if the allocation provided by clause 8(d)(i) is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause 8(d)(i) above but also the relative fault of the
Company and the Guarantors, on the one hand, and of the Holder, on the other
16
<PAGE>
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative fault of the Company and the Guarantors,
on the one hand, and of the Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or such Guarantor, on the one
hand, or by the Holder, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company, the Guarantors and each Holder agree that it would not be just
and equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any matter,
including any action that could have given rise to such losses, claims, damages,
liabilities or judgments. Notwithstanding the provisions of this Section 8, no
Holder, its directors, its officers or any Person, if any, who controls such
Holder shall be required to contribute, in the aggregate, any amount in excess
of the amount by which the total received by such Holder with respect to the
sale or exchange of Transfer Restricted Securities pursuant to a Registration
Statement exceeds (i) the amount paid by such Holder for such Transfer
Restricted Securities and (ii) the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(d) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each Holder hereunder and not joint.
SECTION 9. RULE 144A and RULE 144
The Company and each Guarantor agrees with each Holder, for so long as any
Transfer Restricted Securities remain outstanding and during any period in which
the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of the
Exchange Act, to make available, upon request of any Holder, to such Holder or
beneficial owner of Transfer Restricted Securities in connection with any sale
thereof and any prospective purchaser of such Transfer Restricted Securities
designated by such Holder or beneficial owner, the information required by Rule
144A(d)(4) under the Act in order to permit resales of such Transfer Restricted
Securities pursuant to Rule 144A, and (ii) is subject to Section 13 or 15 (d) of
the Exchange Act, to make all filings required thereby in a timely manner in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144 if the making of such filings is required for such resales to be made.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors acknowledge and agree that
--------
any failure by the Company and/or the Guarantors to comply with their respective
obligations under Sections 3
17
<PAGE>
and 4 hereof may result in material irreparable injury to the Initial Purchasers
or the Holders for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of any such failure, the Initial Purchasers or any Holder may obtain such relief
as may be required to specifically enforce the Company's and the Guarantors'
obligations under Sections 3 and 4 hereof. The Company and the Guarantors
further agree to waive the defense in any action for specific performance that a
remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor
--------------------------
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any Guarantor has previously entered into any agreement
granting any registration rights with respect to its securities to any Person
except pursuant to the Shareholders' Agreement dated September 24, 1999 or in
favor of The 1818 Fund III, L.P. and its affiliates. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's and the Guarantors'
securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose Transfer Restricted Securities are being tendered pursuant to
the Exchange Offer, and that does not affect directly or indirectly the rights
of other Holders whose Transfer Restricted Securities are not being tendered
pursuant to such Exchange Offer, may be given by the Holders of a majority of
the outstanding principal amount of Transfer Restricted Securities subject to
such Exchange Offer.
(d) Third Party Beneficiary. The Holders shall be third party
-----------------------
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the
Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
18
<PAGE>
(ii) if to the Company or the Guarantors:
US Unwired Inc.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70629
Telecopier No.: (318) 497-3197
Attention: Thomas G. Henning, Esq.
With a copy to:
Correro Fishman Haygood
201 St. Charles Avenue, Suite 4600
New Orleans, Louisiana 70170
Telecopier No.: (504) 586-5250
Attention: Sterling Scott Willis, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied; and on the next business day, if timely delivered
to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders; provided, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Transfer Restricted Securities in violation of
the terms hereof or of the Purchase Agreement or the Indenture. If any
transferee of any Holder shall acquire Transfer Restricted Securities in any
manner, whether by operation of law or otherwise, such Transfer Restricted
Securities shall be held subject to all of the terms of this Agreement, and by
taking and holding such Transfer Restricted Securities such Person shall be
conclusively deemed to have agreed to be bound by and to perform all of the
terms and provisions of this Agreement, including the restrictions on resale set
forth in this Agreement and, if applicable, the Purchase Agreement, and such
Person shall be entitled to receive the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
19
<PAGE>
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
----------------
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
20
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
US UNWIRED INC.
By:
------------------------------------
Name: Robert Piper
Title: President
LOUISIANA UNWIRED, LLC
By:
------------------------------------
Name: Robert Piper
Title: Manager
UNWIRED TELECOM CORP.
By:
------------------------------------
Name: Robert Piper
Title: President
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
-----------------------------
Name: Steven D. Smith
Title: Senior Vice President
FIRST UNION SECURITIES, INC.
By:
-----------------------------
Name: John J. Braden
Title: Managing Director
BNY CAPITAL MARKETS, INC.
By:
------------------------------
Name: Timothy Parker
Title: Vice President
S-1
<PAGE>
EXHIBIT A
NOTICE OF FILING OF
A/B EXCHANGE OFFER REGISTRATION STATEMENT
To: Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Louise Guarneri (Compliance Department)
Fax: (212) 892-7272
From: US Unwired Inc.
13 3/8% Senior Subordinated Discount Notes due 2009
Date: ___, ___
For your information only (NO ACTION REQUIRED):
Today, ______, ____, we filed [an A/B Exchange Registration Statement/a
Shelf Registration Statement] with the Securities and Exchange Commission. We
have agreed to use commercially reasonable efforts to cause this registration
statement to be declared effective within __ business days of the date hereof.
1
<PAGE>
EXHIBIT 10.2
AGREEMENT
---------
This Agreement is dated as of September 24, 1999, among US Unwired Inc., a
Louisiana corporation (the "Company"), and the shareholders of the Company who
are signatories hereto or become parties hereto in the manner hereinafter
provided (collectively, the "Shareholders").
The Company and the Shareholders agree as; follows:
1. Articles of Incorporation.
-------------------------
The Shareholders will not approve any amendment to the Articles of
Incorporation ("Articles") of the Company that restricts the transfer of Class B
Common Stock of the Company beyond the restrictions contained in the Articles,
and will use their best efforts to prevent (or, if they cannot prevent, then to
repeal) any amendment to the By-Laws of the Company that has that effect unless
such amendment to the Articles or By-Laws is approved by each of the
Shareholders who at the time thereof is a holder of Class B Common Stock.
2. Piggy-Back Registration Rights. In consideration of the Shareholders'
------------------------------
willingness to accept the transfer restrictions of the Articles, which will
benefit the Company by promoting an orderly trading market for its shares, the
Company grants the Shareholders the following piggyback registration rights.
(a) If the Company proposes to register under the Securities Act the
sale, for cash through underwriters, of any shares issued by the Company,
including shares that are proposed to be sold by the Company and shares that the
Company may be obligated to register under a demand registration covenant held
by a selling shareholder (collectively, "primary shares"), other than the
Company's initial public offering and other than a registration filed pursuant
to a demand registration covenant hereafter granted by the Company to a
purchaser in connection with the Company's sale of shares to such purchaser,
unless rights of the type accorded by this Section 2 are permitted in accordance
with such demand registration covenant, the Company will notify the Shareholders
(and any other shareholder who may be entitled to include shares in such
registration) of such proposal as soon as is practicable. Subject to the
allocation and limitation provisions below, the Company will in such notice
invite the Shareholders (and any other shareholder who may be entitled to
include shares in such registration) to include in such registration (if shares
of selling shareholders are permitted to be included in the registration form
proposed to be filed by the Company or in any other registration form that the
Company would be permitted to use to register the primary shares and the use of
which would not cause any material additional expense to the Company) such
aggregate number of shares (the "Includable Shares") as shall be equal to 80%
(or, at the Company's option, more) of the amount of shares that the
underwriters determine to be the approximate maximum number which could be
included in such registration without having an adverse effect on the offering
of the primary shares. Such notice (the "Piggy-Back Notice") shall be sent to
each Shareholder at his, her or its address of record. It shall, to the extent
then known or determined, identify the proposed offering, name the underwriters,
and indicate the proposed timing. Such disclosure shall not prevent the Company
from changing those matters at its discretion.
<PAGE>
(b) Each Shareholder who desires to include shares in the registration
statement shall notify the Company, within 10 days after the Piggy-Back Notice
is sent, of the number of such shares. Such notice (the "Inclusion Notice")
shall constitute the good faith commitment of the Shareholder to include that
number (or any lesser number that occurs by reason of the allocation and
limitation provisions herein of shares in the Company's registration statement
plus up to 15% thereof to cover any over allotment option requested by the
underwriters. The Inclusion Notice shall state that the Shareholder desires to
include the shares covered by the Inclusion Notice in the registration for sale
through the underwriters as soon as may be practicable after the effective date
of the registration statement, and that the Shareholder will provide all
information and take all actions as may be required to permit the Company to
comply with all applicable legal requirements and to obtain acceleration of the
effective date of the registration statement.
(c) If the managing underwriter of the primary offering informs the
Company that the number and type of securities requested to be included would
materially affect such offering, then the Company will include in such
registration, to the extent of the number and type that the company is advised
can be sold, FIRST, all Primary Shares, SECOND, the securities to be included
pursuant to this Agreement and pursuant to Section 2.2 of a registration rights
agreement between the Company and the 1818 Fund III, L.P., pro rata among the
groups, on the basis of estimated proceeds from the sale thereof, and THIRD, all
other securities proposed. The number of shares that may be included pursuant
to this Agreement is referred to as the "Includable Shares". If the number of
shares covered by Includable Notices exceeds at any time the number of
Includable Shares, the number set forth in each Inclusion Notice will be
proportionately reduced so that the total, as so reduced, equals the number of
Includable Shares. The reduction applicable to each Inclusion Notice will be
that proportion of the total reduction as is equal to the fraction whose
numerator is the number of shares specified in such Inclusion Notice and whose
denominator is the total number of shares specified in all of the Inclusion
Notices. If the number of Includable Shares is increased, or if shares sought
to be included in the registration are not included, then any addition to the
Includable Shares will be allocated, proportionately in the same manner, among
the Shareholders who have timely given Inclusion Notices. The Company may in
its discretion accept untimely Inclusion Notices but in that event will give
each Shareholder who has previously submitted an Inclusion Notice a reasonable
time within which to revise it.
(d) The Company may at any time, in its sole discretion, determine to
delay or not to file or to withdraw (prior to or following the effective date)
any registration statement to which this Section 2 applies.
(e) The Shareholders whose shares are included in the registration
statement ("Selling Shareholders") will enter into customary underwriting
agreements with the Company and the underwriters, which will contain the
customary indemnifications by each of them. Each of the Selling Shareholders
will, if requested so to so by the underwriters, deposit the shares to be sold
by such Selling Shareholder with an escrow agent.
2
<PAGE>
(f) Each Selling Shareholder shall pay the registration and NASD
filing fees applicable to the shares offered by such Selling Shareholder, the
underwriting discounts and commissions applicable to such shares, the blue sky
fees and expenses applicable thereto, the fees of such Selling Shareholder's
counsel and accountants, and such Selling Shareholder's proportionate (based on
the number of shares included by that Selling Shareholder divided by the total
number of shares included by all such Selling Shareholders) share of all
incremental additional expenses caused by the inclusion of the shares included
by Selling Shareholders. The Company shall pay all other expenses of
preparation, printing and filing the registration statement.
(g) The Company may exclude from any such registration any shares
which the Shareholder would be permitted to sell in the public market without
any remaining restriction under the Articles and which can be sold under Rule
144 or any comparable provision.
(h) The provisions of this Section 2 shall not apply to any evergreen
shelf registration covering Registrable Securities as that term is used in a
registration rights agreement between the Company and the 1818 Fund III, L.P.
3. Transfer Assistance. The Company will, and will request that its
-------------------
transfer agent, render reasonable assistance so as to promote the efficiency of
(a) the transfer of shares sold by a Shareholder under Rule 144 or 145 under the
Securities Act, and (b) the issuance of certificates representing shares of
Class A Common Stock into which shares of Class B Common Stock of a Shareholder
have been converted in accordance with the Articles.
4. Miscellaneous.
-------------
(a) This Agreement constitutes the entire agreement of the parties
with respect to its subject matter, but it does not supersede any prior written
agreements of the parties except to any extent it is inconsistent with them.
Shares registered for sale under the provisions of Section 2 shall be relieved
of any restriction on transfer that arises under, or was imposed to implement
the provisions of, Rule 144 or 145 under the Securities Act, if such
registration eliminates the legal requirement for such restriction. Otherwise,
the provisions of Section 2 shall not relieve any Shareholder of any restriction
on transfer of capital stock of the Company.
(b) This Agreement binds and inures to the benefit of the Company and
its legal successors by merger or consolidation, the respective Shareholders,
the Estates of the Shareholders who are individuals, and the legal successors by
merger or consolidation of those who are not. The rights and obligations under
this Agreement may not be assigned or transferred and are not heritable except
in any such case to a Qualified Holder (as such term is used in the Articles)
who acquires shares of Class B Common Stock from a Shareholder (including by
inheritance) but in that event this Agreement will, unless such Qualified Holder
is then a party to this Agreement as a Shareholder, apply only to the shares of
Class B Common Stock so acquired
3
<PAGE>
and only if such Qualified Holder, promptly upon request at any time by the
Company, agrees in writing to be bound by all provisions of this Agreement
applicable to the acquired shares.
(c) The provisions of Section 2 shall terminate six years after the
date of this Agreement unless extended by the vote of a majority of the shares
of Class B Common Stock held by the Shareholders at the time of such extension.
The remaining provisions of this Agreement shall terminate 25 years after the
date of this Agreement unless so extended. No such termination shall terminate
rights and obligations already accrued at the time of such termination.
(d) Certificates representing shares subject to the provisions of this
Agreement shall be appropriately legended.
(e) Notices shall be given to the Company at its Louisiana registered
office, Attention: President, and to each Shareholder at the address of record
of such Shareholder.
(f) This Agreement shall be governed by the internal laws of
Louisiana. It may be executed in one or more counterparts.
IN WITNESS WHEREOF, the Company and the Shareholders whose names are
subscribed hereto have become parties to this Agreement as of the date first
above written; other shareholders of the Company may become parties by executing
and returning a counterpart signature page on or before September 24, 1999 to
the Company (which will acknowledge receipt thereof and send a copy of such
acknowledgement to all Shareholders who by then have become parties).
US UNWIRED INC.
By: /s/ Thomas G. Henning
-------------------------------
Authorized Officer
4
<PAGE>
SHAREHOLDERS
<TABLE>
<S> <C>
/s/ William L. Henning, Sr. /s/ William L. Henning, Jr.
- ------------------------------------------- ----------------------------------------
William L. Henning, Sr. William L. Henning, Jr.
/s/ John A. Henning /s/ Thomas G. Henning
- ------------------------------------------- ----------------------------------------
John A. Henning Thomas G. Henning
/s/ Robert Piper /s/ Thomas D. Henning
- ------------------------------------------- ----------------------------------------
Robert Piper Thomas D. Henning
/s/ Joyce P. Spates /s/ James D. Spates
- ------------------------------------------- ----------------------------------------
Joyce P. Spates James D. Spates
/s/ Thomas G. Shearman, Jr. /s/ Ada B. Vincent
- ------------------------------------------- ----------------------------------------
Thomas G. Shearman, Jr. Ada B. Vincent
- ------------------------------------------- ----------------------------------------
Pine Island Oil Company, Scobee Family Limited Partnership,
Authorized Representative Authorized Partner
/s/ Henry Rice Scobee /s/ William L Henning, Jr.
- ------------------------------------------- ----------------------------------------
Henry Rice Scobee Custodian for William L Henning, Jr.
Exempt Class Trust No. 1
/s/ John A. Henning /s/ Thomas G. Henning
- ------------------------------------------- ----------------------------------------
Custodian for John A. Henning Custodian for Thomas G. Henning
Exempt Class Trust No. 1 Exempt Class Trust No. 1
- ------------------------------------------- ----------------------------------------
Henco Partnership, Authorized Shearman Corporation, Authorized
Partner Representative
/s/ William Thomas Henning /s/ Daniel Lovejoy Henning
- ------------------------------------------- ----------------------------------------
William Thomas Henning, II under the Custodian for Daniel Lovejoy Henning
under U.G.M.A., Thomas G. Henning, Custodian the U.G.M.A., Thomas G. Henning,
Custodian
/s/ John Allen Henning /s/ Travis Guy Henning
- ------------------------------------------- ----------------------------------------
John Allen Henning, Jr. under the U.G.M.A., Travis Guy Henning under the
U.G.M.A., Thomas G. Henning, Custodian Thomas G. Henning, Custodian
/s/ Hillary Elizabeth Henning /s/ John David Henning
- ------------------------------------------- ----------------------------------------
Hillary Elizabeth Henning under the John David Henning under the U.G.M.A.,
U.G.M.A., Thomas G. Henning, Custodian Thomas G. Henning, Custodian
/s/ Katherine Anna Henning /s/ Grant Thomas Henning
- ------------------------------------------- ----------------------------------------
Katherine Anna Henning under the Grant Thomas Henning under the U.G.M.A.,
U.G.M.A, William L. Henning, Sr., Custodian William L. Henning, Sr., Custodian
</TABLE>
<PAGE>
EXHIBIT 10.3
US Unwired Inc.
1999
Equity Incentive Plan
<PAGE>
US Unwired Inc.
Equity Incentive Plan
1. Definitions. The terms defined in this Section 1 or elsewhere in the
Plan shall, for all purposes of this Plan, have the meanings herein specified:
1.1 "Affiliate" means, with respect to an entity, a person or entity
that directly, or indirectly through one or more intermediaries, controls,
or is controlled by, or is under common control with, such entity.
1.2 "Applicable Percentage" shall have the meaning provided in
Section 12.11(a)(iii)b.
1.3 "Approval Date" shall have the meaning provided in Section
12.11(a)(ii).
1.4 "Base Price" shall mean the price established at the time of
grant of an SAR or an LSAR from which the appreciation of a share of Stock
between the date of grant and exercise will be calculated.
1.5 "Board" shall mean the Board of Directors of the Company, acting
as such.
1.6 "Business Combination" shall have the meaning provided in Section
12.11(a)(iii).
1.7 "Cause" shall mean, with respect to any particular Employee, (i)
the material and willful failure of such Employee to perform duties
assigned to him if such failure is not waived by the Company or cured by
such Employee within 30 days after the Company expressly notified the
Employee in writing of the basis for the Company's claim that the Employee
has materially and willfully failed to perform his duties, (ii) the
Employee is found guilty of fraud, theft, embezzlement or the
misappropriation of funds or is convicted of any felony crime, (iii) a
violation of the Company's policy manual, as amended from time to time (the
"Policy Manual"), which is a grounds for termination of employment or (iv)
termination pursuant to a provision of the Policy Manual.
1.8 "Change of Control" shall have the meaning provided in section
12.11(a).
1.9 "Change of Control Value" shall have the meaning provided in
Section 12.11(d).
1.10 "Code" shall mean the Internal Revenue Code of 1986, as amended.
2
<PAGE>
1.11 "Committee" shall mean the committee of the Board authorized to
administer the Plan. Until such time as the Board has designated a
committee to administer the Plan, references herein to the "Committee"
shall be deemed to mean the "Board."
1.12 "Company" shall mean US Unwired Inc., a Louisiana corporation,
and its Subsidiaries.
1.13 "Consultant" shall mean any person who is engaged by the Company
or a Subsidiary to render consulting services and is compensated for such
consulting services.
1.14 "Employee" or "Employees" shall mean key persons (including
officers and directors) employed by the Company, or a Subsidiary thereof,
on a full-time basis and who are compensated for such employment by a
regular salary.
1.15 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
1.16 "Exercise Date" shall mean the date USU receives written notice
of exercise of an exercisable option, SAR or LSAR.
1.17 "Exercise Price" shall mean the price to be paid for the shares
of Stock being purchased pursuant to a stock option agreement.
1.18 "Fair Market Value" shall mean the price determined as follows:
(a) if the Stock is listed on an established stock exchange or any
automated quotation system that provides sale quotations, the closing sale
price for a share of Stock on such exchange or quotation system on the
applicable date, or if no sale of the Stock shall have been made on that
day, on the next preceding day on which there was a sale of the Stock; (b)
if the Stock is not listed on any exchange or quotation system, but bid and
asked prices are quoted and published, the mean between the quoted bid and
asked prices on the applicable date, and if bid and asked prices are not
available on such day, on the next preceding day on which such prices were
available; and (c) if the Stock is not regularly quoted, the fair market
value of the Stock on the applicable date as established by the Committee
in good faith.
1.19 "Incentive Agreement" shall mean the written agreement between
the Company and participant confirming the award and setting forth the
terms and conditions of the Incentive.
1.20 "Incentives" shall mean non-qualified Stock options, incentive
Stock options, SARs, LSARs, restricted Stock, Stock awards and performance
Stock.
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1.21 "Incumbent Board" shall have the meaning provided in Section
12.11 (a)(ii).
1.22 "LSAR" shall mean a limited stock appreciation right, which is a
right to receive cash with respect to Stock subject to an option in lieu of
exercising such option upon a Change of Control of the Company as described
in Section 8 hereof.
1.23 "USU" shall mean US Unwired Inc., a Louisiana corporation.
1.24 "Plan" shall mean the US Unwired Inc. 1999 Equity Incentive
Plan.
1.25 "Pyramid" shall mean the method of paying the Exercise Price in
a number of successive steps using Stock received upon the exercise of
other Stock options. The Optionee begins by paying the exercise price of
an option to purchase a small number of shares of Stock in cash or Stock.
Upon receipt of the option Stock, the Optionee delivers those same shares
of Stock back to USU to pay the exercise price of additional options. This
process continues with Stock received upon exercise being delivered back to
USU in successive steps until all options desired to be exercised have been
exercised.
1.26 "Restricted Period" shall have the meaning provided in
Section 9.2.
1.27 "Subsidiary" shall mean any corporation in which USU owns,
directly or indirectly through Subsidiaries, at least 50% of the total
combined voting power.
1.28 "Tax Date" shall have the meaning provided in Section 12.7.
1.29 "SAR" shall mean a Stock appreciation right as described in
Section 8 hereof.
1.30 "Stock" shall mean Class A common stock of the Company
representing an equity ownership interest in the Company with one vote per
share, except as this definition may be modified as provided in Section
12.5 hereof
2. Purpose. The purpose of this Plan is to increase stockholder value and
to advance the interests of USU and its Subsidiaries by furnishing a variety of
economic incentives designed to attract, retain and motivate key Employees,
officers, directors and Consultants and to strengthen the mutuality of interests
between such Employees, officers, directors and Consultants and USU's
stockholders. Incentives may consist of opportunities to purchase or receive
Stock, monetary payments related thereto or both, through options, Stock
appreciation rights, Stock awards, restricted Stock and performance Stock awards
on terms determined under the Plan.
3. Administration.
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3.1 Composition. Prior to the registration of the Stock under the
Exchange Act, the Plan shall be administered by the Board of Directors of
USU or by any committee of the Board of Directors to which the Board may
delegate the function. After registration of the Stock under the Exchange
Act, the Plan shall be administered by the compensation committee of the
Board of Directors of USU, the members of which shall qualify to administer
the Plan under applicable laws and regulations.
3.2 Authority. The Committee shall have plenary authority to award
Incentives under the Plan, to interpret the Plan, to establish any rules or
regulations relating to the Plan that it determines to be appropriate, to
enter into agreements with participants as to the terms of the Incentives
(the "Incentive Agreements") and to make any other determination that it
believes necessary or advisable for the proper administration of the Plan.
Its decisions in matters relating to the Plan shall be final and conclusive
on the Company and participants. The Committee may delegate its authority
hereunder to the extent provided in Section 4 hereof.
4. Eligible Participants. Employees of the Company, officers, directors
and Consultants shall be eligible to receive Incentives under the Plan when
designated by the Committee. Employees, officers, directors and Consultants may
be designated individually or by groups or categories, as the Committee deems
appropriate. With respect to participants not subject to Section 16 of the
Exchange Act, the Committee may delegate to an officer of the Company its
authority to designate participants, to determine the size and type of Incentive
to be received by those participants and to determine or modify performance
objectives for those participants.
5. Types of Incentives. Incentives may be granted under the Plan in any
of the following forms, either individually or in combination: (a) incentive
Stock options and nonqualified Stock options; (b) Stock appreciation rights; (c)
limited Stock appreciation rights; (d) Stock awards; (e) restricted Stock and
(f) performance Stock.
6. Stock Subject to the Plan.
6.1 Number of Stock. Subject to adjustment as provided in Section
12.5, a total of 2,300,000 shares of Stock are authorized to be issued
under the Plan. In the event that a Stock option, LSAR or performance
Stock granted hereunder expires or is terminated or canceled prior to
exercise or payment, any shares of Stock that were issuable under such
Incentives may again be issued under the Plan. If Stock is issued as
restricted Stock or pursuant to a Stock award and thereafter are forfeited
or reacquired by the Company pursuant to rights reserved upon issuance
thereof, such forfeited and reacquired Stock may again be issued under the
Plan. Incentives that are paid in cash are not counted against the
limitations provided in this Section 6.1.
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6.2 Cancellation. The Committee may also determine to cancel, and
agree to the cancellation of, options in order to make a participant
eligible for the grant of an option at a lower price or the grant of
another Incentive.
6.3 Type of Stock. Stock issued under the Plan may be authorized and
unissued Stock or issued Stock held as treasury Stock.
7. Stock Options. A Stock option is a right to purchase shares of Stock
from USU. Each Stock option granted by the Committee under this Plan shall be
subject to the following terms and conditions:
7.1 Price. The exercise price per Stock shall be determined by the
Committee, subject to adjustment under Section 12.5.
7.2 Number. The number of shares of Stock subject to the option
shall be determined by the Committee, subject to adjustment as provided in
Section 12.5.
7.3 Duration and Time for Exercise. The term of each Stock option
shall be determined by the Committee. Each Stock option shall become
exercisable at such time or times during its term as shall be determined by
the Committee at the time of grant. Notwithstanding the foregoing, the
Committee may accelerate the exercisability of any Stock option.
7.4 Repurchase. Upon approval of the Committee, the Company may
repurchase a previously granted Stock option from a participant by mutual
agreement before such option has been exercised by payment to the
participant of the amount per share of Stock by which the Fair Market Value
of the Stock subject to the option on the date of purchase exceeds the
exercise price, or on such other terms as may be provided in the Incentive
Agreement.
7.5 Manner of Exercise. An option may be exercised, in whole or in
part, by giving written notice to the Company, specifying the number of
shares of Stock to be purchased. The exercise notice shall be accompanied
by payment of the full exercise price. The exercise price shall be payable
in United States dollars and may be paid (a) by cash or check; (b) by
delivery of Stock held by the optionee for at least six months, which
shares of Stock shall be valued for this purpose at their Fair Market Value
on the date such option is exercised; (c) if permitted by the Committee in
the Incentive Agreement or otherwise, by delivery of Stock that have not
been held for six months including the use of the Pyramid method of
exercise; (d) if the Stock is listed on an established stock exchange or
any automated quotation system that provides sale quotations, by delivery
of a properly executed exercise notice together with irrevocable
instructions to a broker approved by the Company (with a copy to the
Company) to promptly deliver to the Company the amount of sale or loan
proceeds to pay the exercise price; or (e) in such other manner as may be
authorized from time to time by the Committee. In the case of
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delivery of an uncertified check upon exercise of an option, no Stock shall
be issued until the check has been paid in full. Prior to the issuance of
Stock upon the exercise of an option, a participant shall have no rights as
a Stockholder.
7.6 Incentive Options. Notwithstanding anything in the Plan to the
contrary, the following additional provisions shall apply to the grant of
options that are intended to qualify as incentive options (as such term is
defined in Section 422 of the Code):
(a) Any incentive option Agreement authorized under the Plan
shall contain such other provisions as the Committee shall deem
advisable, but shall in all events be consistent with and contain or
be deemed to contain all provisions required in order to qualify the
options as incentive options.
(b) All incentive options must be granted within ten years from
the date on which this Plan is adopted by the Board of Directors.
(c) Unless sooner exercised, all incentive options shall expire
no later than ten years after the date of grant.
(d) The Exercise Price for incentive options shall be not less
than the Fair Market Value of the Shares subject to the option on the
date of grant.
(e) No incentive options shall be granted to any participant who,
at the time such option is granted, would own (within the meaning of
Section 422 of the Code) interests possessing more than 10% of the
total combined voting power of all classes of equity interests of the
employer corporation or of its parent or subsidiary corporation.
8. Stock Appreciation Rights and Limited Stock Appreciation Rights. A SAR
is a right to receive, without payment to the Company, a number of shares of
Stock, cash or any combination thereof, the amount of which is determined
pursuant to the formula set forth in Section 8.4(a). A LSAR is a right to
receive, without payment to the Company, cash in an amount determined pursuant
to the formula set forth in Section 8.4(b) upon a Change of Control of the
Company. A SAR or LSAR may be granted (a) in tandem with any option granted
under the Plan, either concurrently with the grant of such option or at such
later time as determined by the Committee (as to all or any portion of the Stock
subject to the option), or (b) separately, without reference to any related
option. Each SAR and LSAR granted by the Committee under the Plan shall be
subject to the following terms and conditions:
8.1 Number and Base Price. Each SAR and LSAR granted to any
participant shall relate to such number of shares of Stock as shall be
determined by the Committee, subject to adjustment as provided in Section
12.5. In the case of a SAR or LSAR granted in tandem with an option, the
number of shares of Stock to which the SAR
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or LSAR pertains shall be reduced in the same proportion that the holder of
the option exercises the related option. The Committee shall determine the
Base Price for each SAR or LSAR. If a SAR or LSAR is granted in tandem with
an option, the Base Price shall be equal to the Exercise Price.
8.2 Duration and Exercisability. The term of each SAR and LSAR shall
be determined by the Committee. Each SAR shall become exercisable at such
time or times, to such extent and upon such conditions as shall be
determined by the Committee. Each LSAR shall become exercisable upon the
earlier of a Change of Control of the Company or immediately prior to the
closing of a transaction that will result in a Change of Control of the
Company if consummated. Notwithstanding the foregoing, the Committee may
in its discretion accelerate the exercisability of any SAR or LSAR. The
Committee shall also determine whether the SAR is payable in cash, Stock or
a combination thereof.
8.3 Exercise Procedure. A SAR or LSAR may be exercised, in whole or
in part, by giving written notice to the Company, specifying the number of
SARs or LSARs that the holder wishes to exercise. The Company shall,
within 30 days of an Exercise Date, deliver to the exercising holder
certificates for the Stock or cash or both to which the holder is entitled
pursuant to Section 8.4.
8.4 Payment.
(a) SARS.
(i) The number of shares of Stock that shall be issuable
upon the exercise of a SAR payable partly or wholly in Stock
shall be determined by dividing:
1. the product of (1) the number of shares of Stock as
to which the SAR is exercised, multiplied by (2) the amount
by which the Fair Market Value or of a share of Stock on the
Exercise Date exceeds the Base Price of the SAR; by
2. the Fair Market Value of a share of Stock on the
Exercise Date.
No fractional share of Stock shall be issued upon the
exercise of a SAR; instead, the holder of a SAR shall be entitled to
receive a cash adjustment equal to the same fraction of the Fair
Market Value of a share of Stock on the Exercise Date or to purchase
the portion necessary to make a whole share of Stock at its Fair
Market Value on the Exercise Date.
(ii) The cash payment that shall be made upon the exercise
of a SAR payable partly or wholly in cash shall be equal to the
amount by
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which the Fair Market Value on the Exercise Date of a share of
Stock exceeds the Base Price of the SAR, which amount is then
multiplied by the number of shares of Stock with respect to which
the SAR is exercised.
(b) LSARs. Upon exercise of a LSAR, the participant shall
receive a cash payment equal to the amount by which the per share
Change of Control Value on the Exercise Date exceeds the Base Price,
which amount is then multiplied by the number of shares of Stock with
respect to which the LSAR is exercised.
9. Restricted Stock.
9.1 Grant of Restricted Stock. An award of restricted Stock is an
issuance of shares of Stock that may be subject to the attainment of
specified performance goals or targets, restrictions on transfer,
forfeitability provisions and such other terms and conditions as the
Committee may determine, subject to the provisions of the Plan.
9.2 Award and Delivery of Restricted Stock. At the time an award of
restricted Stock is made, the Committee shall establish a period of time
(the "Restricted Period") applicable to such an award. Each award of
restricted Stock may have a different Restricted Period. The Committee
may, in its sole discretion, prescribe conditions for the termination of
the Restricted Period upon death, disability, retirement or other
termination of employment or service or upon the satisfaction of other
conditions with respect to all or any portion of the shares of restricted
Stock. Unless otherwise provided in the Incentive Agreement, the Committee
shall have the power to accelerate provided the expiration of the
Restricted Period with respect to all or any part of the Stock awarded to a
participant and the expiration of the Restricted Period shall automatically
occur under the conditions described in Section 12.11 hereof
9.3 Escrow. In order to enforce the restrictions imposed by the
Committee pursuant to this Section 9, the participant receiving restricted
Stock shall enter into an Incentive Agreement with the Company setting
forth the conditions of the grant. Certificates representing restricted
Stock shall be registered in the name of the participant and deposited with
the Company, together with a stock power endorsed in blank by the
participant. Each such certificate shall bear a legend in substantially
the following form:
The transferability of this certificate and the Stock represented by
it are subject to the terms and conditions (including conditions of
forfeiture) contained in the US Unwired Inc. Equity Incentive Plan
(the "Plan"), and an Agreement entered into between the registered
owner and US Unwired Inc. Copies of the Plan and the Agreement are on
file at the principal office of the Company.
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9.4 Dividends on Restricted Stock. Any and all cash and Stock
dividends paid with respect to the restricted Stock shall be subject to any
restrictions on transfer, forfeitability provisions or reinvestment
requirements as the Committee may, in its discretion, determine.
9.5 Forfeiture. Upon the forfeiture of any restricted Stock
(including any additional restricted Stock that may result from the
reinvestment of cash and Stock dividends in accordance with such rules as
the Committee may establish pursuant to Section 9.4), such forfeited Stock
shall be surrendered. The participants shall have the same rights and
privileges, and be subject to the same forfeiture provisions with respect
to any additional Stock received pursuant to Section 12.5 due to a
recapitalization, merger or other change in capitalization.
9.6 Expiration of Restricted Period. Upon the expiration or
termination of the Restricted Period and the satisfaction of any other
conditions prescribed by the Committee or at such earlier time as provided
for in Section 9.2 and in the restricted Stock Agreement, the restrictions
applicable to the restricted Stock shall lapse and a certificate for the
number of shares of Stock with respect to which the restrictions have
lapsed shall be delivered, free of all such restrictions, except any that
may be imposed by law, to the participant or the participant's estate, as
the case may be.
9.7 Rights as a Stockholder. Subject to the terms and conditions of
the Plan and subject to any restrictions on the receipt of dividends that
may be imposed by the Committee, each participant receiving restricted
Stock shall have all the rights of a stockholder with respect to Stock
during any period in which such shares of Stock are subject to forfeiture
and restrictions on transfer, including without limitation, the right to
vote such Stock. Unless otherwise restricted by the Committee, dividends
paid on Stock, in cash or property, other than Stock, shall be paid to the
participant currently.
10. Stock Awards. A Stock award consists of the transfer by the Company
to a participant of Stock, without other payment therefor, as additional
compensation for services to the Company. The number of shares of Stock to be
transferred by the Company to a participant pursuant to a Stock award shall be
determined by the Committee.
11. Performance Stock. A performance Stock consists of an award that may
be paid in Stock or in cash, as described below. The award of performance Stock
shall be subject to such terms and conditions as the Committee deems
appropriate, including the following:
11.1 Performance Objectives. Each performance Stock will be subject
to performance objectives for USU or one of its Subsidiaries or divisions
to be achieved by the end of a specified period. The number of shares of
performance Stock awarded shall be determined by the Committee and may be
subject to such terms and conditions, as the Committee shall determine. If
the performance objectives are achieved, each participant
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will be paid (a) a number of shares of Stock equal to the number of shares
of performance Stock initially granted to that participant; (b) a cash
payment equal to the Fair Market Value of such number of shares of Stock on
the date the performance objectives are met or such other date as may be
provided by the Committee or (c) a combination of Stock and cash, as may be
provided by the Committee. If such objectives are not met, each award of
performance Stock may provide for lesser payments in accordance with the
established formula.
11.2 Not a Stockholder. The award of performance Stock to a
participant shall not create any rights in such participant as a
stockholder of the Company until the payment of Stock with respect to an
award.
11.3 Dividend Equivalent Payments. A performance Stock award may be
granted by the Committee in conjunction with dividend equivalent payment
rights or other such rights. If so granted, such amounts shall be paid
currently in cash or an adjustment shall be made in performance Stock
awarded on account of cash dividends that may be paid or other rights that
may be issued to the holders of Stock prior to the end of any period for
which performance objectives were established.
12. General.
12.1 Duration. Subject to earlier termination under Section 12.10,
the Plan shall remain in effect until all Incentives granted under the Plan
have either been satisfied by the issuance of Stock or the payment of cash
or been terminated under the terms of the Plan and all restrictions imposed
on Stock in connection with their issuance under the Plan have lapsed. No
termination of the Plan by the Board of Directors may materially impair the
rights of a participant without the consent of the participant.
12.2 Non-transferability of Incentives. No option, SAR, LSAR or
performance Stock may be transferred, pledged or assigned by the holder
thereof (except in the event of the holder's death, by will or the laws of
descent and distribution) and the Company shall not be required to
recognize any attempted assignment of such Incentive by any participant.
During a participant's lifetime, an Incentive may be exercised only by him
or by his guardian or legal representative. Restricted Stock may only be
transferred, pledged or assigned following termination of the Restricted
Period and the transfer of all Stock may be subject to the additional
conditions provided in Section 12.4 or the applicable Incentive Agreement.
12.3 Effect of Termination of Employment. If a participant ceases to
be an Employee, officer, director or Consultant of the Company for any
reason, including death, any Incentives may be exercised or shall expire at
such times as may be determined by the Committee in the Incentive
Agreement.
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12.4 Additional Condition. Anything in this Plan to the contrary
notwithstanding: (a) the Company may, if it shall determine it necessary or
desirable for any reason, at the time of award of any Incentive or the
issuance of any share of Stock pursuant to any Incentive, require the
recipient of the Incentive, as a condition to the receipt thereof or to the
receipt of any share of Stock issued pursuant thereto, to deliver to the
Company a written representation of present intention to acquire the
Incentive or the Stock issued pursuant thereto for his own account for
investment and not for distribution; and (b) if at any time the Company
further determines, in its sole discretion, that the listing, registration
or qualification (or any updating of any such document) of any Incentive or
the Stock issuable pursuant thereto is necessary on any securities exchange
or under any federal or state securities or blue sky law, or that the
consent or approval of any governmental regulatory body is necessary or
desirable as a condition of, or in connection with the award of any
Incentive, the issuance of Stock pursuant thereto, or the removal of any
restrictions imposed on such Stock, such Incentive shall not be awarded or
such Stock shall not be issued or such restrictions shall not be removed,
as the case may be, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Company.
12.5 Adjustment. In the event of any recapitalization,
reclassification, Stock dividend, Stock split, combination of Stock or
other similar change in the Stock, the number of shares of Stock issuable
or issued under the Plan, including Stock subject to restrictions, options
or achievement of performance objectives, shall be adjusted in proportion
to the change in the number of outstanding shares of Stock. In the event
of any such adjustments, the purchase price of any option, the performance
objectives of any Incentive, and the Stock issuable pursuant to any
Incentive shall be adjusted as and to the extent appropriate, in the
reasonable discretion of the Committee, to provide participants with the
same relative rights before and after such adjustment.
12.6 Incentive Agreements. Except in the case of Stock awards, the
terms of each Incentive shall be stated in an Agreement approved by the
Committee. Notwithstanding anything to the contrary contained in the Plan,
the Company is under no obligation to grant an Incentive to a participant
or continue an Incentive in force unless the participant executes all
appropriate agreements with respect to such Incentives in such form as the
Committee may determine from time to time.
12.7 Withholding.
(1) The Company shall have the right to withhold from any
payments made under the Plan or to collect as a condition of payment,
any taxes required by law to be withheld. At any time that a
participant is required to pay to the Company an amount required to be
withheld under applicable income tax laws in connection with the
issuance of Stock, the lapse of restrictions on Stock or the exercise
of an option or SAR under the Plan, the participant may satisfy this
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obligation in whole or in part by electing (the "Election") to have
the Company withhold Stock having a value equal to the amount required
to be withheld. The value of the Stock to be withheld shall be based
on the Fair Market Value of the Stock on the date that the amount of
tax to be withheld shall be determined ("Tax Date"). Each Election
must be made prior to the Tax Date. If a participant makes an
election under Section 83(b) of the Code with respect to restricted
Stock, Election is not permitted to be made.
(2) A participant may also satisfy his or her total tax liability
related to the Incentive by delivering Stock owned by the participant.
The value of the Stock delivered shall be based on the Fair Market
Value of the Stock on the Tax Date.
12.8 No Continued Employment. No participant under the Plan shall
have any right, because of his or her participation, to continue in the
employ of the Company or to continue to serve as a director for any period
of time or to any right to continue his or her present or any other rate of
compensation.
12.9 Deferral Permitted. Payment of cash or distribution of any
Stock to which a participant is entitled under any Incentive shall be made
as provided in the Incentive Agreement. Payment may be deferred at the
option of the participant if provided the Incentive Agreement.
12.10 Amendment or Termination of the Plan. The Board may amend or
terminate the Plan at any time, provided, however, that certain amendments
may require stockholder approval if deemed necessary by the Board to
satisfy applicable tax or regulatory requirements.
12.11 Change of Control.
(a) A Change of Control shall mean:
(i) the acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of
Rule 13d-3 under the Exchange Act) of more than 50% of the
voting power of the Company except
a. any acquisition of Stock directly from USU or its
Affiliates,
b. any acquisition of Stock by USU or its Affiliates,
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c. any acquisition of Stock by any employee benefit
plan (or related trust) sponsored or maintained by USU or
any of its Affiliates,
d. any acquisition of Stock by any entity pursuant to
a transaction that complies with clauses (a), (b) and (c) of
subsection (iii) of this Section 12.11(a); or
(ii) individuals who, as of the date this Plan was adopted
by the Board (the "Approval Date"), constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a
majority of the Board provided, however, that any individual
becoming a director subsequent to prove the Approval Date whose
election, or nomination for election by USU's stockholders, was
approved by a vote of the majority of the voting power of US
Unwired Inc. or any of its Affiliates, or at least a majority of
the directors then comprising the Incumbent Board, shall be
considered a member of the Incumbent Board, unless such
individual's initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person
other than the Incumbent Board; or
(iii) consummation of any merger, consolidation, share
exchange or similar reorganization involving USU, or any sale or
other disposition of all or substantially all of the assets of
USU (a "Business Combination"), in each case unless, following
such Business Combination,
a. all or substantially all of the individuals and
entities who were the beneficial owners of USUs voting
securities entitled to vote generally in the election of
directors immediately before such Business Combination have
direct or indirect beneficial ownership of more than 50% of
the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of
directors of the entity surviving or resulting from such
Business Combination (which, for purposes of this paragraph
(a) and paragraphs (b) and (c), shall include an entity
which as a result of such transaction owns USU or all or
substantially all of USU's assets either directly or through
one or more subsidiaries), and
b. no person (excluding any entity surviving or
resulting from such Business Combination or any employee
benefit plan or related trust of USU or such entity
resulting from such Business Combination) beneficially owns,
directly or indirectly,
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the Applicable Percentage or more of the then outstanding
entity resulting from such Business Combination or the
Applicable Percentage or more of the combined voting power
of the then outstanding voting securities of such entity
(where "Applicable Percentage" means the greater of 20% or
the percentage of Stock held by the largest Stockholder of
USU immediately prior to the Business Combination), and
c. at least a majority of the members of the board of
directors of the entity surviving or resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of
the action of the Board, providing for such Business
Combination; or
(iv) approval by the stockholders of USU of a plan of
complete liquidation or dissolution of USU.
(b) Upon the earlier of a Change of Control, or immediately
prior to the closing of a transaction that will result in a Change of
Control if consummated, all outstanding options, SARs and LSARs
granted pursuant to the Plan shall automatically become fully
exercisable, all restrictions or limitations on any Incentives shall
lapse and all performance criteria and other conditions relating to
the payment of Incentives shall be deemed to be achieved or waived by
USU without the necessity of action by any person.
(c) No later than 30 days after the approval by the Board of a
Change of Control of the types described in Sections 12.11(a)(iii) and
(iv) above, and no later than 30 days after a Change of Control of the
type described in Sections 12.11(a)(1) and (11) above, the Committee
(as the Committee was composed immediately prior to such Change of
Control and notwithstanding any removal or attempted removal of some
or all of the members thereof as directors or Committee members),
acting in its sole discretion without the consent or approval of any
participant may act to effect one or more of the alternatives listed
below and such act by the Committee may not be revoked or rescinded by
persons not members of the Committee immediately prior to the Change
of Control:
(i) require that all outstanding options and/or SARs be
exercised on or before a specified date (before or after such
Change of Control) fixed by the Committee, after which specified
date all unexercised options and SARs shall terminate,
(ii) provide for mandatory conversion of some or all of the
outstanding options and SARs held by some or all participants as
of a date, before or after such Change of Control, specified by
the Committee, in
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which event such options and SARs shall be deemed automatically
canceled and USU shall pay, or cause to be paid, to each such
participant an amount of cash equal to, or publicly traded
securities of the surviving corporation in the Change of Control
transaction with a value equal to, the excess, if any, of the
Change of Control Value of the Stock subject to such option or
SAR, as defined and calculated below, over the Exercise Price(s)
of such options or SARS,
(iii) make such equitable adjustments to Incentives then
outstanding as the Committee deems appropriate to reflect such
Change of Control (provided, however, that the Committee may
determine in its sole discretion that no adjustment is
necessary), or
(iv) provide that thereafter upon any exercise of an
option or SAR (each of which shall be fully exercisable pursuant
to Section 12.11(b)) the participant shall be entitled to
purchase under such option or SAR, in lieu of the number of
shares of Stock then covered by such option or SAR, the number
and class of shares of stock or other securities or property
(including, without limitation, cash) to which the participant
would have been entitled pursuant to the terms of the agreement
providing for the merger, consolidation, asset sale, dissolution
or other Change of Control of the type described in Sections
12.11(a)(iii) and (iv) of the Plan, if, immediately prior to such
Change of Control, the participant had been the holder of record
of the number of shares of Stock then covered by such options or
SARS,
provided, however, that the holder of LSARs may choose instead in his
sole discretion to exercise his LSARs.
(d) For the purposes of paragraph (ii) of Section 12.11(c) and
the exercise of LSARS, "Change of Control Value" shall equal the
amount determined by whichever of the following items is applicable:
(i) the per share of Stock price to be paid to
Stockholders of USU in any such merger, consolidation or other
reorganization,
(ii) the price per Stock offered to stockholders of USU in
any tender offer or exchange offer whereby a Change of Control
takes place,
(iii) in all other events, the Fair Market Value per share
of Stock as of the date determined by the Committee to be the
date of conversion of such options or SARs or the date of
exercise of such LSARS, or
16
<PAGE>
(iv) if the consideration offered to stockholders of USU in
any transaction described in this Section 12.11(d) consists of
anything other than cash, the Committee shall determine the fair
cash equivalent of the portion of the consideration offered that
is other than cash.
12.12 Loans. In order to assist a participant to acquire Stock
pursuant to an Incentive granted under the Plan and to assist a participant
to satisfy his tax liabilities arising in connection with such Incentive,
the Committee may authorize, at either the time of the grant of the
Incentive, at the time of the acquisition of Stock pursuant to the
Incentive, or at the time of the lapse of restrictions on restricted Stock
granted under the Plan, the extension of a loan, in compliance with
Regulation G of the Federal Reserve Board, to the participant by the
Company. The terms of any loans, including the interest rate, collateral
and terms of repayment will be subject to the discretion of the Committee.
The maximum credit available hereunder shall be the purchase price, if any,
of the Stock acquired pursuant to the Incentive, plus the maximum tax
liability that may be incurred in connection with the acquisition.
Adopted by the Board of Directors: September 27, 1999
Approved by the Stockholders: September 27, 1999
17
<PAGE>
EXHIBIT 10.6
EXECUTION COPY
================================================================================
SECURITIES PURCHASE AGREEMENT
by and among
US UNWIRED INC.
and
THE 1818 FUND III, L.P.
________________________
Dated October 29, 1999
________________________
================================================================================
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
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<S> <C>
Article 1
DEFINITIONS............................................................. 1
1.1 Definitions...................................................... 1
1.2 Accounting Terms................................................. 12
Article 2
PURCHASE AND SALE OF PREFERRED STOCK.................................... 12
2.1 Purchase and Sale of Preferred Stock............................ 12
2.2 Charter Amendment............................................... 13
2.3 Fees............................................................ 13
2.4 Closing......................................................... 13
Article 3
CONDITIONS TO THE OBLIGATION OF THE PURCHASER TO CLOSE................. 13
3.1 Representations and Warranties True............................. 13
3.2 Compliance with this Agreement.................................. 13
3.3 Officer's Certificate........................................... 13
3.4 Secretary's Certificate......................................... 14
3.5 Documents....................................................... 14
3.6 Purchase Permitted by Applicable Laws; Legal Investment......... 14
3.7 Filing of Charter Amendment and other Amendments................ 14
3.8 Opinion of Counsel.............................................. 14
3.9 Approval of Counsel to the Purchaser............................ 14
3.10 Consents and Approvals.......................................... 14
3.11 No Material Adverse Change...................................... 15
3.12 Due Diligence................................................... 15
3.13 Conduct of Business............................................. 15
3.14 Registration Rights Agreement................................... 15
3.15 Shareholders Agreement.......................................... 15
3.16 Charter and By-Laws of the Company.............................. 15
3.17 Market Conditions............................................... 15
3.18 No Litigation................................................... 16
3.19 No Default or Breach............................................ 16
3.20 HSR Act......................................................... 16
3.21 High Yield Offering............................................. 16
3.22 Election of Directors........................................... 16
3.23 Amendments to the Credit Agreements............................. 16
3.24 Sprint PCS Agreement............................................ 16
</TABLE>
i
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<TABLE>
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<S> <C>
3.25 Amendment of Existing Shareholders' Agreement................... 17
Article 4
CONDITIONS TO THE OBLIGATION OF THE COMPANY TO CLOSE.................... 17
4.1 Representations and Warranties True............................. 17
4.2 Compliance with this Agreement.................................. 17
4.3 Issuance Permitted by Applicable Laws........................... 17
4.4 Approval of Counsel to the Company.............................. 17
4.5 Consents and Approvals.......................................... 18
4.6 HSR Act......................................................... 18
4.7 High Yield Offering............................................. 18
Article 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 18
5.1 Corporate Existence and Power................................... 18
5.2 Corporate Authorization; No Contravention....................... 18
5.3 Governmental Authorization; Third Party Consents................ 19
5.4 Binding Effect.................................................. 19
5.5 No Legal Bar.................................................... 19
5.6 Litigation...................................................... 20
5.7 No Default or Breach............................................ 20
5.8 Title to Properties; Leases..................................... 20
5.9 Taxes........................................................... 21
5.10 Financial Condition............................................. 22
5.11 No Material Adverse Change...................................... 22
5.12 Offering Documents.............................................. 22
5.13 Environmental Matters........................................... 22
5.14 Investment Company.............................................. 24
5.15 Affiliates and Subsidiaries..................................... 24
5.16 Capitalization.................................................. 24
5.17 Solvency........................................................ 25
5.18 Private Offering................................................ 25
5.19 Broker's, Finder's or Similar Fees.............................. 25
5.20 Full Disclosure................................................. 25
5.21 Year 2000 Compliance............................................ 26
5.22 No Undisclosed Financial Liabilities............................ 26
5.23 Registration Rights Agreement; Shareholders Agreement........... 26
5.24 Trade Relations................................................. 27
5.25 Material Contracts; Sprint PCS Agreement........................ 27
5.26 Business Plan................................................... 28
5.27 Internal Controls............................................... 28
5.28 ERISA........................................................... 29
</TABLE>
ii
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<TABLE>
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<S> <C>
5.29 Labor Relations................................................. 29
5.30 Personal Property............................................... 29
5.31 Intellectual Property........................................... 29
5.32 FCC Matters; Operation and Condition of the Systems............. 30
Article 6
REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PURCHASER........... 33
6.1 Existence and Power............................................. 33
6.2 Authorization; No Contravention................................. 33
6.3 Binding Effect.................................................. 33
6.4 No Legal Bar.................................................... 33
6.5 Purchase for Own Account........................................ 33
6.6 Broker's, Finder's or Similar Fees.............................. 34
Article 7
INDEMNIFICATION......................................................... 35
7.1 Indemnification by the Company.................................. 35
7.2 Notification.................................................... 35
7.3 Registration Rights Agreement................................... 36
Article 8
AFFIRMATIVE COVENANTS................................................... 36
8.1 Financial Statements............................................ 37
8.2 Certificates; Other Information................................. 38
8.3 Preservation of Corporate Existence............................. 38
8.4 Payment of Obligations.......................................... 38
8.5 Compliance with Laws............................................ 39
8.6 Notices......................................................... 39
8.7 Issue Taxes..................................................... 39
8.8 Reservation of Shares........................................... 39
8.9 Inspection...................................................... 40
8.10 Registration and Listing........................................ 40
8.11 HSR Act Filing.................................................. 40
8.12 Sprint PCS Agreement............................................ 41
Article 9
NEGATIVE COVENANTS...................................................... 41
9.1 Consolidations and Mergers...................................... 41
9.2 Transactions with Affiliates.................................... 42
9.3 No Inconsistent Agreements...................................... 42
</TABLE>
iii
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Article 10
DISPOSITIONS............................................................ 42
10.1 Dispositions by the Purchaser................................... 42
10.2 Equity Put Option............................................... 43
Article 11
MISCELLANEOUS........................................................... 46
11.1 Survival of Provisions.......................................... 46
11.2 Notices......................................................... 46
11.3 Successors and Assigns.......................................... 47
11.4 Amendment and Waiver............................................ 47
11.5 Counterparts.................................................... 48
11.6 Headings........................................................ 48
11.7 Determinations.................................................. 48
11.8 Governing Law................................................... 48
11.9 Jurisdiction.................................................... 48
11.10 Severability.................................................... 49
11.11 Rules of Construction........................................... 49
11.12 Remedies........................................................ 49
11.13 Entire Agreement................................................ 49
11.14 Attorneys' Fees................................................. 49
11.15 Publicity....................................................... 50
11.16 Expenses........................................................ 50
</TABLE>
SCHEDULES
Schedule 5.6 - Litigation
Schedule 5.8 - Title to Properties; Leases
Schedule 5.13 - Environmental Matters
Schedule 5.15 - Affiliates and Subsidiaries
Schedule 5.16 - Capitalization
Schedule 5.21 - Year 2000 Compliance
Schedule 5.22 - Undisclosed Financial Liabilities
Schedule 5.23 - Registration Rights Agreement; Shareholders Agreement
Schedule 5.25 - Material Contracts; Sprint PCS Agreement
Schedule 5.26 - Business Plan
Schedule 5.29 - Labor Relations
Schedule 5.31 - Intellectual Property
Schedule 5.32 - FCC Matters; Operation and Condition of the Systems
EXHIBITS
iv
<PAGE>
Page #
------
Exhibit A Form of Charter Amendment
Exhibit B Form of Registration Rights Agreement
Exhibit C Form of Warrant
Exhibit D Form of Shareholders Agreement
Exhibit E Matters to be Addressed by Opinion of Counsel to Company
v
<PAGE>
SECURITIES PURCHASE AGREEMENT, dated October 29, 1999, by and among US
Unwired Inc., a Louisiana corporation (the "Company"), and The 1818 Fund III,
-------
L.P., a Delaware limited partnership (the "Purchaser").
---------
The Company proposes that the Company issue to the Purchaser and that
the Purchaser purchase, up to 500,000 shares of the Company's Senior Redeemable
Convertible Preferred Stock, Series A, no par value (the "Preferred Stock"),
---------------
upon the terms and subject to the conditions set forth in this Agreement.
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
Article 1
DEFINITIONS
-----------
1.1 Definitions. As used in this Agreement, and unless the context
-----------
requires a different meaning, the following terms have the meanings indicated:
"1997 Audited Financials" has the meaning assigned to that term
-----------------------
in Section 5.10.
"1998 Audited Financials" has the meaning assigned to that term
-----------------------
in Section 5.10.
"1999 Interim Financials" has the meaning assigned to that term
-----------------------
in Section 5.10.
"Affiliate" has the meaning ascribed to such term in Rule 12b-2
---------
of the General Rules and Regulations under the Exchange Act; provided that the
--------
Purchaser shall not be deemed to be an "Affiliate" of the Company.
"Agreement" means this Agreement as the same may be amended,
---------
supplemented or modified in accordance with the terms hereof.
"Assets" has the meaning assigned to that term in Section 5.8(a).
------
"Business Day" means any day other than a Saturday, Sunday or
------------
other day on which commercial banks in the City of New York, New York are
authorized or required by law or executive order to close.
<PAGE>
2
"Business Plan" has the meaning assigned to that term in Section
-------------
5.26.
"Charter Amendment" means the Amendment to Articles of
-----------------
Incorporation of the Company (the form of which is attached hereto as Exhibit A)
---------
to be adopted by the Board of Directors and shareholders of the Company and
filed with the Secretary of State of the State of Louisiana.
"Class A Common Stock" means the Class A common stock, par value
--------------------
$.01 per share of the Company.
"Class B Common Stock" means the Class B common stock, par value
--------------------
$.01 per share, of the Company.
"Closing" has the meaning assigned to that term in Section 2.4.
-------
"Closing Date" means the date specified in Section 2.4.
------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commission" means the Securities and Exchange Commission or any
----------
similar agency then having jurisdiction to enforce the Securities Act.
"Commission Documents" means all registration statements, proxy
--------------------
statements, reports and other documents (and all amendments thereto), required
to be filed by the Company under the Securities Act or the Exchange Act.
"Common Stock" means the Class A Common Stock, the Class B Common
------------
Stock and each other class of capital stock of the Company that does not have a
preference over any other class of capital stock of the Company as to dividends
or upon liquidation, dissolution or winding up of the Company and in each case,
shall include any other class of capital stock of the Company into which such
stock is reclassified or reconstituted.
"Communications Act" has the meaning assigned to that term in
------------------
Section 5.30.
"Communications Licenses" means all licenses, waivers, consents,
-----------------------
permits or other authorizations issued or granted by the FCC or any other state
or local Governmental Authority in connection with ownership and operation of
the cellular, paging, PCS Services, LMDS, local exchange, long distance and
Internet services provided by the Company and its Subsidiaries, including Sprint
PCS Licenses.
"Company" has the meaning assigned to that term in the recitals
-------
to this Agreement.
<PAGE>
3
"Condition of the Company" means the assets, business,
------------------------
properties or financial or other condition of the Company and its Subsidiaries
taken as a whole.
"Consolidated Net Worth" means, as of the date of determination
----------------------
with respect to any Person, the consolidated stockholders' equity of such Person
and its Subsidiaries, determined in accordance with GAAP.
"Contact List" has the meaning assigned to that term in Section
------------
10.1(a).
"Contingent Obligation" means, as applied to any Person, any
---------------------
direct or indirect liability of that Person with respect to any Indebtedness,
lease, dividend, guaranty, letter of credit or other obligation (the "primary
-------
obligation") of another Person (the "primary obligor"), including, without
- ---------- ---------------
limitation, any obligation of such first-mentioned Person, whether or not
contingent, (a) to purchase, repurchase or otherwise acquire such primary
obligations or any property constituting direct or indirect security therefor,
or (b) to advance or provide funds (i) for the payment or discharge of any such
primary obligation, or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, or (c) to purchase property, securities or services primarily for the
purpose of assuring the beneficiary of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation, or
(d) otherwise to assure or hold harmless the beneficiary of any such primary
obligation against loss in respect thereof. The amount of any Contingent
Obligation shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Contingent Obligation
is made or, if not stated or determinable, the maximum reasonably anticipated
liability in respect thereof as determined by the Company in good faith.
"Contractual Obligations" means as to any Person, any provision
-----------------------
of any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument to which such
Person is a party or by which it or any of its property is bound.
"Credit Agreement" means, collectively, (i) that certain Credit
----------------
Agreement, dated as of October 1, 1999, by and among the Company and CoBank,
ACB, as Administrative Agent and a lender; The Bank of New York, a Documentation
Agent and a lender; BNY Capital Markets, Inc., a Co-Arranger; First Union
Capital Markets Corp., a Syndication Agent and a Co-Arranger; First Union
National Bank, a lender; and the other lenders party signatory thereto,
providing for up to $130.0 million of term and revolving credit borrowings, (ii)
that certain Loan and Security Agreement, dated as of July 22, 1998, by and
among LEC Unwired, AT&T Commercial Finance Corporation and the financial
institutions named therein, providing for up to $15.0
<PAGE>
4
million of credit borrowings, and (iii) that certain Subordinated Loan and
Security Agreement, dated as of July 22, 1998, by and among LEC Unwired, AT&T
Commercial Finance Corporation and the financial institutions named therein,
providing for up to $3.0 million of credit borrowings, in each case 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 from time to time.
"Demand Group" has the meaning assigned to that term in Section
------------
10.2(a).
"Demand Notice" has the meaning assigned to that term is Section
-------------
10.2(a).
"Discount Note Documents" means (i) the DLJ Purchase Agreement,
-----------------------
(ii) the Offering Memorandum, (iii) that certain A/B Exchange Registration
Rights Agreement, dated as of October 29, 1999, by and among the Company, LA
Unwired, Unwired Telecom, Donaldson, Lufkin & Jenrette Securities Corporation,
First Union Securities, Inc. and BNY Capital Markets, Inc., (iv) that certain
Indenture, dated as of October 29, 1999, by and among the Company, LA Unwired,
Unwired Telecom and State Street Bank and Trust Company, providing for the
issuance of an aggregate of $400,000,000 in principal amount at maturity of the
Company's 13 3/8% Senior Subordinated Discount Notes due 2009, (v) that certain
Pledge and Security Agreement, dated as of October 29, 1999, between LA Unwired
and State Street Bank and Trust Company, and (vi) that certain Intercreditor
Agreement, dated as of October 29, 1999, between State Street Bank and Trust
Company, and CoBank, ACB and acknowledged by LA Unwired.
"DLJ Purchase Agreement" means that certain Purchase Agreement,
----------------------
dated as of October 26, 1999, by and among the Company, Donaldson, Lufkin &
Jenrette Securities Corporation, First Union Securities, Inc. and BNY Capital
Markets, Inc., relating to an aggregate of $400,000,000 in principal amount at
maturity of the Company's 13 3/8% Senior Subordinated Discount Notes due 2009.
"Documents" has the meaning assigned to that term in Section
---------
5.20.
"DTC" means the Depositary Trust Company.
---
"Environmental Claims" means any notification, whether formal or
--------------------
informal, written or oral, pursuant to Environmental Laws or principles of
common law relating to pollution, or protection of the environment or health and
safety, that any of the current or past operations of the Company or any of its
Subsidiaries, or any by-product thereof, or any of the property currently or
formerly owned, leased or operated
<PAGE>
5
by the Company or any of its Subsidiaries, or the operations or property of any
predecessor of the Company or any of its Subsidiaries, is or may be implicated
in or subject to any Claim, Requirements of Law, hearing, notice, agreement or
evaluation by any Governmental Authority or any other Person.
"Environmental Compliance Costs" means any expenditures, costs,
------------------------------
assessments or expenses (including any expenditures, costs, assessments or
expenses in connection with the conduct of any Remedial Action, as well as
reasonable fees, disbursements and expenses of attorneys, experts, personnel and
consultants), whether direct or indirect, necessary to cause the operations,
real property, assets, equipment or facilities owned, leased, operated or used
by the Company or any of its Subsidiaries, or the property of any predecessor of
the Company or any of its Subsidiaries, to be in compliance with any and all
requirements of Environmental Laws, principles of common law concerning
pollution, protection of the environment or health and safety, or Permits issued
pursuant to Environmental Laws; provided, however, that Environmental Compliance
-------- -------
Costs do not include expenditures, costs, assessments or expenses necessary in
connection with normal maintenance of such real property, assets, equipment or
facilities or the replacement of equipment in the normal course of events due to
ordinary wear and tear.
"Environmental Laws" means any federal, state, territorial,
------------------
provincial, parish or local law, common law doctrine, rule, order, decree,
judgment, injunction, license, permit or regulation relating to environmental
matters, including those pertaining to land use, air, soil, surface water,
ground water (including the protection, cleanup, removal, remediation or damage
thereof), public or employee health or safety or any other environmental matter,
together with any other laws (federal, state, territorial, provincial or local)
relating to emissions, discharges, releases or threatened releases of any
contaminant including, without limitation, medical, biological, biohazardous or
radioactive waste and materials, into ambient air, land, surface water,
groundwater, personal property or structures, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transportation, discharge or handling of any contaminant, including, without
limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. (S) 9601 et seq.), the Hazardous Material
-- ---
Transportation Act (49 U.S.C. (S) 1801 et seq.), the Resource Conservation and
-- ---
Recovery Act (42 U.S.C. (S) 6901 et seq.), the Federal Water Pollution Control
-- ---
Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42 U.S.C. (S) 1251 et
-- --- --
seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601 et seq.), the
- --- -- ---
Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. (S) 121 et seq.),
-- ---
the Asbestos Hazard Emergency Response Act (15 U.S.C. (S) et seq.); the Safe
-- ---
Drinking Water Act (42 U.S.C. (S) 300F et seq.); the Oil Pollution Act of 1990
-- ---
(33 U.S.C. (S) 2701 et seq.); and the Occupational Safety and Health Act (29
-- ---
U.S.C. (S) 651 et seq.), as such laws have been amended or supplemented and any
-- ---
analogous future federal, or present or future state or local laws, statutes and
regulations promulgated thereunder.
<PAGE>
6
"ERISA" means the Employee Retirement Income Security Act of
-----
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations of the Commission promulgated thereunder.
"F-block License" means a license awarded by the FCC to provide
---------------
PCS Services in the frequency block 1890-1895 MHz paired with 1970-1975 MHz.
"FCC" means the Federal Communications Commission.
---
"FCC Rules" has the meaning assigned that term in Section 5.30.
---------
"Financial Liabilities" has the meaning assigned that term in
---------------------
Section 5.22.
"GAAP" means generally accepted accounting principles in effect
----
from time to time.
"Governmental Authority" means the government of any nation,
----------------------
state or other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Hazardous Materials" means those substances that are regulated
-------------------
by, or form the basis of liability under, any Environmental Laws.
"Hazardous Substance" means any toxic waste, pollutant,
-------------------
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste, industrial substance or waste, petroleum or petroleum-derived substance
or waste, radioactive substance or waste, or any constituent of any such
substance or waste, or any other substance regulated under or defined by any
Environmental Law.
"High Yield Offering" has the meaning assigned to that term in
-------------------
Section 3.21.
"Holder", with respect to Preferred Shares or Common Stock
------
issued upon conversion of the Preferred Shares or upon exercise of the Warrants,
means the Purchaser and any subsequent direct or indirect transferee of such
securities; provided that the term Holder shall not include any Person who owns
--------
such securities if such securities have been registered under the Securities Act
or have been transferred to such Person after such securities has been the
subject of a distribution to the public
<PAGE>
7
pursuant to Rule 144 under the Securities Act (or any successor provision) or
otherwise distributed under circumstances not requiring a legend.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
-------
Act of 1976, as amended, and the rules and regulations of the Federal Trade
Commission thereunder.
"Indebtedness" means as to any Person, without duplication, (a)
------------
all obligations of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured), (b)
all obligations evidenced by notes, bonds, debentures or similar instruments,
(c) all obligations to pay the deferred purchase price of property or services,
except trade accounts payable and accrued liabilities arising in the ordinary
course of business, (d) all interest rate and currency swaps and similar
agreements under which payments are obligated to be made, whether periodically
or upon the happening of a contingency, (e) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such Person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (f) all obligations under leases which
have been or should be, in accordance with GAAP, recorded as capital leases, (g)
all indebtedness secured by any Lien (other than Liens in favor of lessors under
leases other than leases included in clause (f)) on any property or asset owned
or held by that Person regardless of whether the indebtedness secured thereby
shall have been assumed by that Person or is non-recourse to the credit of that
Person, (h) all obligations of such Person to reimburse or prepay any bank or
other Person in respect of amounts paid under a letter of credit, banker's
acceptance or similar instrument, (i) all capital stock issued by such Person
subject to mandatory redemption that is not contingent upon future events or
circumstances, and (j) any Contingent Obligation.
"Indemnified Party" has the meaning assigned to that term in
-----------------
Section 7.1.
"Intellectual Property" has the meaning assigned to that term in
---------------------
Section 5.31(a).
"IPO" means the date on which the Company (a) becomes a
---
"reporting company," as defined under Section 12(g) of the Exchange Act, with
all of its filings with the Commission being current, and (b) has completed one
or more underwritten offerings of Common Stock registered under the Securities
Act with at least $50 million, in the aggregate, of gross proceeds.
"LA Unwired" means Louisiana Unwired, LLC, a Louisiana limited
----------
liability company.
<PAGE>
8
"Leases" means any leases of property, whether real, personal or
------
mixed, and all amendments thereto, and shall include all use or occupancy
agreements.
"LEC Unwired" means LEC Unwired, LLC, a Louisiana limited
-----------
liability company.
"Liabilities" has the meaning assigned to that term in Section
-----------
7.1.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
----
assignment, encumbrance, lien (statutory or other) or preference, priority or
other security interest or preferential arrangement of any kind or nature
whatsoever (including, without limitation, those created by, arising under or
evidenced by, any conditional sale or other title retention agreement, the
interest of a lessor under a capitalized lease obligation, or any financing
lease having substantially the same economic effect as any of the fore going).
"LMDS" means local multipoint distribution services, a form of
----
wireless communications.
"Meretel" means Meretel Communications Limited Partnership, a
-------
Louisiana partnership in commendam.
"Nonparticipating Holders" has the meaning assigned to that term
------------------------
in Section 10.1(a).
"Offering Memorandum" means that certain Offering Memorandum,
-------------------
dated as of October 26, 1999, relating to an aggregate of $400,000,000 in
principal amount at maturity of the Company's 13 3/8% Senior Subordinated
Discount Notes due 2009.
"Options" has the meaning assigned to that term in Section 5.16.
-------
"Participating Holder" has the meaning assigned to that term in
--------------------
Section 10.2(a).
"PCS Services" means the provision of personal communications
------------
service, a form of wireless communications.
"Permits" means all licenses, franchises, permits and
-------
authorizations of any governmental bodies as are necessary for the lawful
conduct of the business of the Company or any of its Subsidiaries.
"Per Share Equity Value" of a share of Common Stock as of a
----------------------
particular date shall mean the quotient obtained by dividing (a) the "as if
fully distributed value" of all outstanding shares of the Common Stock on such
date
<PAGE>
9
(assuming that (i) the shares of Common Stock are publicly traded on a national
exchange and that no consideration is given to any distinction between the
shares of Class A Common Stock and shares of Class B Common Stock, (ii) that no
person or group owns a control block, (iii) no consideration is given to any
minority investment discounts or discounts related to restrictions on
transferability or discounts relating to illiquidity, (iv) all the Preferred
Shares have been converted into Common Stock, and (v) no consideration is given
to any cost of selling the shares of Common Stock), by (b) the number of
outstanding shares of the Common Stock. The "as if fully distributed value"
shall be determined in accordance with Section 10.2(c).
"Person" means any individual, firm, corporation, partnership,
------
limited liability company, trust, incorporated or unincorporated association,
joint venture, joint stock company, Governmental Authority or other entity of
any kind, and shall include any successor (by merger or otherwise) of such
entity.
"PORTAL" means Private Offerings, Resales and Trading through
------
Automated Linkages.
"Preferred Shares" has the meaning assigned to that term in
----------------
Section 2.1(a).
"Preferred Stock" has the meaning assigned to that term in the
---------------
recitals to this Agreement.
"Prohibitive Event" has the meaning assigned to that term in
-----------------
Section 10.2(a).
"Purchase Price" has the meaning assigned to that term in Section
--------------
2.1(a).
"Purchaser" has the meaning assigned to that term in the recitals
---------
to this Agreement.
"Put Price" means, with respect to a share of Common Stock, the
---------
Per Share Equity Value of such share of Common Stock as of the date of the
Demand Notice or such later date in accordance with Section 10.2(d).
"Real Property" means all of the fee estates and buildings and
-------------
other fixtures and improvements thereon, leasehold interests, easements,
licenses, rights to access, rights-of-way, and other real property interests
which are owned or used by the Company or any of its Subsidiaries, as of the
date hereof, in the operations of the business of the Company and its
Subsidiaries, plus such additions thereto and deletions therefrom arising in the
ordinary course of business between the date hereof and the Closing Date.
<PAGE>
10
"Redemption Date" has the meaning assigned to that term in
---------------
Section 10.2(a).
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement in substantially the form attached hereto as Exhibit B.
---------
"Release" means any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration into
or through the indoor or outdoor environment or into, through or out of any
property, including the movement of Hazardous Substances through or in the air,
soil, surface water, ground water or property.
"Remedial Action" means all actions, whether voluntary or
---------------
involuntary, reasonably necessary to comply with, or discharge any obligation
under, Environmental Laws to (i) clean up, remove, treat, cover or in any other
way adjust Hazardous Substances in the indoor or outdoor environment; (ii)
prevent or control the Release of Hazardous Substances so that they do not
migrate or endanger or threaten to endanger public health or welfare or the
environment; or (iii) perform remedial studies, investigations, restoration and
post-remedial studies, investigations and monitoring on, about or in any real
property.
"Required Redemption Notice" has the meaning assigned to that
--------------------------
term in Section 10.2(a).
"Requirements of Law" means as to any Person, the Articles of
-------------------
Incorporation and By-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Securities Act" means the Securities Act of 1933, as amended,
--------------
and the rules and regulations of the Commission promulgated thereunder.
"Shareholders Agreement" means the Shareholders Agreement in
----------------------
substantially the form attached hereto as Exhibit D.
---------
"Solvent" means, with respect to any Person, that the fair
-------
saleable value on a going concern basis of the assets and property of such
Person is, on the date of determination, greater than the total amount of
liabilities (including contingent and unli quidated liabilities) of such Person
as of such date and that, as of such date, such Person is able to pay all
liabilities of such Person as such liabilities mature. In computing the amount
of contingent or unliquidated liabilities at any time, such liabilities will be
computed as the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that is probable to become an
actual or matured liability.
<PAGE>
11
"Sprint PCS" means, collectively, Sprint Spectrum L.P., a
----------
Delaware limited partnership, and SprintCom, Inc., a Kansas corporation.
"Sprint PCS Agreement" means, collectively, (i) the Sprint PCS
--------------------
Management Agreement among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom,
Inc. and LA Unwired dated February 8, 1999, including Addendum I, Addendum II,
the Sprint Trademark and Service Mark License Agreement, and Sprint Spectrum
Trademark and Service Mark License Agreement, all as attached thereto and made a
part thereof; (ii) the Sprint PCS Management Agreement, among Wirelessco, L.P.,
Sprint Spectrum L.P., SprintCom, Inc. and LA Unwired dated June 8, 1998,
including Addendum I, Addendum II, the Sprint Trademark and Service Mark License
Agreement, and Sprint Spectrum Trademark and Service Mark License Agreement, all
as attached thereto and made a part thereof and (iii) the Sprint PCS Management
Agreement among Wirelessco, L.P., Sprint Spectrum L.P., SprintCom, Inc. and
Meretel dated June 8, 1999, including Addendum I, the Sprint Trademark and
Service Mark License Agreement, and Sprint Spectrum Trademark and Service Mark
License Agreement, all as attached thereto and made a part thereof.
"Sprint PCS Licenses" has the meaning assigned to that term in
-------------------
Section 5.32(a).
"Sprint PCS Markets" has the meaning assigned to that term in
------------------
Section 5.25(b).
"Subsidiary" means, with respect to any Person, another Person of
----------
which 50% or more of the voting power of the voting equity securities or equity
interest is owned, directly or indirectly, by such first-mentioned Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company. "Subsidiaries" of the Company shall also include LA Unwired, LEC
Unwired, Unwired Telecom and Texas Unwired.
"Technology Systems" has the meaning assigned to that term is
------------------
Section 5.21.
"Texas Unwired" means Texas Unwired, a Louisiana general
-------------
partnership.
"Unwired Telecom" means Unwired Telecom Corp., a Louisiana
---------------
corporation.
"USTs" means any underground or aboveground storage tanks or
----
related piping or dispensers.
<PAGE>
12
"Voting Stock" means, with respect to any Person, any
------------
securities or similar instruments of such Person whose holders are entitled
under ordinary circumstances to vote for the election of directors of such
Person (irrespective of whether at such time securities or similar instruments
of any other class or classes shall have or might have voting power by reason of
the happening of any contingency).
"Warrants" mean the warrants exercisable into shares of Common
--------
Stock of the Company, at an exercise price of $.01 per warrant, in substantially
the form attached hereto as Exhibit C.
---------
"Year 2000 Compliance" has the meaning assigned to that term in
--------------------
Section 5.21.
1.2 Accounting Terms. All accounting terms used herein not expressly
----------------
defined in this Agreement shall have the respective meanings given to them in
accordance with sound accounting practice. The term "sound accounting practice"
shall mean such accounting practice as, in the opinion of the independent
accountants regularly retained by the Company, conforms at the time to GAAP
applied on a consistent basis except for changes with which such accountants
concur.
Article 2
PURCHASE AND SALE OF PREFERRED STOCK
------------------------------------
2.1 Purchase and Sale of Preferred Stock.
------------------------------------
(a) Subject to the terms and conditions herein set forth, the
Company agrees that it will issue to the Purchaser, and the Purchaser agrees
that it will acquire from the Company, at the Closing, 500,000 shares of
Preferred Stock (the "Preferred Shares") for a purchase price of $50,000,000
----------------
(the "Purchase Price"), in cash, by wire transfer of immediately available funds
--------------
to an account designated by the Company in a notice delivered to the Purchaser
one Business Day prior to the Closing Date.
2.2 Charter Amendment. The Preferred Shares shall have the rights
-----------------
and preferences set forth in the Charter Amendment.
2.3 Fees. Simultaneously with the purchase of the Preferred Shares,
----
the Company shall pay a facility fee equal to two percent (2%) of the Purchase
Price to the Purchaser, in cash, by wire transfer of immediately available funds
to an account designated in a notice delivered to the Company not later than two
Business Days prior to the Closing Date. At the Company's option by notice to
the Purchaser at least two Business Days prior to the Closing Date, such
facility fee may be paid by the Purchaser deducting such amount from the
Purchase Price.
<PAGE>
13
2.4 Closing. Subject to Articles 3 and 4, the purchase and issuance
-------
of the Preferred Shares shall take place at the closing (the "Closing") to be
-------
held at the offices of Paul, Weiss, Rifkind, Wharton & Garrison, 1285 Avenue of
the Americas, New York, New York 10019-6064 on October 29, 1999, or such other
location or later date on or prior to October 31, 1999 as the parties may agree
(the "Closing Date"), at 10:00 a.m., New York City time. At the Closing,
------------
subject to the terms and conditions set forth herein, the Company shall sell the
Preferred Shares to the Purchaser by delivering to the Purchaser Preferred
Shares registered in the name of the Purchaser or its designee, with appropriate
issue stamps, if any, affixed at the expense of the Company, free and clear of
any Lien, and the Purchaser shall purchase the Preferred Shares.
Article 3
CONDITIONS TO THE OBLIGATION
OF THE PURCHASER TO CLOSE
-------------------------
The obligation of the Purchaser to purchase the Preferred Shares, to
pay the Purchase Price at the Closing and to perform any of its obligations
hereunder shall be subject to the satisfaction or waiver of the following
conditions on or before the Closing Date:
3.1 Representations and Warranties True. The representations and
-----------------------------------
warranties of the Company contained in Article 5 hereof shall be true and
correct in all material respects at and as of the Closing Date as if made at and
as of such date.
3.2 Compliance with this Agreement. The Company shall have performed
------------------------------
and complied with all of its agreements and conditions set forth or contemplated
herein that are required to be performed or complied with by the Company on or
before the Closing Date.
3.3 Officer's Certificate. The Purchaser shall have received a
---------------------
certificate, dated the Closing Date and signed by the President or the Chief
Financial Officer of the Company, certifying that the conditions set forth in
Sections 3.1 and 3.2 hereof have been satisfied on and as of such date.
3.4 Secretary's Certificate. The Purchaser shall have received a
-----------------------
certificate, dated the Closing Date and signed by the Secretary or an Assistant
Secretary of the Company, certifying the truth and correctness of attached
copies of the Articles of Incorporation and By-laws of the Company and
resolutions of the Board of Directors of the Company approving this Agreement
and the transactions contemplated hereby.
3.5 Documents. The Purchaser shall have received copies of such
---------
documents as it reasonably may request in connection with the sale of the
Preferred
<PAGE>
14
Shares and the transactions contemplated hereby, all in form and substance
reasonably satisfactory to such Purchaser.
3.6 Purchase Permitted by Applicable Laws; Legal Investment. The
-------------------------------------------------------
acquisition of and payment for the Preferred Shares to be acquired by the
Purchaser hereunder and the consummation of the transactions contemplated
hereby: (a) shall not be prohibited by any applicable law or governmental
regulation; (b) shall not subject the Purchaser to any penalty or, in its
reasonable judgment, other onerous condition under or pursuant to any applicable
law or governmental regulation; and (c) shall be permitted by the laws and
regulations of the jurisdictions to which it is subject.
3.7 Filing of Charter Amendment and other Amendments. The Charter
------------------------------------------------
Amendment shall have been duly filed by the Company with the Secretary of State
of the State of Louisiana and shall be effective and the Articles of
Incorporation of the Company shall provide that the Purchaser is eligible to be
a holder of shares of Class B Common Stock.
3.8 Opinion of Counsel. The Purchaser shall have received the
------------------
opinions of Correro Fishman Haygood Phelps Walmsley & Casteix, L.L.P., counsel
to the Company, and Lukas, Nace, Gutierrez & Sachs, Chartered, special
regulatory counsel to the Company, dated the Closing Date, with respect to the
matters set forth in Exhibit E hereto.
---------
3.9 Approval of Counsel to the Purchaser. All actions and
------------------------------------
proceedings hereunder and all documents required to be delivered by the Company
hereunder or in connection with the consummation of the transactions
contemplated hereby, and all other related matters, shall have been reasonably
acceptable to Paul, Weiss, Rifkind, Wharton & Garrison, counsel to the
Purchaser, as to their form and substance.
3.10 Consents and Approvals. All consents, exemptions,
----------------------
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons, including, with respect to
Contractual Obligations of the Company, necessary or required in connection with
the execution, delivery or performance by the Company or enforcement against the
Company of this Agreement, the Preferred Shares, the Registration Rights
Agreement, the Warrants or the Shareholders Agreement shall have been obtained
and be in full force and effect, and the Purchaser shall have been furnished
with appropriate evidence thereof.
3.11 No Material Adverse Change. Since December 31, 1998, there shall
--------------------------
have been no material adverse change, nor shall any such change be threatened,
in the Condition of the Company since that date.
3.12 Due Diligence. The Purchaser shall have completed its due
-------------
diligence review of the assets, business, properties, pending litigations,
prospects,
<PAGE>
15
operations and financial and other Condition of the Company, and shall be
reasonably satisfied with the results of such review.
3.13 Conduct of Business. The Company shall have conducted its
-------------------
business in the ordinary course from the date hereof to the Closing Date, and no
extraordinary or other material transactions not in the ordinary course of
business shall have occurred without the Purchaser's consent.
3.14 Registration Rights Agreement. The Company shall have duly
-----------------------------
executed and delivered to the Purchaser the Registration Rights Agreement.
3.15 Shareholders Agreement. The Company and the other parties to the
----------------------
Shareholders Agreement (other than the Purchaser) shall have duly executed and
delivered to the Purchaser the Shareholders Agreement.
3.16 Charter and By-Laws of the Company. The Articles of
----------------------------------
Incorporation and By-Laws of the Company, each as amended as of the Closing
Date, shall be in a form reasonably acceptable to the Purchaser.
3.17 Market Conditions. Between the date hereof and the Closing Date,
-----------------
(a) trading in securities generally on the New York Stock Exchange, Inc. shall
not have been suspended or limited or minimum or maximum prices shall not have
been generally established on such exchange, or additional material governmental
restrictions, not in force on the date of this Agreement, shall not have been
imposed upon trading in securities generally by such exchange or by order of the
Commission or any court or other Governmental Authority, (b) a general banking
moratorium shall not have been declared by either Federal or New York State
authorities, and (c) any material adverse change in the financial or securities
markets in the United States or in political, financial or economic conditions
in the United States or any outbreak or material escalation of hostilities or
declaration by the United States of a national emergency or war or other
calamity or crisis shall not have occurred.
3.18 No Litigation. No action, suit, proceeding, claim or dispute
-------------
shall have been brought or otherwise arisen at law, in equity, in arbitration or
before any Governmental Authority against the Company or any of its Subsidiaries
which would, if adversely determined, (i) have a material adverse effect on the
Condition of the Company or (ii) have a material adverse effect on the ability
of the Company to perform its obligations under this Agreement, the Preferred
Shares, the Registration Rights Agreement, the Warrants or the Shareholders
Agreement.
3.19 No Default or Breach. Neither the Company nor any of its
--------------------
Subsidiaries shall have been in default under or with respect to any Contractual
Obligation in any respect, which, individually or together with all such
defaults, would be materially adverse to the Condition of the Company or which
could materially adversely affect the ability of the Company to perform its
obligations under this
<PAGE>
16
Agreement, the Preferred Shares, the Registration Rights Agreement, the Warrants
or the Shareholders Agreement.
3.20 HSR Act. The waiting period under the HSR Act with respect to
-------
the Preferred Shares to be acquired by such Purchaser shall have expired or been
terminated.
3.21 High Yield Offering. The Company shall have consummated or be
-------------------
simultaneously consummating its offering of Senior Discount Notes due 2009,
which offering shall result in proceeds to the Company (net of placement and
similar fees) of at least $150,000,000 (the "High Yield Offering").
-------------------
3.22 Election of Directors. Two individuals designated by the
---------------------
Purchaser shall have been elected to the Board of Directors of the Company in
accordance with the Shareholders Agreement.
3.23 Amendments to the Credit Agreements. The Purchaser shall have
-----------------------------------
received a copy of amendments to each of the Credit Agreements permitting the
issuance of the Preferred Stock.
3.24 Sprint PCS Agreement.
--------------------
(a) The Company shall have received, and provided copies to the
Purchaser, of (i) written evidence from Sprint PCS that the financing condition
set forth in the Sprint PCS Agreement has been fully satisfied and (ii) any
waivers or consents of Sprint PCS required in connection with any of the
transactions contemplated by the Discount Note Documents.
(b) The Sprint PCS Agreement shall be in full force and effect
and binding upon the parties thereto in accordance with its terms. Neither the
Company nor any of its Subsidiaries, nor to the knowledge of the Company or its
Subsidiaries, any other party to such agreement, is in default thereunder, nor
does any condition exist that with notice or lapse of time or both, would
constitute a default thereunder. Neither the Company nor any of its Subsidiaries
has any knowledge of any proposed, pending or likely cancellation or termination
of such agreement.
3.25 Amendment of Existing Shareholders' Agreement. The Shareholders'
---------------------------------------------
Agreement, dated as of September 24, 1999, among the Company and the other
parties signatory thereto, shall be in full force and effect and binding upon
the parties thereto in accordance with its terms.
<PAGE>
17
Article 4
CONDITIONS TO THE OBLIGATION
OF THE COMPANY TO CLOSE
-----------------------
The obligations of the Company to issue and sell the Preferred Shares
to the Purchaser, and to consummate the transactions contemplated herein on the
Closing Date with respect to the Purchaser, shall be subject to the satisfaction
or waiver of the following conditions on or before the Closing Date:
4.1 Representations and Warranties True. The representations and
-----------------------------------
warranties of the Purchaser contained in Article 6 hereof shall be true and
correct in all material respects at and as of the Closing Date as if made at and
as of such date.
4.2 Compliance with this Agreement. The Purchaser shall have
------------------------------
performed and complied with all of its agreements and conditions set forth or
contemplated herein that are required to be performed or complied with by the
Purchasers on or before the Closing Date.
4.3 Issuance Permitted by Applicable Laws. The issuance of the
-------------------------------------
Preferred Shares and the consummation of the transactions contemplated hereby by
the Company: (a) shall not be prohibited by any applicable law or governmental
regulation; (b) shall not subject the Company to any penalty or, in its
reasonable judgment, other onerous condition under or pursuant to any applicable
law or governmental regulation; and (c) shall be permitted by the laws and
regulations of the jurisdictions in which is it subject.
4.4 Approval of Counsel to the Company. All actions and proceedings
----------------------------------
hereunder and all documents required to be delivered by the Purchaser hereunder
or in connection with the consummation of the transactions contemplated hereby,
and all other related matters, shall have been reasonably acceptable to Correro
Fishman Haygood Phelps Walmsley & Casteix L.L.P., counsel to the Company, as to
their form and substance.
4.5 Consents and Approvals. All consents, exemptions,
----------------------
authorizations, or other actions by, or notices to, or filings with,
Governmental Authorities and other Persons necessary or required in connection
with the execution, delivery or performance by such Purchaser or enforcement
against such Purchaser of this Agreement shall have been obtained and be in full
force and effect, and the Company shall have been furnished with appropriate
evidence thereof.
4.6 HSR Act. The waiting period under the HSR Act with respect to
-------
the Preferred Shares to be acquired by such Purchaser shall have expired or been
terminated.
<PAGE>
18
4.7 High Yield Offering. The Company shall have consummated or be
-------------------
simultaneously consummating the High Yield Offering.
Article 5
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
-------------------------
The Company hereby represents and warrants to the Purchaser as
follows:
5.1 Corporate Existence and Power. The Company, and each of its
-----------------------------
Subsidiaries:
(a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization;
(b) has (i) full corporate (or other organizational) power and
authority and (ii) all governmental licenses, authorizations, consents and
approvals, to own and operate its property, to lease the property it operates as
lessee and to conduct the business in which it is currently, or is currently
proposed to be, engaged;
(c) is duly qualified as a foreign person, licensed and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification; and
(d) is in compliance with all Requirements of Law;
except, in the case of (c) or (d) of this Section 5.1, to the extent that the
failure to do so would not have a material adverse effect on the Condition of
the Company.
5.2 Corporate Authorization; No Contravention. The execution,
-----------------------------------------
delivery and performance by the Company of this Agreement, the Registration
Rights Agreement, the Warrants, the Shareholders Agreement and the transactions
contemplated hereby and thereby, including the issuance of the Preferred Shares
and the Common Stock issuable upon the conversion of the Preferred Shares or
upon exercise of the Warrants:
(a) is within the Company's corporate power and authority and has
been duly authorized by all necessary corporate action;
(b) will not violate, conflict with or result in any breach or
contravention of or the creation of any Lien under, any Contractual Obligation
of the
<PAGE>
19
Company or any of its Subsidiaries, or any order or decree directly relating to
the Company or any of its Subsidiaries; and
(c) has been duly authorized by the Board of Directors of the
Company and no other corporate proceedings on the part of the Company or its
stockholders are necessary to authorize or approve the Agreement, the
Registration Rights Agreement, the Warrants, the Shareholders Agreement or the
transactions contemplated hereby and thereby.
5.3 Governmental Authorization; Third Party Consents. No approval,
------------------------------------------------
consent, exemption, authorization, or other action by, or notice to, or filing
with, any Governmental Authority or any other Person, is necessary or required
in connection with the execution, delivery or performance by the Company or
enforcement against the Company of this Agreement, the Preferred Shares, the
Registration Rights Agreement, the Warrants, the Shareholders Agreement or the
transactions contemplated hereby or thereby, except for the filing required
under the HSR Act.
5.4 Binding Effect. This Agreement has been duly executed and
--------------
delivered by the Company, and at the Closing the Registration Rights Agreement
and the Preferred Shares will be duly executed and delivered by the Company.
This Agreement constitutes the legal, valid and binding obligations of the
Company enforceable against the Company in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, or similar laws
affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability. At the Closing, the Registration Rights
Agreement, the Preferred Shares, the Shareholders Agreement and, upon issuance
of Warrants in accordance with the terms of this Agreement, the Warrants will
each constitute the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except as enforcement may be limited by applicable bankruptcy, insolvency, or
similar laws affecting the enforcement of creditors' rights generally or by
equitable principles relating to enforceability.
5.5 No Legal Bar. Neither the execution, delivery and performance of
------------
this Agreement, the Registration Rights Agreement, the Warrants and the
Shareholders Agreement nor the issuance or performance of the terms of the
Preferred Shares will violate any Requirement of Law or any Contractual
Obligation of the Company or any of its Subsidiaries.
5.6 Litigation.
----------
(a) Except as set forth on Schedule 5.6, there are no actions,
suits, proceedings, claims or disputes pending, or to the best knowledge of the
Company, threatened, at law, in equity, in arbitration or before any
Governmental Authority against the Company or any of its Subsidiaries:
<PAGE>
20
(i) with respect to this Agreement, the Preferred Shares,
the Registration Rights Agreement, the Warrants or the Shareholders Agreement or
any of the transactions contemplated hereby or thereby; or
(ii) which would, if adversely determined, (i) have a
material adverse effect on the Condition of the Company or (ii) have a material
adverse effect on the ability of the Company to perform its obligations under
this Agreement, the Preferred Shares, the Registration Rights Agreement, the
Warrants or the Shareholders Agreement.
(b) No injunction, writ, temporary restraining order, decree or
any order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery and
performance of this Agreement, the Preferred Shares, the Registration Rights
Agreement, the Warrants or the Shareholders Agreement.
5.7 No Default or Breach. No event has occurred and is continuing
--------------------
(or is likely to occur as a result of the Company entering into this
transaction) under this Agreement, the Discount Note Documents, the Preferred
Shares, the Registration Rights Agreement, the Warrants or the Shareholders
Agreement which constitutes a default under or breach of any of the provisions
of Article 8 or 9. Neither the Company nor any of its Subsidiaries is in
default under or with respect to any Contractual Obligation in any respect,
which, individually or together with all such defaults, would have a material
adverse effect on the Condition of the Company or on the ability of the Company
to perform its obligations under this Agreement, the Preferred Shares, the
Registration Rights Agreement, the Warrants or the Shareholders Agreement.
5.8 Title to Properties; Leases.
---------------------------
(a) Schedule 5.8(a) sets forth a list of all Real Property owned
by the Company or any of its Subsidiaries and indicates the entity that owns the
Real Property. The Company and its Subsidiaries have good indefeasible,
marketable and insurable title to all such Real Property (other than leasehold
real property) and good title to all of its other owned property and assets,
tangible and intangible (collectively, the "Assets") that are material to the
------
business of the Company and its Subsidiaries taken as a whole; all of the Assets
are so owned, in each case, free and clear of all Liens. Except as set forth on
Schedule 5.8(a), all improvements on the real property owned or leased by the
Company and its Subsidiaries are in compliance with applicable zoning, building,
wetlands and land use laws, ordinances and regulations and applicable title
covenants, conditions, restrictions and reservations in all respects necessary
to conduct the business of the Company and its Subsidiaries as presently
conducted, or proposed to be conducted, on or prior to the Closing Date. Except
as set forth on Schedule 5.8(a), all such improvements comply in all material
respects with all Requirements of Law and Permits. Except as set forth on
Schedule 5.8(a), all of the
<PAGE>
21
transmitting towers, ground radials, guy anchors, transmitting buildings and
related improvements, if any, located on the real property owned or leased by
the Company and the Company Subsidiaries are located entirely on such real
property or in areas where a Subsidiary has a valid easement to locate such
items. Except as set forth on Schedule 5.8(a), such transmitting towers, ground
radials, guy anchors, transmitting buildings and related improvements and other
material items of personal property, including equipment, are in a state of
repair and maintenance and operating condition so as to permit the business of
the Company and its Subsidiaries to be operated in all material respects in
accordance with the terms and conditions of all applicable Requirements of Law
and Permits.
(b) Schedule 5.8(b) lists all Leases under which any real property
used in the business of the Company or any of its Subsidiaries is leased to the
Company or such Subsidiary by any Person and indicates the entity that leases
the Real Property. Except as otherwise set forth on Schedule 5.8(b), each Lease
under which the Company or any of its Subsidiaries holds real property
constituting a part of the Assets is in full force and effect, and the Company
or such Subsidiary has a valid leasehold interest in and enjoys peaceful and
undisturbed possession or a valid easement right under all Leases pursuant to
which it holds any such real property, subject to the terms of each Lease and
applicable Requirements of Law. Neither the Company nor, to the Company's
knowledge, any other party thereto, has failed to duly comply with all of the
material terms and conditions of each such Lease or has done or performed, or
failed to do or perform (and no claim is pending or, to the knowledge of the
Company, threatened to the effect that the Company has not so complied, done and
performed or failed to do and perform) any act which would invalidate or provide
grounds for the other party thereto to terminate (with or without notice,
passage of time or both) such Leases or impair the rights or benefits, or
increase the costs, of the Company under any of such Leases in any material
respect.
5.9 Taxes. The Company and its Subsidiaries have filed or caused to
-----
be filed, or have properly filed extensions for, all income tax returns which
are required to be filed and have paid or caused to be paid all taxes as shown
on said returns and on all assessments received by it to the extent that such
taxes have become due, except taxes the validity or amount of which is being
contested in good faith by appropriate proceedings and with respect to which
adequate reserves have been set aside. The Company and its Subsidiaries have
paid or caused to be paid, or have established reserves that the Company
reasonably believes to be adequate for all income tax liabilities applicable to
the Company and its Subsidiaries for all fiscal years which have not been
examined and reported on by the taxing authorities (or closed by applicable
statutes).
5.10 Financial Condition. The Company heretofore has delivered to the
-------------------
Purchaser true and correct copies of audited consolidated financial statements
of the Company and its Subsidiaries as of December 31, 1997 (the "1997 Audited
------------
Financials") and December 31, 1998 (the "1998 Audited Financials"), and the
- ---------- -----------------------
<PAGE>
22
unaudited consolidated financial statements of the Company and its Subsidiaries
as of June 30, 1999 (the "1999 Interim Financials"). The 1997 Audited
-----------------------
Financials, 1998 Audited Financials and 1999 Interim Financials have been
prepared in accordance with GAAP applied consistently and present fairly the
consolidated financial condition of the Company as of the dates thereof and the
consolidated results of operations of the Company for the period, or portion
thereof, then ended (except in the case of the 1999 Interim Financials, for
normal year-end adjustment and the absence of footnotes).
5.11 No Material Adverse Change. Since December 31, 1998, there has
--------------------------
not been any material adverse change, nor to the knowledge of the Company is any
such change threatened, in the Condition of the Company.
5.12 Offering Documents. The Offering Memorandum does not contain any
------------------
untrue statement of a material fact nor omit to state a material fact necessary
to make the statements made, in the light of the circumstances under which they
were made, not misleading. The Revenues, Pre-corporate EBITDA and Ending
Subscribers (as those terms are used in the Offering Memorandum) as of December
31, 1998 and June 30, 1999, set forth in the "Certain Financial Information"
table in the Offering Memorandum are complete and accurate. The representations
and warranties of the Company contained in the DLJ Purchase Agreement shall be
true and correct in all material respects as if made at and as of the Closing
Date.
5.13 Environmental Matters.
---------------------
(a) Neither the Company nor any of its Subsidiaries is or has
been in violation in any material respect of any applicable Environmental Law.
(b) The Company and its Subsidiaries have all Permits required
pursuant to Environmental Laws that are material to the conduct of the business
of the Company or any of its Subsidiaries, all such Permits are in full force
and effect, no action, cause of action, suit, claim, complaint, demand,
litigation or legal, administrative or arbitral proceeding or investigation to
revoke, limit or modify any of such Permits is pending and the Company and each
of its Subsidiaries is in compliance in all material respects with all terms and
conditions thereof. All such Permits are listed on Schedule 5.13.
(c) Neither the Company nor any of its Subsidiaries has
received, or will receive due to the consummation of this transaction, any
Environmental Claim.
(d) The Company and its Subsidiaries have filed all notices
required under Environmental Laws indicating the past or present Release,
generation, treatment, storage or disposal of Hazardous Substances. All such
notices are listed on Schedule 5.13.
<PAGE>
23
(e) Neither the Company nor any of its Subsidiaries has entered
into any written agreement with any Governmental Authority or any other Person
by which the Company or any of the Subsidiaries has assumed responsibility,
either directly or as a guarantor or surety, for the remediation of any
condition arising from or relating to a Release or threatened Release of
Hazardous Substances into the environment.
(f) To the knowledge of the Company or any of its Subsidiaries,
there is not now and has not been at any time in the past a Release or
threatened Release of Hazardous Substances for which the Company or any of its
Subsidiaries may be directly or indirectly responsible individually, or together
with all such other Releases or threatened Releases, in an amount in excess of
$500,000.
(g) Except in cases which would not give rise to any liabilities
under any Environmental Law that, individually or in the aggregate, are in
excess of $500,000, there is not now and has not been at any time in the past
at, on or in any of the real properties owned, leased or operated by the Company
or any of its Subsidiaries, and, to the knowledge of the Company or any of its
Subsidiaries, there was not at, on or in any real property previously owned,
leased or operated by the Company or any of its Subsidiaries or any predecessor:
(i) any generation, use, handling, Release, treatment, recycling, storage or
disposal of any Hazardous Substances; (ii) any UST, surface impoundment, lagoon,
landfill, solid waste disposal area, or other containment facility (past or
present) for the temporary or permanent storage, treatment or disposal of
Hazardous Substances; (iii) any asbestos-containing material; (iv) any
polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical transformers
or other equipment; (v) any Release or threatened Release, or any visible signs
of Releases or threatened Releases, of a Hazardous Substance in form or quantity
requiring Remedial Action under Environmental Laws; or (vi) any Hazardous
Substances present at such property, excepting such quantities as are handled in
accordance with all applicable manufacturer's instructions and Environmental
Laws and in proper storage containers, and as are necessary for the operations
of the Company and its Subsidiaries.
(h) To the knowledge of the Company or any of its Subsidiaries,
there is no basis or reasonably anticipated basis, individually or in the
aggregate, for any Environmental Claim or Environmental Compliance Costs in
excess of $500,000.
(i) Neither the Company or any of its Subsidiaries has
transported, stored, treated or disposed, nor has it allowed or arranged for any
third persons to transport, store, treat or dispose, any Hazardous Substance to
or at: (i) any location other than a site lawfully permitted to receive such
substances for such purposes, or (ii) any location designated for Remedial
Action pursuant to Environmental Laws; nor has it performed, arranged for or
allowed by any method or procedure such transportation or disposal in
contravention of any Environmental Laws
<PAGE>
24
or in any other manner that may result in Environmental Compliance Costs or in
an Environmental Claim. All locations at which the Company or any of its
Subsidiaries has disposed of any Hazardous Substance are listed on Schedule
5.13.
(j) The Company and each of its Subsidiaries is in full
compliance with the upgrade requirements for USTs in effect as of December 31,
1998 pursuant to the Resource Conservation and Recovery Act, 42 U.S.C. (S)6901
et seq.
- -- ---
5.14 Investment Company. Neither the Company nor any Person
------------------
controlling the Company is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
5.15 Affiliates and Subsidiaries. Schedule 5.15 sets forth a complete
---------------------------
and accurate list of all of the Affiliates and Subsidiaries of the Company
together with their respective jurisdictions of incorporation or organization
and the percentage ownership interests held in each such Affiliate or Subsidiary
by the Company or any other Person. Schedule 5.15 sets forth a summary of each
transaction occurring during the preceding twelve month period in which the
ownership interests of any Affiliate or Subsidiary held by any Person, or the
percentage thereof, changed.
5.16 Capitalization. As of the date hereof, the authorized capital
--------------
stock of the Company consists of 100,000,000 shares of Class A Common Stock,
60,000,000 shares of Class B Common Stock and 40,000,000 shares of preferred
stock, no par value, of which, as of the date hereof, no shares of Class A
Common Stock, 11,250,000 shares of Class B Common Stock, and no shares of
preferred stock are issued and outstanding. Except as set forth on Schedule
5.16, there are no shares of capital stock of the Company reserved for issuance.
All of the outstanding shares of capital stock of the Company have been duly
authorized and are fully paid and non-assessable. The Preferred Shares, when
issued upon payment of the Purchase Price, and the shares of Common Stock when
issued upon conversion of the Preferred Shares or upon exercise of the Warrants,
will be duly authorized, and, in each case, validly issued, fully paid and
nonassessable. Except for the Preferred Shares and the Warrants and outstanding
options to purchase (i) an aggregate of 500,000 shares of Class A Common Stock
at an exercise price of $6.00 per share and (ii) an aggregate of 166,600 shares
of Class A Common Stock at an exercise price of $26.55 per share (the
"Options"), there are no options, warrants or other rights to purchase shares of
-------
capital stock or other securities of the Company, nor is the Company obligated
in any manner to issue shares of its capital stock or other securities. Except
as contemplated hereby and for relevant state and federal securities laws, there
are no restrictions on the transfer of shares of capital stock of the Company.
Schedule 5.16 lists the Persons to whom the Options have been allocated and the
number allocated to each such Person. The Company will issue the Options in
accordance with Schedule 5.16.
5.17 Solvency. On and as of the Closing Date, after giving effect to
--------
the transactions contemplated in this Agreement, the Company will be Solvent.
<PAGE>
25
5.18 Private Offering. No form of general solicitation or general
----------------
advertising was used by the Company or, to its knowledge, its representatives in
connection with the offer or sale of the Preferred Shares. No registration of
the Preferred Shares pursuant to the provisions of the Securities Act or any
state securities or "blue sky" laws will be required by the offer, sale or
issuance of the Preferred Shares pursuant to this Agreement. The Company agrees
that neither it, nor anyone acting on its behalf, will offer or sell the
Preferred Shares or any other security so as to require the registration of the
Preferred Shares pursuant to the provisions of the Securities Act or any state
securities or "blue sky" laws, unless such Preferred Shares are so registered.
5.19 Broker's, Finder's or Similar Fees. Except for the fee payable
----------------------------------
pursuant to Section 2.2 and the fee payable to Falkenberg Capital Corp., there
are no brokerage commissions, finder's fees or similar fees or commissions
payable in connection with the transactions contemplated hereby based on any
agreement, arrangement or understanding with the Company or any of its
Subsidiaries, or any action taken by any such entity.
5.20 Full Disclosure. No statement by the Company contained in this
---------------
Agreement or any other documents, certificates, notices or consents
(collectively, "Documents") delivered to the Purchaser in connection with the
---------
purchase and sale of the Preferred Shares at or prior to the Closing contains
(or will contain) an untrue statement of a material fact or omits (or will omit)
to state a material fact required to be stated therein or necessary to make the
statements made, in the light of the circumstances in which made, not materially
false or misleading.
5.21 Year 2000 Compliance. Except as set forth in Schedule 5.21, all
--------------------
computer hardware and software (including all computer hardware and software
contained in imbedded systems) used in the business of the Company and its
Subsidiaries (whether such hardware and software is owned by the Company and its
Subsidiaries or is licensed from third parties) (collectively, the "Technology
----------
Systems") is designed to be used prior to, during and after the calendar year
- -------
2000 and such hardware and software will continue to operate during each such
time period to accurately process date data (including, but not limited to
calculating, comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, including leap year calculations (the "Year 2000
---------
Compliance"). The occurrence of the calendar year 2000 will not adversely
- ----------
affect the Technology Systems of the Company and its Subsidiaries. No
expenditures in excess of currently budgeted items is necessary to cause
Technology Systems to operate properly prior to, during and after the calendar
year 2000. Except as set forth on Schedule 5.21, the Company and its
Subsidiaries have confirmed with all material third party suppliers and
customers that communicate electronically with the Company and its Subsidiaries,
that such communications will not be disrupted and will continue to function
properly prior to, during and after the calendar year 2000, and that such
communications during the aforesaid time periods
<PAGE>
26
will not disrupt the Technology Systems or the operations of the Company and its
Subsidiaries.
5.22 No Undisclosed Financial Liabilities. Except as set forth on
------------------------------------
Schedule 5.22, the Company and its Subsidiaries, after giving effect to the
transactions contemplated hereby, will not have any material direct or indirect
indebtedness, liability (including, without limitation, product liability or
warranty claim), obligation, whether known or unknown, fixed or unfixed,
contingent or otherwise, and whether or not of a kind required by GAAP to be set
forth on a financial statement (collectively "Financial Liabilities"), other
---------------------
than (i) Liabilities fully and adequately reflected on the 1999 Interim
Financials, (ii) those incurred since June 30, 1999 in the ordinary course of
business, and (iii) Liabilities incurred pursuant to this Agreement, the
Discount Note Documents, the Registration Rights Agreement, the Warrants or the
Shareholders Agreement.
5.23 Registration Rights Agreement; Shareholders Agreement. Schedule
-----------------------------------------------------
5.23(a) sets forth all agreements to which the Company or any Subsidiary is a
party or by which it is bound relating to the registration of its securities or,
in the case of a Subsidiary, the securities of the Company. None of the
agreements listed on Schedule 5.23(a) grants any registration rights to any
Person which are inconsistent with the rights to be granted to the Purchaser in
the Registration Rights Agreement. Schedule 5.23(b) sets forth all agreements
to which the Company or any of its Subsidiaries is a party or of which the
Company or any of its Subsidiaries has knowledge relating to the voting of
Common Stock or restricting the transfer of Common Stock.
5.24 Trade Relations. To the best knowledge of the Company, there
---------------
exists no actual or threatened termination, cancellation or limitation of, or
any adverse modification or change in, the business relationship or business of
the Company and its Subsidiaries taken as a whole or their business with any
customer or any group of customers which is, individually or in the aggregate,
material to the business of the Company and its Subsidiaries taken as a whole,
or with any material supplier.
5.25 Material Contracts; Sprint PCS Agreement.
----------------------------------------
(a) Neither the Company nor any of its Subsidiaries is a party to
any Contractual Obligation or is subject to any charge, corporate restriction,
judgment, injunction, decree or Requirement of Law materially adversely
affecting, or which may adversely affect, the Condition of the Company. Schedule
5.25(a) lists all contracts, agreements or commitments of the Company or any of
its Subsidiaries, whether written or oral, other than (a) this Agreement, the
Registration Rights Agreement, the Warrants and the Shareholders Agreement, (b)
purchase orders in the ordinary course of the Company's and any Subsidiary's
business, (c) the Sprint PCS Agreement, (d) tower leases and store leases
entered into in the ordinary course of business consistent with past practice,
and (e) any other contracts, agreements or commitments, of the Company or any of
its Subsidiaries that (i) do not extend beyond
<PAGE>
27
December 31, 2000 and involve the receipt or payment of not more than $50,000,
and (ii) are not material to the Condition of the Company. Notwithstanding the
previous sentence, Schedule 5.25(a) lists all contracts, agreements or
commitments, whether written or oral, between the Company or any of its
Subsidiaries, on the one hand, and any Affiliate of the Company or of any such
Subsidiary, on the other hand. All of the contracts, agreements and commitments
of the Company and its Subsidiaries listed in Schedule 5.25(a) are lawful under
the Communications Act and are in full force and effect and binding upon the
parties thereto in accordance with their terms. Neither the Company nor any of
its Subsidiaries, nor, to the knowledge of the Company or any of its
Subsidiaries, any other party to such contracts, agreements and commitments, is
in default thereunder, nor does any condition exist that with notice or lapse of
time, or both, would constitute a default thereunder. Neither the Company nor
any of its Subsidiaries has any knowledge of any proposed, pending or likely
cancellation or termination of any such contract, agreement or commitment.
(b) Schedule 5.25(b) lists all contracts, agreements or commitments of
the Company or any of its Subsidiaries, whether written or oral, with Sprint PCS
to provide service in the markets listed on Schedule 5.31(f) (the "Sprint PCS
----------
Markets"). After consultation with FCC counsel for Sprint PCS concerning the
- -------
development of the Sprint PCS Agreement, the Company has no reason to believe
that such contracts, agreements and commitments are not in compliance with the
Communications Act and the FCC Rules. All such contracts, agreements and
commitments are in full force and effect and binding upon the parties thereto in
accordance with their terms. Neither the Company nor any of its Subsidiaries,
nor, to the knowledge of the Company or any of its Subsidiaries, any other party
to such contracts, agreements and commitments, is in default thereunder, nor
does any condition exist that with notice or lapse of time, or both, would
constitute a default thereunder. Neither the Company nor any of its
Subsidiaries has any knowledge of any proposed, pending or likely cancellation
or termination of any such contract, agreement or commitment.
(c) The Company and its Subsidiaries are party to all tower leases and
store leases necessary to conduct the business in which the Company and its
Subsidiaries are currently engaged. All of the tower leases and store leases of
the Company and its Subsidiaries are in full force and effect and binding upon
the parties thereto in accordance with their terms. Neither the Company nor any
of its Subsidiaries, nor, to the knowledge of the Company or any of its
Subsidiaries, any other party to such tower leases or store leases, is in
default thereunder, nor does any condition exist that with notice or lapse of
time, or both, would constitute a default thereunder. Neither the Company nor
any of its Subsidiaries has any knowledge of any proposed, pending or likely
cancellation or termination of any such tower lease or store lease other than at
the end of its stated term.
(d) The failure by the Company to enter into Addendum III and Addendum
IV to the Sprint PCS Management Agreement among Wirelessco, L.P.,
<PAGE>
28
Sprint Spectrum L.P., Sprintcom, Inc. and LA Unwired dated June 8, 1998 will not
have a material adverse effect on the Company's Business Plan (as defined in
Section 5.26).
5.26 Business Plan. Prior to the date hereof, the Company delivered
-------------
to the Purchaser its business plans attached as Schedule 5.26 (the "Business
--------
Plan"). The assumptions used in preparation of the Business Plan were
- ----
reasonable when made and continue to be reasonable as of the Closing Date. The
Business Plan has been prepared in good faith and the Business Plan gives effect
to the transactions contemplated by this Agreement. The Purchaser acknowledges
that the Business Plan contains assumptions about future events and that actual
results during the period or periods covered may differ from the data and
results contained in such Business Plan.
5.27 Internal Controls. The Company and the Subsidiaries maintain a
-----------------
system of internal accounting controls sufficient to provide reasonable
assurances that: (a) transactions are executed in accordance with management's
general or specific authorization; (b) transactions are recorded as necessary
(i) to permit preparation of financial statements in conformity with generally
accepted accounting principles and (ii) to maintain accountability for assets;
(c) access to assets is permitted only in accordance with management's general
or specific authorization; and (d) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any material differences.
5.28 ERISA. Neither the Company nor any of the Subsidiaries has
-----
violated any provisions of ERISA, or the rules and regulations promulgated
thereunder, except for such violations which would not, individually or in the
aggregate, have a material adverse effect on the Condition of the Company. If
any plan subject to ERISA is adopted, the execution and delivery of this
Agreement and the sale of the Preferred Shares will not involve any non-exempt
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code.
5.29 Labor Relations. Except to the extent set forth in Schedule
---------------
5.29, (a) neither the Company nor any of its Subsidiaries is a party to any
collective bargaining agreement, (b) the Company and each of its Subsidiaries is
in compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including but
not limited to, the Workers Adjustment and Retraining Notification Act, and
neither the Company nor any of its Subsidiaries is engaged in any unfair labor
practice, (c) there is no unfair labor practice complaint against the Company or
any of its Subsidiaries or pending before the National Labor Relations Board,
(d) there is no labor strike, dispute, slowdown or stoppage actually pending or,
to the best of the Company's or any Subsidiary's knowledge, threatened against
or affecting the Company or any of its Subsidiaries, (e) with respect to the
Company or any of its Subsidiaries, no grievance or arbitration proceeding
arising out of or under collective bargaining agreements is pending or exists
and, to the best of the Company's or any Subsidiary's knowledge, no claim
therefor is
<PAGE>
29
threatened, and (f) neither the Company nor any of its Subsidiaries has
experienced any work stoppage or other labor difficulty since inception.
5.30 Personal Property. All Personal Property has been maintained in
-----------------
a manner consistent with the Company's past practices and with industry
standards, and the assets used in conjunction with the Communications Licenses
are sufficient to permit the Company to operate in accordance with the
Communications Act of 1934, as amended by the Telecommunications Act of 1996, as
amended (the "Communications Act") or the current rules, regulations and
------------------
policies of the FCC (the "FCC Rules") and with all other applicable Requirements
---------
of Law.
5.31 Intellectual Property.
---------------------
(a) Schedule 5.31(a) hereto contains a true and complete list of
all patents and trademarks, service marks, slogans, trade names, logos, jingles,
assumed names, fictional business names, copyrights, licenses, permits and other
similar intellectual property rights and interests applied for, issued to or
presently owned or used by the Company or any of its Subsidiaries (other than
programming and its contents used but not owned by the Company or its
Subsidiaries) which are material to the operation of its business (together with
the good will associated therewith, the "Intellectual Property"). Except as set
---------------------
forth on Schedule 5.31(a), the Company or a Subsidiary has good and marketable
title to all of the Intellectual Property, free and clear of all Liens and, to
the extent indicated on such schedule, such Intellectual Property has been duly
registered in, filed in or issued by the United States Copyright Office or the
United States Patent and Trademark Office, as appropriate, the appropriate
offices in the various states of the United States and the appropriate offices
of such other jurisdictions where such registration, filing or issuance is
necessary to protect such Intellectual Property from infringement and for the
conduct of the business of the Company and its Subsidiaries. Except as set forth
on Schedule 5.31(a), all requisite renewals and affidavits of use have been
filed with respect to each of the registrations set forth in Schedule 5.31(a),
and each is presently in full force or effect, and each of the trade names and
trademarks is valid, and is in good standing and active use and none has been
abandoned.
(b) Except as set forth on Schedule 5.31(b) hereto, the Company
or a Subsidiary is the sole and exclusive owner of the Intellectual Property,
has the sole and exclusive right to use the trade names, trademarks and service
marks included in the Intellectual Property and has received no notice from any
other person or entity pertaining to or challenging the right of the Company or
any Subsidiary to use any of the Intellectual Property or any rights thereunder.
(c) Except as set forth on Schedule 5.31(c) hereto, neither the
Company nor any Subsidiary has violated or infringed any patent, trademark,
trade name, service mark, jingle, assumed name, fictional business name,
copyright, license,
<PAGE>
30
permit or other similar intangible property right or interest held by others or
any license or permit held by the Company.
(d) Except as set forth on Schedule 5.31(d) hereto, (i) neither
the Company nor any Subsidiary has granted any license or other rights and has
no obligations to grant licenses or other rights to any of the Intellectual
Property, and (ii) neither the Company nor any Subsidiary has made any claim of
any violation or infringement by others of its rights to or in connection with
any of the Intellectual Property, and there is no basis for the making of any
such claim.
(e) Except as set forth on Schedule 5.31(e), there are no
proceedings, either pending or, threatened, in the United States Copyright
Office, the United States Patent and Trademark Office or any Federal, state or
local court or before any other governmental agency or tribunal, relating to any
pending application with respect to any Intellectual Property.
(f) The Company and its Subsidiaries have an exclusive
relationship with Sprint PCS to use the Sprint(R) and Sprint PCS(R) brand names
in the territory set forth on Schedule 5.31(f).
5.32 FCC Matters; Operation and Condition of the Systems.
---------------------------------------------------
(a) The Company and its Subsidiaries have all requisite power and
authority and hold all Communications Licenses required under the Communications
Act, the FCC Rules or other state or local laws or rules to own and operate
their properties and to carry on the business of the Company and its
Subsidiaries as now conducted. To the best of the Company's knowledge, the
Company and its Subsidiaries, together with Sprint PCS, hold all Communications
Licenses ("Sprint PCS Licenses") required under the Communications Act, the FCC
-------------------
Rules or other state or local laws or rules to own and operate the properties
and carry on the PCS Services in the Sprint PCS Markets.
(b) Set forth on Schedule 5.32(b)(i) is a complete list of all
Communications Licenses of the Company and its Subsidiaries relating to or used
in connection with the business of the Company and its Subsidiaries, including
which legal entity holds such License and, if such legal entity is neither the
Company nor any of its Subsidiaries, a summary of the terms under which the
Company and its Subsidiaries is permitted to engage in the business relating to
such License. Such list correctly sets forth the expiration date, if any, of
each such Communications License. Except as set forth on Schedule 5.32(b)(ii),
each such Communications License is validly issued, is in full force and effect,
and is not subject to any special conditions outside the ordinary course.
Collectively, the Communications Licenses constitute all authorizations
necessary for the operation of the business of the Company and its Subsidiaries
(including the operation of the cellular, paging, PCS Services, LMDS, local
exchange, long distance and Internet services) in the same manner as it is
presently conducted or,
<PAGE>
31
in the case of the PCS Service, planned to be conducted (including with respect
to the Sprint PCS Markets). The Company and its Subsidiaries have taken all
actions and performed all of their obligations that are necessary to maintain
such Communications Licenses without adverse modification or impairment, and
complete and correct copies of the Communications Licenses of the Company have
been delivered to the Purchaser.
(c) The Company and its Subsidiaries are not parties to, nor to the
best knowledge of the Company and each Subsidiary is there threatened, any
investigation, notice of apparent liability, violation, forfeiture or other
notice, order or complaint issued by or before any court or regulatory body,
including the FCC, or of any other proceeding (other than proceedings of general
applicability) that could in any manner threaten or adversely affect the
validity or continued effectiveness of the Communications Licenses of the
Company and its Subsidiaries, nor to the best knowledge of the Company. Neither
the Company nor any Subsidiary has any reason to believe that (i) each of the
Communications Licenses listed on Schedule 5.32(b)(i) will not be renewed in the
ordinary course and (ii) each of the Communications Licenses listed on Schedule
5.32(b)(ii) will not be renewed within the ordinary course. Since January 1,
1997, the Company and each Subsidiary has filed in a substantially timely manner
all material reports, applications, documents, instruments and information
required to be filed by it pursuant to the Communications Act, the FCC Rules or
other state or local laws or rules, including employment reports. All such
filings are accurate and complete in all material respects.
(d) The cellular and paging services, their physical facilities,
electrical and mechanical systems and transmitting equipment (i) are being and
since January 1, 1997 have been operated in all material respects in accordance
with the specifications of the applicable Communications License and (ii) are
being and since January 1, 1997 have been operated in all material respects in
compliance with all applicable requirements of the FCC Rules, the Communications
Act or other state or local laws or rules.
(e) The Company and its Subsidiaries are in compliance with the
Communications Licenses, the Communications Act, the FCC Rules or other state or
local laws or rules in all material respects. The Company and its Subsidiaries,
in their ownership and operation of the business of the Company and the
Subsidiaries, are operating only those facilities for which an appropriate
license, waiver, consent, permit or other authorization has been obtained and is
in effect, and the Subsidiaries and the Company are meeting the conditions of
such Communications Licenses.
(f) The Company and the Subsidiaries are not aware of any facts, and
the Company and the Subsidiaries have received no notice or other communication,
indicating that the Company and the Subsidiaries, in their ownership and
operation of the business of the Company and the Subsidiaries, are not in
compliance with all requirements of (i) applicable FCC Rules or the
Communications Act, or (ii) applicable state and local statutes, regulations and
ordinances. Except as set
<PAGE>
32
forth on Schedule 5.32(f), neither the Company nor any Subsidiary is aware of
any facts, and the Company and the Subsidiaries have received no notice or
communication, formal or informal, indicating that the FCC is considering
modifying, revoking, suspending, canceling, rescinding or terminating any
Communications License.
(g) The Company and its Subsidiaries have all the licenses,
waivers, consents, permits or other authorizations issued or granted by the
relevant state authorities in connection with the ownership and operation of the
cellular, paging, PCS Services, LMDS, local exchange, long distance or Internet
services provided, or to be provided, by the Company and its Subsidiaries, and
for all communication sites to be constructed by the Company, the Company has or
will obtain all zoning and other municipal approvals necessary for the
construction of such sites, other than such zoning and approvals the failure of
which to obtain would not have a material adverse effect on the Condition of the
Company.
(h) No consent, waiver or other action of, or filing or
notification to, the FCC is required for the consummation of the transactions
contemplated hereby.
Article 6
REPRESENTATIONS AND WARRANTIES
AND COVENANTS OF THE PURCHASER
------------------------------
The Purchasers represents and warrants to, and covenants and agrees
with, the Company as follows:
6.1 Existence and Power. The Purchaser:
-------------------
(a) is duly organized and validly existing under the laws of the
jurisdiction of its organization; and
(b) has the power and authority to own and operate its property,
to lease the property it operates as lessee and to conduct the business in which
it is currently, or is currently proposed to be, engaged.
6.2 Authorization; No Contravention. The execution, delivery and
-------------------------------
performance by the Purchaser of this Agreement:
(a) is within the Purchaser's power and authority and has been
duly authorized by all necessary action;
(b) does not contravene the terms of the Purchaser's Agreement of
Limited Partnership or any amendment thereof; and
<PAGE>
33
(c) will not violate, conflict with or result in any breach or
contravention of or the creation of any Lien under, any Contractual Obligation
of the Purchaser, or any order or decree directly relating to the Purchaser.
6.3 Binding Effect. This Agreement and, when executed by the Company
--------------
on the Closing Date, the Registration Rights Agreement and the Shareholders
Agreement have been duly executed and delivered by the Purchaser, and constitute
the legal, valid and binding obligations of the Purchaser enforceable against it
in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability.
6.4 No Legal Bar. The execution, delivery and performance of this
------------
Agreement, the Registration Rights Agreement and the Shareholders Agreement will
not violate any Requirement of Law or any Contractual Obligation of the
Purchaser.
6.5 Purchase for Own Account. The Preferred Shares (including, for
------------------------
purposes of this Section 6.5, any Common Shares issuable upon conversion of the
Preferred Shares or upon exercise of the Warrants) to be acquired by the
Purchaser pursuant to this Agreement are being acquired for its own account and
with no intention of distributing or reselling such securities or any part
thereof in any transaction that would be in violation of the securities laws of
the United States of America, or any state, without prejudice, however, to the
rights of the Purchaser at all times to sell or otherwise dispose of all or any
part of the Preferred Shares under an effective registration statement under the
Securities Act, or under an exemption from such registration available under the
Securities Act, and subject, nevertheless, to the disposition of the Purchaser's
property being at all times within its control. If the Purchaser should in the
future decide to dispose of any Preferred Shares, the Purchaser understands and
agrees that it may do so only in compliance with the Securities Act and
applicable state securities laws, as then in effect. If the Purchaser should
decide to dispose of any Preferred Shares, other than pursuant to the provisions
of the Registration Rights Agreement, the Purchaser, if requested by the
Company, will have the obligation in connection with such disposition, at the
Purchaser's expense, of delivering an opinion of counsel of recognized standing
in securities law, in connection with such disposition to the effect that the
proposed disposition of the Preferred Shares would not be in violation of the
Securities Act or any applicable state securities laws and, assuming such
opinion is required and is otherwise appropriate in form and substance under the
circumstances, the Company will accept, and will recommend to any applicable
transfer agent or trustee for any of the Preferred Shares that it accept, such
opinion. The Purchaser agrees to the imprinting, so long as required by law, of
a legend on certificates representing all of the Preferred Shares and the shares
of Common Stock issued on conversion thereof or upon exercise of the Warrants
substantially to the following effect:
<PAGE>
34
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS
OF SUCH ACT OR SUCH LAWS."
6.6 Broker's, Finder's or Similar Fees. There are no brokerage
----------------------------------
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with the Purchaser or any action taken by the Purchaser.
Article 7
INDEMNIFICATION
---------------
7.1 Indemnification by the Company. In addition to all other sums
------------------------------
due hereunder or provided for in this Agreement, the Company agrees to indemnify
and hold harmless the Purchaser and its Affiliates (including Brown Brothers
Harriman & Co.) and their respective officers, directors, agents, employees,
subsidiaries, partners and controlling persons (each, an "Indemnified Party") to
-----------------
the fullest extent permitted by law from and against any and all losses, claims,
damages, expenses (including reasonable fees, disbursements and other charges of
counsel) or other liabilities ("Liabilities") resulting from any breach of any
-----------
covenant, agreement, representation or warranty of the Company in this Agreement
or any legal, administrative or other actions (including actions brought by the
Company or any equity holders of the Company or derivative actions brought by
any Person claiming through the Company or in the Company's name), proceedings
or investigations (whether formal or informal), or written threats thereof,
based upon, relating to or arising out of this Agreement, the Preferred Shares,
the Registration Rights Agreement, the Warrants, and the Shareholders Agreement
or the transactions contemplated hereby or thereby, or any Indemnified Party's
role therein or in the transactions contemplated hereby or thereby; provided,
--------
however, that the Company shall not be liable under this Section 7.1: (a) for
- -------
any amount paid in settlement of claims without the Company's consent (which
consent shall not be unreasonably withheld or delayed), or (b) to the extent
that it is finally judicially determined that such Liabilities resulted
primarily from the willful misconduct, bad faith or gross negligence of such
Indemnified Party; provided, further, that if and to the extent that such
-------- -------
indemnification is unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such indemnified
liability permissible under applicable laws. In connection with the obligation
of the Company to indemnify for expenses as set forth above, the Company further
agrees promptly to reimburse each Indemnified Party for all such expenses
<PAGE>
35
(including reasonable fees, disbursements and other charges of counsel) as such
expenses are incurred by such Indemnified Party; provided, however, that if an
-------- -------
Indemnified Party is reimbursed hereunder for any expenses, such reimbursement
of expenses shall be refunded promptly to the Company to the extent it is
finally judicially determined that the Liabilities in question resulted
primarily from the willful misconduct, bad faith or gross negligence of such
Indemnified Party.
7.2 Notification. Each Indemnified Party under this Article 7 will,
------------
promptly after the receipt of notice of the commencement of any action or other
proceeding against such Indemnified Party in respect of which indemnity may be
sought from the Company under this Article 7, notify the Company in writing of
the commencement thereof. The failure of any Indemnified Party to so notify the
Company of any such action shall not relieve the Company from any liability
which it may have to such Indemnified Party (a) other than pursuant to this
Article 7, or (b) under this Article 7 unless, and only to the extent that, such
omission results in the Company's forfeiture of substantive rights or defenses.
In case any such action or other proceeding shall be brought against any
Indemnified Party and it shall notify the Company of the commencement thereof,
the Company shall be entitled to participate therein and, to the extent that it
may wish, to assume the defense thereof, with counsel reasonably satisfactory to
such Indemnified Party; provided, however, that any Indemnified Party may, at
-------- -------
its own expense, retain separate counsel to participate in such defense.
Notwithstanding the foregoing, in any action or proceeding in which both the
Company and an Indemnified Party is, or is reasonably likely to become, a party,
such Indemnified Party shall have the right to employ separate counsel at the
Company's expense and to control its own defense of such action or proceeding
if, in the reasonable opinion of counsel to such Indemnified Party, (a) there
are or may be legal defenses available to such Indemnified Party or to other
indemnified parties that are different from or additional to those available to
the Company, or (b) any conflict or potential conflict exists between the
Company and such Indemnified Party that would make such separate representation
advisable; provided, however, that in no event shall the Company be required to
-------- -------
pay fees and expenses under this Article 7 for more than one firm of attorneys
in any jurisdiction in any one legal action or group of related legal actions.
The Company agrees that the Company will not, without the prior written consent
of the Purchaser, settle, compromise or consent to the entry of any judgment in
any pending or threatened claim, action or proceeding relating to the matters
contemplated hereby (if any Indemnified Party is a party thereto or has been
actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of the Purchaser and
each other Indemnified Party from all liability arising or that may arise out of
such claim, action or proceeding. The rights accorded to Indemnified Parties
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise.
7.3 Registration Rights Agreement. Notwithstanding anything to the
-----------------------------
contrary in this Article 7, the indemnification and contribution provisions of
the
<PAGE>
36
Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
Article 8
AFFIRMATIVE COVENANTS
---------------------
The Company hereby covenants and agrees (a) with the Purchaser, with
respect to all of this Article 8, and (b) with any other Holder, with respect to
all of this Article 8 except Sections 8.1(c), (d) and (e), 8.9, 8.10 and 8.12:
8.1 Financial Statements. The Company shall promptly deliver to the
--------------------
Purchaser and (except with respect to Section 8.1(c), (d) and (e)) any other
Holder:
(a) as soon as available, but not later than ninety (90) days
after the end of each fiscal year of the Company, a copy of the audited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such fiscal year and the related consolidated statements of income and cash
flows for such fiscal year, setting forth, in each case, in comparative form,
the figures for the previous year, all in reasonable detail and accompanied by a
management discussion and analysis of the operations of the Company and its
Subsidiaries for such fiscal year and by the opinion of Ernst & Young (or any
successor thereto) or another nationally recognized independent public
accounting firm, which report shall state that such consolidated financial
statements present fairly the financial position for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years (except for
changes with respect to which such accounting firm concurs); provided, however,
-------- -------
that the delivery of a copy of the Company's Annual Report on Form 10-K shall
satisfy the requirements of this Section 8.1(a);
(b) commencing with the fiscal period ending on September 30,
1999, as soon as available, but in any event not later than forty-five (45) days
after the end of each of the first three fiscal quarters of each year, the
unaudited consolidated balance sheet of the Company and its Subsidiaries, and
the related consolidated statements of income and cash flow for such quarter and
for the period commencing on the first day of the fiscal year and ending on the
last day of such quarter, all certified by an appropriate officer of the
Company; provided, however that the delivery of a copy of the Company's
-------- -------
Quarterly Report on Form 10-Q shall satisfy the requirements of this Section
8.1(b);
(c) commencing with the month ending on October 31, 1999, as soon
as available, but in any event not later than thirty (30) days after the end of
each month, the unaudited monthly and year-to-date financial statements setting
forth, in each case, in comparative form, the figures for the previous year and
the budget figures, all certified by an appropriate officer of the Company;
<PAGE>
37
(d) as soon as available and in any event not later than thirty
(30) days prior to the end of each fiscal year, the budget of the Company and
its Subsidiaries for the next succeeding fiscal year, including cash flow
projection and operating budget, calculated monthly, and, as soon as available,
any updates or revisions to such financial plan;
(e) annual budgets and such other financial and operating data of
the Company and its Subsidiaries, as the Purchaser reasonably may request, to
the extent that such information is formally prepared for the Company's
Chairman, President, Board of Directors, banks, other lenders, holders of
securities of the Company, the Commission or the financial community;
(f) at any time when it is not subject to Section 13 or 15(d) of
the Exchange Act, upon request, to the Purchaser and prospective purchasers of
the Preferred Shares, information of the type that would satisfy the requirement
of subsection (d)(4)(i) of Rule 144A (or any similar successor provision) under
the Securities Act; and
(g) except as otherwise provided in Section 8.1(a) and (b),
promptly after the same are filed, copies of all Commission Documents.
8.2 Certificates; Other Information. The Company shall furnish to
-------------------------------
the Purchaser and to any other Holder:
(a) concurrently with the delivery of the financial statements
referred to in Section 8.1(a) or 8.1(b), a certificate of the Company's Chief
Financial Officer stating that to the best of knowledge of such officer there is
no default under or breach of Articles 8 and 9, except as specified in such
certificates; and
(b) promptly upon receipt, copies of all accountants' management
letters and all certificates relating to compliance, defaults, material
litigation, and other material adverse changes.
8.3 Preservation of Corporate Existence. The Company shall, and
-----------------------------------
shall cause each of its Subsidiaries to:
(a) preserve and maintain in full force and effect its corporate
or organizational existence and good standing under the laws of its jurisdiction
of incorporation or organization, except as permitted by Section 9.1;
(b) preserve and maintain in full force and effect all material
rights, privileges, qualifications, licenses and franchises necessary in the
normal conduct of its business; and
<PAGE>
38
(c) use its reasonable efforts to preserve its business
organization.
8.4 Payment of Obligations. The Company shall, and shall cause each
----------------------
of its Subsidiaries to, pay and discharge as the same shall become due and
payable, all their respective obligations and liabilities, including:
(a) all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Company or such Subsidiary;
(b) all lawful claims which the Company and each of its
Subsidiaries is obligated to pay, which are due and which, if unpaid, might by
law become a Lien upon its property, unless the same are being contested in good
faith by appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by the Company or such Subsidiary; and
(c) all payments of principal of and interest on Indebtedness
when due (giving effect to any grace periods relating thereto).
8.5 Compliance with Laws. The Company shall comply, and shall cause
--------------------
each of its Subsidiaries to comply, in all material respects with all
Requirements of Law and with the directions of any Governmental Authority having
jurisdiction over it or its business, except the failure to so comply would not
have a material adverse effect on the Condition of the Company.
8.6 Notices. Upon knowledge of the Chief Executive Officer, the
-------
President or the Chief Financial Officer of the Company of the events described
below, the Company shall give written notice within 15 days to the Purchaser of
any (a) material default or event of default under any material Contractual
Obligation of the Company or any of its Subsidiaries, or (b) material dispute,
litigation, investigation, proceeding or suspension which may exist at any time
against the Company, any of its Subsidiaries, or any of its or their assets, in
each case accompanied by a statement setting forth details of the occurrence
referred to therein and stating what action the Company proposes to take with
respect thereto.
8.7 Issue Taxes. The Company shall pay, or cause to be paid, all
-----------
documentary and similar taxes levied under the laws of any applicable
jurisdiction in connection with the issuance of the Preferred Shares and
Warrants and the execution and delivery of the other agreements and documents
contemplated hereby and any modification of the Preferred Shares or Warrants or
such other agreements and documents, and will hold the Purchaser harmless,
without limitation as to time, against any and all Liabilities with respect to
all such taxes.
<PAGE>
39
8.8 Reservation of Shares. The Company shall at all times (i)
---------------------
reserve and keep available out of its authorized Common Stock, solely for the
purpose of issue or delivery upon conversion of the Preferred Shares, and (ii)
keep available out of its authorized Common Stock, solely for the purpose of
issue or delivery upon exercise of the Warrants as provided in the Charter
Amendment and the Warrants, such number of shares of Common Stock as shall then
be issuable or deliverable upon the conversion of all outstanding Preferred
Shares and upon the exercise of all outstanding Warrants. Such shares of Common
Stock shall, when issued or delivered in accordance with the Charter Amendment
or Warrants, be duly and validly issued and fully paid and non-assessable. The
Company shall issue the Common Stock into which the Preferred Shares are
convertible or Warrants are exercisable upon the proper surrender of the
Preferred Shares in accordance with the provisions of the Charter Amendment or
the Warrants and shall otherwise comply with the terms thereof.
8.9 Inspection. The Company will permit, and will cause each of its
----------
Subsidiaries to permit, representatives of the Purchaser to visit and inspect
any of its properties, to examine its corporate, financial and operating records
and make copies thereof or abstracts therefrom, and to discuss its affairs,
finances and accounts with their respective directors, officers and independent
public accountants, all at such reasonable times during normal business hours
and as often as may be reasonably requested, upon reasonable advance notice to
the Company.
8.10 Registration and Listing. If any shares of Common Stock required
------------------------
to be reserved for purposes of conversion of the Preferred Shares or exercise of
the Warrants, as provided in the Charter Amendment or the Warrants, require
registration with or approval of any Governmental Authority under any Federal or
state or other applicable law before such Common Stock may be issued or
delivered upon conversion or exercise, the Company will endeavor in good faith
and as expeditiously as possible to cause such Common Stock to be duly
registered or approved, as the case may be, unless such registration or approval
is required solely because of a breach of the Purchaser's representation
contained in Section 6.5. In the event that the Common Stock is quoted or
listed on any national securities exchange, the Company, if permitted by the
rules of such system or exchange, will quote or list and keep quoted or listed
on such exchange, upon official notice of issuance, all Common Stock issuable or
deliverable upon conversion of the Preferred Shares or upon exercise of the
Warrants. In addition, at the request of the Purchaser, the Company will
endeavor in good faith and as expeditiously as possible, to use its best efforts
to obtain private placement numbers for the Preferred Shares and the Common
Stock issued upon conversion of the Preferred Shares or upon exercise of the
Warrants, assigned by the CUSIP Service Bureau of Standard & Poor's ratings
group and make such securities PORTAL and DTC eligible.
8.11 HSR Act Filing. The Company shall prepare and file, and
--------------
cooperate with each Purchaser so that it may prepare and file, in each case
within five Business Days of a request by such Purchaser, notification and
report forms in
<PAGE>
40
compliance with the HSR Act, and shall otherwise fully comply with the
requirements of the HSR Act. The Company shall bear all of its own expenses and
all out-of-pocket expenses (including filing fees and reasonable attorneys'
fees, charges and expenses) of the Purchaser in connection with any such
preparation and filing.
8.12 Sprint PCS Agreement. The Company shall notify the Purchaser as
--------------------
soon as possible of (a) any material change or development, or threatened
material change or development, with respect to the Sprint PCS Agreement or with
respect to the transactions contemplated by the Sprint PCS Agreement, or (b) any
adverse change in the Company's or any Subsidiary's relationship with Sprint
PCS.
Article 9
NEGATIVE COVENANTS
------------------
The Company hereby covenants and agrees with the Purchaser and each
Holder that so long as any Preferred Shares are outstanding:
9.1 Consolidations and Mergers. The Company shall not merge,
--------------------------
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whenever acquired), and the Company shall not allow any of
its Subsidiaries to merge or consolidate with or into any other Person except
the Company or another Subsidiary of the Company, except the Company may
consolidate or merge with or into, or sell all or substantially all of its
assets to, any Person if:
(a) The corporation or partnership formed by such consolidation
or surviving such merger or the Person which acquires all or substantially all
of the assets of the Company shall be (after giving effect to such transaction)
a Solvent corporation or partnership organized or formed, as the case may be,
and existing under, the laws of the United States, any state thereof, or the
District of Columbia, and shall expressly assume in writing all of the
obligations of the Company under this Agreement, the Preferred Shares, the
Registration Rights Agreement, the Warrants and the Shareholders Agreement;
(b) immediately after giving effect to such transaction, no
default under, or breach of, the provisions of Articles 8 and 9 exists;
(c) the corporation or partnership formed by or surviving any
such transaction or the Person which acquires all or substantially all of the
assets of the Company shall have a Consolidated Net Worth at least equal to the
Consolidated Net Worth of the Company immediately prior to such transaction; and
<PAGE>
41
(d) the Company shall have furnished to the Holders (i) an
opinion of counsel satisfactory to a majority in interest of the Holders
addressing the matters (other than Solvency) set forth in clause (a) above, and
(ii) a certificate of the Chief Financial Officer of the Company to the effect
that such transaction has been consummated in compliance with the foregoing
requirements; provided that nothing in this Section 9.1 shall affect the rights
--------
of any Holder under this Agreement, the Preferred Shares, the Registration
Rights Agreement, the Warrants and the Shareholders Agreement.
9.2 Transactions with Affiliates. Except as described in the
----------------------------
Offering Memorandum under the caption "Certain Relationships and Related
Transactions --Affiliate Transactions", the Company shall not, and shall not
permit any of its Subsidiaries to, enter into any transaction with any Affiliate
of the Company or of any such Subsidiary, unless such transaction is on terms no
less favorable to the Company or such Subsidiary as would be obtainable by the
Company or such Subsidiary at the time of such transaction in an arm's-length
transaction with a Person that is not an Affiliate of the Company or of such
Subsidiary. The Company shall not, and shall not permit any of its Subsidiaries
to, amend or modify any material provision of any existing contract, agreement
or commitment, whether written or oral, between the Company or any of its
Subsidiaries, on the one hand, and an Affiliate of the Company or of any such
Subsidiary, on the other hand, unless such amendment or modification is on terms
no less favorable to the Company or such Subsidiary as would be obtainable by
the Company or such Subsidiary at the time of such amendment or modification in
an arm's-length transaction with a Person that is not an Affiliate of the
Company or of such Subsidiary.
9.3 No Inconsistent Agreements. Neither the Company nor any of its
--------------------------
Subsidiaries shall enter into any loan or other agreement, or enter into any
amendment or other modification to any currently existing agreement, which by
its terms restricts or prohibits the ability of the Company to issue Common
Stock upon conversion of the Preferred Stock or upon exercise of the Warrants in
accordance with the Charter Amendment, the Warrants and this Agreement, or to
perform its obligations under this Agreement, the Registration Rights Agreement,
the Warrants and the Shareholders Agreement.
<PAGE>
42
Article 10
DISPOSITIONS
------------
10.1 Dispositions by the Purchaser.
-----------------------------
(a) In the event that, prior to an IPO, the Purchaser shall
desire to sell or otherwise transfer any of the Preferred Shares, the Purchaser
shall give the Company written notice of its desire to sell such securities,
which notice shall specify (i) the number of such securities the Purchaser
desires to sell, (ii) the price at, and the terms and conditions on, which the
Purchaser desires to sell such securities, and (iii) the identity of all Persons
whom the Purchaser intends to contact in connection with the proposed sale (the
"Contact List"), and the Purchaser shall offer to sell such securities to the
------- ----
Company at such price and on such terms and conditions. If, within thirty (30)
days of receiving such notice, the Company does not accept such offer in
writing, the Purchaser shall be free for a period of six months to enter into a
definitive agreement to sell such securities to any Person on the Contact List
at a price not less than the price offered to the Company, and on terms and
conditions substantially equivalent to those offered to the Company. If the
Purchaser does not sell such securities in such a manner within such six-month
period, the Purchaser may not thereafter sell or transfer such securities
without again complying with the provisions of the first sentence of this
Section 10.1(a). If, within the thirty-day period specified in the preceding
sentence, the Company does accept such offer in writing, then the Company shall
purchase such securities as promptly as is reasonably practicable, but in no
event later than thirty (30) days following such acceptance. If, after such
acceptance, the Company for whatever reason fails to purchase such securities on
or prior to the date specified in the preceding sentence, the Purchaser may,
among other remedies available to it, sell such securities to any Person on the
Contact List at any price and on any terms.
(b) Notwithstanding anything in this Section 10.1 to the
contrary, the Purchaser may, at any time and from time to time, sell or
otherwise transfer Common Stock or Preferred Shares (i) pursuant to an exchange
offer or a tender offer not opposed by a majority of the Company's Board of
Directors, (ii) pursuant to any all cash tender offer made by any Person for all
of the issued and outstanding Common Stock, (iii) pursuant to the Registration
Rights Agreement, (iv) to any of the Purchaser's Affiliates, or (v) to the
Purchaser's limited partners pursuant to a pro rata distribution; provided,
--------
however, that any Affiliates (or limited partners) of the Purchaser to which
- -------
such securities are transferred shall agree to be bound by all of the transfer
restrictions set forth in this Section 10.1.
(c) Except as otherwise provided in Section 10.1(b), any
securities transferred by the Purchaser shall not thereafter be subject to the
provisions of this Section 10.1.
<PAGE>
43
10.2 Equity Put Option.
-----------------
(a) If an IPO shall not have occurred by the fifth
anniversary of the Closing Date, the Holders of a majority of the Preferred
Shares (the "Demand Group," and each Holder in the Demand Group, a
------
"Participating Holder") may, by written notice to the Company (a "Demand
-------------------- ------
Notice"), require the Company to redeem all or a portion of the then outstanding
- ------
Preferred Shares held by such Participating Holder at a redemption price per
share of Class B Common Stock into which such Preferred Shares are convertible
at the time of redemption equal to the Put Price; provided, however, that the
right to require redemption pursuant to this Section 10.2 shall expire and be of
no further force or effect following the consummation of an IPO. Within ten (10)
days following receipt of a Demand Notice, the Company shall give notice (a
"Required Redemption Notice") to all registered Holders who did not participate
--------------------------
in the Demand Notice (the "Nonparticipating Holders"), that the Company has
------------------------
received a Demand Notice, and the Company shall inform each such
Nonparticipating Holder that it has the right under this Agreement to include in
the redemption all or a portion of the Preferred Shares held by such
Nonparticipating Holder by giving the Company written notice of such
Nonparticipating Holder's desire to participate therein within ten (10) days
following receipt of the Required Redemption Notice. Any Nonparticipating Holder
that elects to participate in the redemption shall thereafter be deemed to be a
Participating Holder for purposes of this Section 10.2. Notice of a request for
redemption pursuant to this Section 10.2 shall be sent in accordance with
Section 11.2 of this Agreement. The Company shall redeem the Preferred Shares
required to be redeemed pursuant to such Demand Notice no later than ninety (90)
days after the Per Share Equity Value is determined in accordance with Section
10.2(c), but in no event later than the 180th day after the Company receives
such Demand Notice (the "Redemption Date"). In the event that the Company
---------------
redeems less than all of the Preferred Shares required to be redeemed pursuant
to such Demand Notice, redemption pursuant to this Section 10.2 shall be pro
rata among the Demand Group based on the number of Preferred Shares that each
such Participating Holder required to be redeemed pursuant to the Demand Notice.
On or prior to the Redemption Date, each Participating Holder of Preferred
Shares shall be entitled to receive payment of the Per Share Equity Value for
each of the Preferred Shares such Participating Holder required be redeemed on
the Redemption Date, in immediately available funds upon actual delivery to the
Company or its transfer agent of such Preferred Share certificates.
Notwithstanding anything to the contrary in this Section, in the event the
Company fails to redeem any Preferred Shares required to be redeemed pursuant to
a Demand Notice on the Redemption Date solely as a result of the terms of any
Indebtedness for borrowed money of the Company prohibiting such redemption and
the Company is unable to obtain waivers to such prohibition or to refinance such
Indebtedness (a "Prohibitive Event"), then the Company shall pay such amount as
-----------------
soon as possible, but the Participating Holders' sole remedy for such failure
shall be pursuant to Section 10.2(b); provided that the Company shall use its
commercially reasonable efforts to obtain waivers to the terms of any
Indebtedness for borrowed money of the Company prohibiting such redemption or to
refinance such Indebtedness.
<PAGE>
44
If the Company fails to redeem any of the Preferred Shares required to be
redeemed pursuant to a Demand Notice for any reason other than a Prohibitive
Event, the Participating Holders shall be entitled to take any and all remedies
hereunder and at law or in equity.
(b) If, on or before the Redemption Date, the Company has not
redeemed in full all of the Preferred Shares required to be redeemed by such
date pursuant to Section 10.2(a) because of a Prohibitive Event, the Company
shall issue to each such Participating Holder Warrants immediately exercisable
into that number of shares of Class B Common Stock equal to five percent (5%) of
the number of shares of Class B Common Stock to which such Participating Holder
would be entitled if such Participating Holder were to convert all of the shares
of Preferred Stock held by such Holder on the Redemption Date (after taking into
account any Preferred Shares redeemed on such date) into shares of Class B
Common Stock. For every six-month period following the Redemption Date during
which the Company fails to redeem in full all of the Preferred Shares such
Participating Holders required to be redeemed pursuant to a Demand Notice
because of a Prohibitive Event, the Company shall issue additional Warrants to
each such Participating Holder on the final day of such six-month period, which
Warrants shall be immediately exercisable into that number of shares of Class B
Common Stock equal to five percent (5%) of the number of shares of Class B
Common Stock to which such Participating Holder would be entitled if such
Participating Holder were to convert all of its shares of Preferred Stock held
by it on the first day of such six-month period (after taking into account all
redemptions of Preferred Stock on or prior to such date) into shares of Class B
Common Stock on such date. Notwithstanding the foregoing, if on any date on
which the Company is obligated to issue Warrants pursuant to this Section
10.2(b), the issuance of such Warrants would result in an event of default
occurring under any Indebtedness for borrowed money of the Company because such
issuance of Warrants would constitute a "change of control" thereunder, then, on
such date, the Company may issue Warrants immediately exercisable into shares of
Class A Common Stock (in lieu of shares of Class B Common Stock).
(c) The "as if fully distributed value" (as that term is used in
the definition of Per Share Equity Value), shall be determined by a panel of
three independent appraisers, each of which shall be recognized investment
banking firms or recognized experts experienced in the valuation of
corporations. Within fifteen (15) days after a Demand Notice is delivered to the
Company pursuant to Section 10.2(a), the Demand Group and the Board of Directors
of the Company shall each designate one such appraiser that is willing and able
to conduct such determination. If either the Demand Group or the Board of
Directors of the Company fails to make such designation within such period, the
other party that has made the designation shall have the right to make the
designation on its behalf. The two appraisers designated shall, within a period
of fifteen (15) days after the designation of the second appraiser, agree to
designate a third appraiser. The three appraisers shall conduct their
determination as promptly as practicable, and the "as if fully distributed
value" shall be the average of
<PAGE>
45
the determination of the two appraisers that are closer to each other than to
the determination of the third appraiser, which third determination shall be
discarded. Such determination shall be final and binding on the Demand Group and
the Company. The Demand Group shall be responsible for the fees and expenses of
the appraiser designated by or on behalf of it and the Company shall be
responsible for the fees and expenses of the appraiser designated by or on
behalf of the Board of Directors of the Company. The Demand Group and the
Company shall each share half the fees and expenses of the third appraiser
designated by the other appraisers.
(d) If the Company fails to redeem any Preferred Shares on the
Redemption Date required to be redeemed pursuant to a Demand Notice, at the
request of the Participating Holders holding a majority of the Preferred Shares
which had been included in such demand but which are still outstanding, the Per
Share Equity Value of the shares of Class B Common Stock into which such shares
of Preferred Stock are exercisable shall be redetermined as of one or more dates
after the Redemption Date in accordance with the definition thereof and Section
10.2(c) until all the shares of Preferred Stock required to be redeemed are
redeemed in full; provided that in no event shall the appraisal process set
--------
forth in Section 10.2(c) occur more than once every six months.
Article 11
MISCELLANEOUS
-------------
11.1 Survival of Provisions. All warranties, representations,
----------------------
covenants and agreements made by the Company in or under this Agreement shall be
considered to have been relied upon by the Purchaser and shall survive the
execution and delivery of this Agreement and the issuance to the Purchaser of
the Preferred Shares, regardless of any investigation made by or on behalf of
the Purchaser. All warranties, representations and covenants made by the
Purchaser shall survive the execution and delivery of this Agreement and the
issuance to the Purchaser of the Preferred Shares. Except as otherwise set
forth in Articles 8 or 9, all of the representations and warranties made herein
and each of the provisions of Articles 5, 6, 7, 10 and 11 shall survive the
execution and delivery of this Agreement, any investigation by or on behalf of
the Purchaser or any Affiliate, acceptance of the Preferred Shares and payment
therefor, payment or prepayment of the Preferred Shares upon redemption or
otherwise, conversion of the Preferred Shares or termination of this Agreement;
provided that the representations and warranties set forth in Articles 5 and 6
- --------
shall expire and terminate upon the conversion of all of the Preferred Shares
into Common Stock.
11.2 Notices. All notices, demands and other communications provided
-------
for or permitted hereunder shall be made in writing and shall be by registered
<PAGE>
46
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(a) if to the Purchaser at the following address:
The 1818 Fund III, L.P.
c/o Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Telecopier No.: (212) 493-8429
Attention: Mr. Lawrence C. Tucker
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Telecopier No.: (212) 757-3990
Attention: Marilyn Sobel, Esq.
(b) if to the Company at the following address:
US Unwired Inc.
Hibernia Tower
One Lakeshore Drive, Suite 1900
Lake Charles, LA 70629
Telecopier No.: (318) 497-3197
Attention: William Henning, Jr.
with a copy to:
Thomas G. Henning
Post Office Box 3709
Lake Charles, Louisiana 70602
Telecopier No.: (318) 497-3479
All such notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered; (ii) when delivered
by courier, if delivered by commercial overnight courier service; (iii) five (5)
Business Days after being deposited in the mail, postage prepaid, if mailed; and
(iv) when receipt is acknowledged, if telecopied.
11.3 Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the successors and permitted assigns of the
parties
<PAGE>
47
hereto. The Purchaser may assign any of its rights under this Agreement, the
Preferred Shares, the Registration Rights Agreement, the Warrants or the
Shareholders Agreement to any of its Affiliates. Subject to the restrictions of
this Agreement, the Purchaser may assign any of its rights under this Agreement
(other than those set forth in Section 8.1(c), (d) or (e), or 8.9) or the
Preferred Shares, or a portion thereof to any other Holder. The Company may not
assign any of its rights under this Agreement without the written consent of the
Purchaser. Except as provided in Article 7 and this Section 11.3, no Person
other than the parties hereto is intended to be a beneficiary of this Agreement.
11.4 Amendment and Waiver. No failure or delay on the part of the
--------------------
Company or the Purchaser in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Company or the Purchaser at law, in equity or otherwise. Any
amendment, supplement, modification or termination of or to any provision of
this Agreement, any waiver of any provision of this Agreement, and any consent
to any departure by the Company from the terms of any provision of this
Agreement, shall be effective only in the specific instance and for the specific
purpose for which made or given and shall be effective only when signed in
writing by or on behalf of holders of at least a majority of the Common Stock
issued and issuable upon conversion of the Preferred Shares (whether or not
converted), it being understood that the terms of this Agreement may be waived
or amended with the written consent of holders of at least a majority of the
Common Stock issued and issuable upon conversion of the Preferred Shares
(whether or not converted). Except where notice is specifically required by
this Agreement, no notice to or demand on the Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances.
11.5 Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
11.6 Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
11.7 Determinations. Except where any provision expressly requires
--------------
that a determination be reasonable or a consent not be unreasonably withheld, or
be subject to qualifications to similar effect, all determinations to be made by
the Company, the Purchaser or any Holder hereunder in its opinion or judgment or
with its approval or otherwise shall be made by it in its sole discretion.
<PAGE>
48
11.8 Governing Law. This Agreement has been negotiated, executed and
-------------
delivered in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
11.9 Jurisdiction. Each party to this Agreement hereby irrevocably
------------
agrees that any legal action or proceeding arising out of or relating to this
Agreement or any agreements or transactions contemplated hereby shall be brought
exclusively in the courts of the State of Delaware or of the United States of
America for the District of Delaware, and hereby expressly submits to the
exclusive personal jurisdiction and venue of such courts for the purposes
thereof and expressly waives any claim of improper venue and any claim that such
courts are an inconvenient forum. Each party hereby irrevocably consents to the
service of process of any of the aforementioned courts in any such suit, action
or proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 11.2, such service to
become effective ten (10) days after such mailing.
11.10 Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
11.11 Rules of Construction. Unless the context otherwise requires,
---------------------
(a) "or" is not exclusive, (b) references to Articles, Sections or subsections
refer to Articles, Sections or subsections of this Agreement, and (c) the words
"include," "includes" and "including" do not limit the preceding words or terms
and shall be deemed to be followed by the words "without limitation."
11.12 Remedies. If a breach of this Agreement or the Charter Amendment
--------
by the Company occurs and is continuing, any Holder may pursue any available
remedy by proceeding at law or in equity to enforce the performance (including
specific performance) of any provision of this Agreement or the Charter
Amendment. A Holder may maintain a proceeding even if it does not possess any
of the Preferred Shares or does not produce any of them in the proceeding.
Except as otherwise provided by law, a delay or omission by any Holder in
exercising any right or remedy accruing upon any such breach shall not impair
the right or remedy or constitute a waiver of or acquiescence in any such
breach. No remedy is exclusive of any other remedy. All available remedies are
cumulative.
11.13 Entire Agreement. This Agreement, together with the Exhibits and
----------------
Schedules hereto, the Charter Amendment, the Registration Rights Agreement, the
Warrants and the Shareholders Agreement, is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of
<PAGE>
49
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein. This Agreement, together with the Exhibits and Schedules hereto, the
Charter Amendment, the Registration Rights Agreement, the Warrants, and the
Shareholders Agreement supersede all prior agreements and understandings between
the parties with respect to such subject matter.
11.14 Attorneys' Fees. In any action or proceeding brought to enforce
---------------
any provision of this Agreement, the Charter Amendment, the Registration Rights
Agreement, the Warrants and the Shareholders Agreement or any other document or
instrument contemplated hereby or thereby, or where any provision hereof or
thereof is validly asserted as a defense, the successful party shall be entitled
to recover reasonable attorneys' fees, charges and disbursements in addition to
any other available remedy.
11.15 Publicity. Except, after consultation with the Purchaser, for
---------
disclosure in the Offering Memorandum or otherwise in connection with the "road
show" with respect to the High Yield Offering, and except as may be required by
applicable law, no party hereto shall issue a publicity release or announcement
or otherwise make any public disclosure concerning this Agreement or the
transactions contemplated hereby, without prior approval by the other parties
hereto. If any announcement is required by law to be made by any party hereto,
prior to making such announcement such party will deliver a draft of such
announcement to the other parties and shall give the other parties an
opportunity to comment thereon.
11.16 Expenses. The Company acknowledges and agrees that whether or
--------
not the transactions contemplated hereby are consummated, except if the failure
to consummate the transactions contemplated hereby results from a breach of this
Agreement by the Purchaser, the Company shall reimburse Purchaser for all
reasonable out-of-pocket expenses and all legal fees and expenses and other
charges of the Purchaser in connection with the negotiation, execution and
delivery of this Agreement, the Preferred Shares, the Registration Rights
Agreement, the Warrants and the Shareholders Agreement (including all fees,
disbursements and related charges of Paul, Weiss, Rifkind, Wharton & Garrison
and all fees, disbursements and related charges of special FCC regulatory
counsel). All such out-of-pocket fees and expenses incurred by the Purchaser
prior to or in connection with the Closing shall be paid at the Closing, and the
Purchaser may offset the amount of such fees and expenses against the Purchase
Price of the Preferred Shares. Notwithstanding the foregoing, the maximum
amount of legal fees (including related disbursements and other charges) to be
reimbursed by the Company pursuant to this Section 11.16 shall not exceed
$150,000. The Company shall pay the reasonable fees, out of pocket expenses and
all expenses and other charges of the Purchaser incurred in connection with any
amendment to this Agreement, the Charter Amendment, the Registration Rights
Agreement, the Warrants and the Shareholders Agreement.
[THE REMAINDER OF THIS PAGE HAS BEEN
INTENTIONALLY LEFT BLANK]
<PAGE>
50
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective representatives hereunto duly
authorized as of the date first above written.
US UNWIRED INC.
Robert Piper
By: ________________________________________
Name: Robert Piper
Title: President
THE 1818 FUND III, L.P.
By: Brown Brothers Harriman & Co.,
its General Partner
Lawrence C. Tucker
By: ________________________________________
Name: Lawrence C. Tucker, Partner
Title: Brown Brothers Harriman & Co.
<PAGE>
Exhibit C
---------
[FORM OF WARRANT]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED,
QUALIFIED, APPROVED OR DISAPPROVED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD
--------------
OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER SUCH ACT OR LAWS AND NEITHER
THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER FEDERAL OR
STATE REGULATORY AUTHORITY HAS PASSED ON OR ENDORSED THE MERITS OF THESE
SECURITIES.
WARRANT NO. [___]
WARRANT
TO PURCHASE SHARES OF CLASS B COMMON STOCK,/1/
PAR VALUE $.01,
OF
US UNWIRED INC.
THIS IS TO CERTIFY THAT THE 1818 FUND III, L.P. or its registered
assigns (the "Holder"), is the owner of [_________________________ ____________]
------
[(___________)] Warrants (the "Warrants"), each of which entitles the registered
--------
holder thereof to purchase from US UNWIRED INC., a Louisiana corporation (the
"Company"), one (1) fully paid, duly authorized and nonassessable share of Class
-------
B common stock, par value $.01 per share, of the Company (the "Class B Common
--------------
Stock"), at any time or from time to time on or before 5:00 p.m.,
- -----
______________
/1/ The Warrant may be exercisable into shares of Class A common stock,
par value $.01 per share, of the Company (the "Class A Common Stock") (in lieu
--------------------
of shares of Class B Common Stock) to the extent and under the circumstances set
forth in Section 10.2 of the Securities Purchase Agreement, in which case all
references in the Warrant to "Class B Common Stock" should be read as "Class A
Common Stock".
<PAGE>
2
New York City time, on [___________], 20[__] (the "Warrant Expiration
------------------
Date"),/2/ at an exercise price of $.01 per share (the "Exercise Price"), all
- ---- --------------
on the terms and subject to the conditions hereinafter set forth.
The number of shares of Class B Common Stock issuable upon exercise of
each such Warrant (the "Number Issuable"), which is initially one (1) share, is
---------------
subject to adjustment from time to time pursuant to the provisions of Section 2
of this Warrant Certificate.
Capitalized terms used herein but not otherwise defined shall have the
meanings given to them in Section 12 hereof.
Section 1. Exercise of Warrant.
-------------------
(a) Subject to the last paragraph of this Section 1, the Warrants
evidenced hereby may be exercised, in whole or in part, by the Holder hereof at
any time or from time to time on or before 5:00 p.m., New York City time, on the
Warrant Expiration Date, upon delivery to the Company at the principal executive
office of the Company in the United States of America, of (A) this Warrant
Certificate, (B) a written notice stating that such Holder elects to exercise
the Warrants evidenced hereby in accordance with the provisions of this Section
1 and specifying the number of Warrants being exercised and the name or names in
which such Holder wishes the certificate or certificates for shares of Class B
Common Stock to be issued and (C) payment of the Exercise Price for the shares
of Class B Common Stock issuable upon exercise of such Warrants, which shall be
payable by any one or any combination of the following: (i) cash; (ii) certified
or official bank check payable to the order of the Company; (iii) by the
surrender (which surrender shall be evidenced by cancellation of the number of
Warrants represented by any Warrant Certificate presented in connection with a
Cashless Exercise (as defined below)) of a Warrant or Warrants (represented by
one or more relevant Warrant Certificates), and without the payment of the
Exercise Price in cash, in return for the delivery to the surrendering holder of
such number of shares of Class B Common Stock equal to the number of shares of
Class B Common Stock for which such Warrant is exercisable as of the date of
exercise (if the Exercise Price were being paid in cash or certified or official
bank check) reduced by that number of shares of Class B Common Stock equal to
the quotient obtained by dividing (x) the aggregate Exercise Price to be paid by
(y) the Market Price of one share of Class B Common Stock on the Business Day
which next precedes the day of exercise of the Warrant; or (iv) by the delivery
of shares of Class B Common Stock having a value (as defined by the next
sentence) equal to the aggregate Exercise Price to be paid, that are either held
by the Holder or are acquired in connection with such exercise, and without
payment of the Exercise Price in cash. Any share of Class B Common Stock
delivered as payment of the Exercise Price in connection with an In-Kind
Exercise (as defined below) shall be
________________
/2/ The Warrant Expiration Date for any Warrant will be the second
anniversary of the date of the issuance of such Warrant.
<PAGE>
3
deemed to have a value equal to the Market Price of one (1) share of Class B
Common Stock on the Business Day which next precedes the day of exercise of the
Warrant. An exercise of a Warrant in accordance with clause (iii) is herein
referred to as a "Cashless Exercise" and an exercise of a Warrant in accordance
-----------------
with clause (iv) is herein referred to as an "In-Kind Exercise." The
----------------
documentation and consideration, if any, delivered in accordance with
subsections (A), (B) and (C) are collectively referred to herein as the "Warrant
-------
Exercise Documentation."
- ----------------------
(b) As promptly as practicable, and in any event within five (5)
Business Days after receipt of the Warrant Exercise Documentation, the Company
shall deliver or cause to be delivered (A) certificates representing the number
of validly issued, fully paid and nonassessable shares of Class B Common Stock
specified in the Warrant Exercise Documentation, (B) if applicable, cash in lieu
of any fraction of a share, as hereinafter provided, and (C) if less than the
full number of Warrants evidenced hereby are being exercised or used in a
Cashless Exercise, a new Warrant Certificate or Certificates, of like tenor, for
the number of Warrants evidenced by this Warrant Certificate, less the number of
Warrants then being exercised or used in a Cashless Exercise. Such exercise
shall be deemed to have been made at the close of business on the date of
delivery of the Warrant Exercise Documentation so that the Person entitled to
receive shares of Class B Common Stock upon such exercise shall be treated for
all purposes as having become the record holder of such shares of Class B Common
Stock at such time. No such surrender shall be effective to constitute the
person entitled to receive such shares as the record holder thereof while the
transfer books of the Company for the Class B Common Stock are closed for any
purpose (but not for any period in excess of five (5) days); provided, however,
-------- -------
that any such surrender of this Warrant Certificate for exercise during any
period while such books are so closed shall become effective for exercise
immediately upon the reopening of such books, as if the exercise had been made
on the date this Warrant Certificate was surrendered and for the Number Issuable
of Class B Common Stock specified in the Warrant Exercise Documentation and at
the Exercise Price.
(c) The Company shall pay all expenses in connection with, and all
taxes and other governmental charges (other than income taxes of the holder)
that may be imposed in respect of, the issue or delivery of any shares of Class
B Common Stock issuable upon the exercise of the Warrants evidenced hereby. The
Company shall not be required, however, to pay any tax or other charge imposed
in connection with any transfer involved in the issue of any certificate for
shares of Class B Common Stock in any name other than that of the registered
holder of the Warrants evidenced hereby.
(d) In connection with the exercise of any Warrants evidenced hereby,
no fractions of shares of Class B Common Stock shall be issued, but in lieu
thereof the Company shall pay a cash adjustment in respect of such fractional
interest in an amount equal to such fractional interest multiplied by the Market
Price per share of Class B Common Stock on the Business Day which next precedes
the day of exercise. If more than one (1) such Warrant shall be exercised by
the holder thereof at the same
<PAGE>
4
time, the number of full shares of Class B Common Stock issuable on such
exercise shall be computed on the basis of the total number of Warrants so
exercised.
Section 2. Adjustments.
-----------
(a) Adjustment of Number Issuable. The Number Issuable shall be
-----------------------------
subject to adjustment from time to time as follows:
(i) In case the Company shall at any time or from time to time
after the Issue Date:
(A) pay a dividend or make a distribution on the
outstanding shares of Common Stock in capital stock of the Company;
(B) subdivide the outstanding shares of Common Stock into a
larger number of shares;
(C) combine the outstanding shares of Common Stock into a
smaller number of shares; or
(D) issue any shares of its capital stock in a
reclassification of the Common Stock;
then, and in each such case, the Number Issuable in effect immediately
prior to such event shall be adjusted (and any other appropriate actions
shall be taken by the Company) so that the holder of any Warrant evidenced
hereby thereafter exercised shall be entitled to receive the number of
shares of Class B Common Stock or other securities of the Company which
such holder would have owned or had been entitled to receive upon or by
reason of any of the events described above, had such Warrant been
exercised immediately prior to the happening of such event. An adjustment
made pursuant to this clause (i) shall become effective retroactively (x)
in the case of any such dividend or distribution, to a date immediately
following the close of business on the record date for the determination of
holders of shares of Common Stock entitled to receive such dividend or
distribution, or (y) in the case of any such subdivision, combination or
reclassification, to the close of business on the date upon which such
corporate action becomes effective.
(ii) If after the Issue Date, the Company shall, at any time or
from time to time, issue or sell (x) shares of Common Stock or (y)
securities convertible into or exchangeable for shares of Common Stock, or
any options, warrants or other rights to acquire shares of Common Stock
(other than (A) shares of Common Stock issued upon exercise of the Warrants
outstanding on the Issue Date and (B) shares issued as a result of
adjustments made under agreements related to shares described in clause
(A)) at a price per share that is less than the Conversion Price per share
of Class B Common Stock then in
<PAGE>
5
effect as of the record date or Issuance Date, as the case may be, referred
to in the following sentence (the "Relevant Date") (treating the price per
-------------
share of Common Stock, in the case of the issuance of any security
convertible or exchangeable or exercisable into Common Stock as equal to
(x) the sum of the price for such security convertible, exchangeable or
exercisable into Common Stock plus any additional consideration payable
(without regard to any anti-dilution adjustments) upon the conversion,
exchange or exercise of such security into Common Stock divided by (y) the
number of shares of Common Stock initially underlying such convertible,
exchangeable or exercisable security), in each case, other than issuances
or sales for which an adjustment is made pursuant to another paragraph of
this Section 2, then, and in each such case, the Number Issuable then in
effect shall be adjusted by multiplying the Number Issuable in effect on
the day immediately prior to the Relevant Date by a fraction, (1) the
numerator of which shall be the sum of the number of shares of Common
Stock, on a fully diluted basis, outstanding on the Relevant Date, plus the
number of additional shares of Common Stock issued or to be issued (or the
maximum number into which such convertible or exchangeable securities
initially may convert or exchange or for which such options, warrants or
other rights initially may be exercised), and (2) the denominator of which
shall be the sum of the number of shares of Common Stock, on a fully
diluted basis, outstanding on the Relevant Date, plus the number of shares
of Common Stock which the aggregate consideration (plus the aggregate
amount of any additional consideration initially payable upon conversion,
exchange or exercise of such security) for the total number of such
additional shares of Common Stock so issued (or into which such convertible
or exchangeable securities may convert or exchange or for which such
options, warrants or other rights may be exercised) would purchase at the
Conversion Price per share of Class B Common Stock on the Relevant Date.
Such adjustment shall be made whenever such shares, securities, options,
warrants or other rights are issued, and shall become effective
retroactively to a date immediately following the close of business (x) in
the case of an issuance to the stockholders of the Company, as such, on the
record date for the determination of stockholders entitled to receive such
shares, securities, options, warrants or other rights and (y) in all other
cases, on the date (the "Issuance Date") of such issuance; provided,
------------- --------
however, that if any convertible or exchangeable securities, options,
-------
warrants, or other rights
(or any portions thereof) which shall have given rise to an adjustment
pursuant to this Section 2(a)(ii) shall have expired or terminated without
the exercise thereof, then the Number Issuable hereunder shall be
readjusted (but to no greater extent than originally adjusted) on the basis
of eliminating from the computation any additional shares of Common Stock
corresponding to such convertible or exchangeable securities, options,
warrants or other rights as shall have expired or terminated. Solely for
purposes of this clause (ii), (I) Common Stock shall include the Class B
Common Stock of the Company and each other class of capital stock of the
Company that does not have a preference over any other class of capital
stock of the Company as to dividends or upon liquidation, dissolution or
winding up of the Company and, in each case, shall include any
<PAGE>
6
other class of capital stock of the Company into which such stock is
reclassified or reconstituted and (II) if the provisions of any securities
convertible into or exchangeable for shares of Common Stock or options,
warrants or other rights to acquire shares of Common Stock are amended
after the date of issuance so as to reduce the applicable conversion price,
exchange price or exercise price such amendment shall be deemed to be a new
issuance of such securities.
(iii) In case the Company shall, at any time or from time to
time, after the Issue Date distribute to any holder of shares of its Common
Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the resulting or surviving
corporation and the Common Stock is not changed or exchanged) cash,
evidences of indebtedness of the Company or another issuer, securities of
the Company or another issuer or other assets (excluding dividends or other
distributions of shares of Common Stock or other capital stock for which
adjustment is made under Section 2(a)(i) or dividends or other
distributions received by or set aside for the benefit of the holders of
Common Stock pursuant to Section 2(c) below) or rights or warrants to
subscribe for or purchase securities of the Company (excluding those in
respect of which adjustments in the Number Issuable is made pursuant to
Section 2(a)(i) or Section 2(a)(ii)), then, and in each such case, the
Number Issuable then in effect shall be adjusted by multiplying the Number
Issuable in effect immediately prior to the date of such distribution by a
fraction (x) the numerator of which shall be the Conversion Price per share
of Class B Common Stock on the record date referred to below and (y) the
denominator of which shall be such Conversion Price per share of Class B
Common Stock less the then Fair Market Value (as determined in good faith
by the Board of Directors of the Company, a certified resolution with
respect to which shall be mailed to the holder of the Warrants evidenced
hereby) of the portion of the cash, evidences of indebtedness, securities
or other assets so distributed or of such subscription rights or warrants
applicable to one (1) share of Common Stock (but such denominator shall in
no event be zero). Such adjustment shall be made whenever any such
distribution is made and shall become effective retroactively to a date
immediately following the close of business on the record date for the
determination of stockholders entitled to receive such distribution.
(iv) In case the Company, at any time or from time to time,
shall take any action which could have a dilutive effect on the number of
shares of Common Stock that may be issued upon exercise of the Warrants,
other than an action described in any of Section 2(a)(i) through 2(a)(iii),
inclusive, or Section 2(b), then the Number Issuable shall be adjusted in
such manner and at such time as the Board of Directors of the Company in
good faith determines to be equitable under the circumstances (such
determination to be evidenced in a resolution, a certified copy of which
shall be mailed to the holder of the Warrants evidenced hereby).
<PAGE>
7
(v) Notwithstanding anything herein to the contrary, no
adjustment under this Section 2(a) need be made to the Number Issuable
unless such adjustment would require an increase or decrease of at least 1%
of the Number Issuable then in effect. Any lesser adjustment shall be
carried forward and shall be made at the time of and together with the next
subsequent adjustment, which, together with any adjustment or adjustments
so carried forward, shall amount to an increase or decrease of at least 1%
of such Number Issuable. Any adjustment to the Number Issuable carried
forward and not theretofore made shall be made immediately prior to the
exercise of any Warrants pursuant hereto.
(vi) The Company promptly shall deliver to each registered
holder of Warrants at least five (5) Business Days prior to effecting any
transaction which would result in an increase or decrease in the Number
Issuable pursuant to this Section 2 a notice thereof, together with a
certificate, signed by the President or a Vice President and by the
Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Company, setting forth in reasonable detail the event
requiring the adjustment and the method by which such adjustment was
calculated and specifying the increased or decreased Number Issuable then
in effect following such adjustment.
(vii) Notwithstanding anything contrary contained in this
Section 2(a), the Company shall be entitled to make such upward adjustments
in the Number Issuable, in addition to those otherwise required by this
Section 2(a), as the Board of Directors of the Company in their discretion
shall determine to be advisable in order that any stock dividend,
subdivision or combination of shares, distribution of rights or warrants to
purchase stock or securities, or distribution of securities convertible
into or exchangeable for Common Stock, hereafter made by the Company to its
shareholders shall not be taxable; provided, however, that any such
-------- -------
adjustment shall be made, as nearly as practicable, in a manner which
treats all holders of Warrants with similar protections on an equal basis.
(viii) Notwithstanding anything to the contrary contained herein,
no adjustment under this Section 2(a) shall be made upon the issuance of
shares of Common Stock upon the exercise of up to 2,000 options with
respect to Common Stock with an exercise price of $6.00 per share.
(b) Reorganization, Reclassification, Consolidation, Merger or Sale
---------------------------------------------------------------
of Assets. In case of any capital reorganization or reclassification or other
- ---------
change of outstanding shares of Common Stock (other than a change in par value,
or from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another Person (other than a consolidation or
merger in which the Company is the resulting or surviving person and which does
not result in any reclassification or change of outstanding Common Stock) (any
of the foregoing, a "Transaction"), the Company,
-----------
<PAGE>
8
or such successor or purchasing Person, as the case may be, shall execute and
deliver to each holder of the Warrants evidenced hereby, at least five (5)
Business Days prior to effecting any of the foregoing Transactions, a
certificate that the holder of each such Warrant then outstanding shall have the
right thereafter to exercise such Warrant into the kind and amount of shares of
stock or other securities (of the Company or another issuer) or property or cash
receivable upon such Transaction by a holder of the number of shares of Class B
Common Stock into which such Warrant could have been exercised immediately prior
to such Transaction. Such certificate shall provide for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for in
this Section 2 and shall contain other terms identical to the terms hereof. If,
in the case of any such Transaction, the stock, other securities, cash or
property receivable thereupon by a holder of Common Stock includes shares of
stock or other securities of a Person other than the successor or purchasing
Persons and other than the Company, which controls or is controlled by the
successor or purchasing Person or which, in connection with such Transaction,
issues stock, securities, other property or cash to holders of Common Stock,
then such certificate also shall be executed by such Person, and such Person
shall, in such certificate, specifically assume the obligations of such
successor or purchasing Person and acknowledge its obligations to issue such
stock, securities, other property or cash to holders of the Warrants upon
exercise thereof as provided above. The provisions of this Section 2(b)
similarly shall apply to successive Transactions.
(c) Special Distributions. If the holder so elects by sending a
---------------------
Special Notice to the Company, in the event that the Company shall declare a
dividend or make any other distribution (including, without limitation, in cash,
in capital stock (which shall include, without limitation, any options, warrants
or other rights to acquire Capital Stock) of the Company, whether or not
pursuant to a shareholder rights plan, "poison pill" or similar arrangement) in
other property or assets, to holders of Common Stock (a "Special Distribution"),
--------------------
then the Board of Directors shall set aside the amount of such dividend or
distribution that any holder of Warrants would have been entitled to receive had
it exercised such Warrants prior to the record date for such dividend or
distribution. Upon the exercise of a Warrant evidenced hereby, the holder shall
be entitled to receive, such dividend or distribution that such holder would
have received had such Warrant been exercised immediately prior to the record
date for such dividend or distribution. Prior to any Special Distribution
described in this section 2(c), the Company shall as provided in Section 4
hereof notify each holder (not less than ten (10) Business Days prior to the
occurrence of each Special Distribution) of its intent to make such Special
Distribution and the holder, if it elects to have such distribution set aside
the amount thereof rather than have an adjustment to the Number Issuable as
provided in Section 2(a)(i) or (iii), shall notify the Company by sending a
Special Notice prior to the date of any such Special Distribution.
Section 3. No Redemption. The Company shall not have any right to
-------------
redeem any of the Warrants evidenced hereby.
<PAGE>
9
Section 4. Notice of Certain Events. In case at any time or from
------------------------
time to time (i) the Company shall declare any dividend or any other
distribution to the holders of its Common Stock, (ii) the Company shall
authorize the granting to the holders of its Common Stock of rights or warrants
to subscribe for or purchase any additional shares of stock of any class or any
other right, (iii) the Company shall authorize the issuance or sale of any other
shares or rights which would result in an adjustment to the Number Issuable
pursuant to Section 2(a)(i), (ii) or (iii) or would result in a Special
Distribution pursuant to Section 2(c) hereof, (iv) there shall be any capital
reorganization or reclassification of the Common Stock of the Company or
consolidation or merger of the Company with or into another Person, or any sale
or other disposition of all or substantially all the assets of the Company, or
(v) there shall be a voluntary or involuntary dissolution, liquidation or
winding up of the Company, then, in any one or more of such cases the Company
shall mail to each holder of the Warrants evidenced hereby at such holder's
address as it appears on the transfer books of the Company, as promptly as
practicable but in any event at least 30 days prior to the applicable date
hereinafter specified, a notice stating (a) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or warrants or, if
a record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution, rights or warrants are to
be determined, (b) the Issuance Date (as defined in Section 2(a)(ii) hereof) or
(c) the date on which such reclassification, consolidation, merger, sale,
conveyance, dissolution, liquidation or winding up is expected to become
effective; provided, however, that in the case of any event to which Section
-------- -------
2(b) applies, the Company shall give at least ten (10) Business Days' prior
written notice as aforesaid. Such notice also shall specify the date as of which
it is expected that the holders of Common Stock of record shall be entitled to
exchange their Common Stock for shares of stock or other securities or property
or cash deliverable upon such reorganization, reclassification, consolidation,
merger, sale, conveyance, dissolution, liquidation or winding up.
Section 5. Certain Covenants. The Company covenants and agrees that
-----------------
all shares of Capital Stock of the Company which may be issued upon the exercise
of the Warrants evidenced hereby will be duly authorized, validly issued and
fully paid and nonassessable. The Company shall at all times reserve and keep
available for issuance upon the exercise of the Warrants, such number of its
authorized but unissued shares of Common Stock as will from time to time be
sufficient to permit the exercise of all outstanding Warrants, and shall take
all action required to increase the authorized number of shares of Common Stock
if at any time there shall be insufficient authorized but unissued shares of
Common Stock to permit such reservation or to permit the exercise of all
outstanding Warrants. The Company shall prepare and file, and cooperate with the
holder of this Warrant so that it may prepare and file, in each case within five
(5) Business Days of a request by such holder, notification and report forms in
compliance with the HSR Act, and shall otherwise fully comply with the
requirements of the HSR Act, to the extent required in connection with the
exercise of the Warrant. The Company shall bear all of its own expenses and all
of its own out-of-pocket expenses (including reasonable attorneys' fees, charges
and expenses) and filing fees of such holder in connection with any such
preparation and filing.
<PAGE>
10
Section 6. Registered Holder. The person in whose name this Warrant
-----------------
Certificate is registered shall be deemed the owner hereof and of the Warrants
evidenced hereby for all purposes. The registered holder of this Warrant
Certificate, in its capacity as such, shall not be entitled to any rights
whatsoever as a stockholder of the Company, except as herein provided.
Section 7. Transfer of Warrants. Any transfer of the rights
--------------------
represented by this Warrant Certificate shall be effected by the surrender of
this Warrant Certificate, along with the form of assignment attached hereto,
properly completed and executed by the registered holder hereof, at the
principal executive office of the Company in the United States of America,
together with an appropriate investment letter, if deemed reasonably necessary
by counsel to the Company to assure compliance with applicable securities laws.
Thereupon, the Company shall issue in the name or names specified by the
registered holder hereof and, in the event of a partial transfer, in the name of
the registered holder hereof, a new Warrant Certificate or Certificates
evidencing the right to purchase such number of shares of Class B Common Stock
as shall be equal to the number of shares of Class B Common Stock then
purchasable hereunder.
Section 8. Denominations. The Company covenants that it will, at its
-------------
expense, promptly upon surrender of this Warrant Certificate at the principal
executive office of the Company in the United States of America, execute and
deliver to the registered holder hereof a new Warrant Certificate or
Certificates in denominations specified by such holder for an aggregate number
of Warrants equal to the number of Warrants evidenced by this Warrant
Certificate.
Section 9. Replacement of Warrants. Upon receipt of evidence
-----------------------
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant Certificate and, in the case of loss, theft or destruction, upon
delivery of an indemnity reasonably satisfactory to the Company (in the case of
an insurance company or other institutional investor, its own unsecured
indemnity agreement shall be deemed to be reasonably satisfactory), or, in the
case of mutilation, upon surrender and cancellation thereof, the Company will
issue a new Warrant Certificate of like tenor for a number of Warrants equal to
the number of Warrants evidenced by this Warrant Certificate.
Section 10. Governing Law. THIS WARRANT CERTIFICATE SHALL BE
-------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL
BE GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
Section 11. Rights Inure to Registered Holder. The Warrants
---------------------------------
evidenced by this Warrant Certificate will inure to the benefit of and be
binding upon the registered holder thereof and the Company and their respective
successors and permitted assigns. Nothing in this Warrant Certificate shall be
construed to give to any Person other than the Company and the registered holder
thereof any legal or equitable
<PAGE>
11
right, remedy or claim under this Warrant Certificate, and this Warrant
Certificate shall be for the sole and exclusive benefit of the Company and such
registered holder. Nothing in this Warrant Certificate shall be construed to
give the registered holder hereof any rights as a holder of shares of Common
Stock until such time, if any, as the Warrants evidenced by this Warrant
Certificate are exercised in accordance with the provisions hereof.
Section 12. Definitions. For the purposes of this Warrant
-----------
Certificate, the following terms shall have the meanings indicated below:
"Business Day" means any day other than a Saturday, Sunday or other
------------
day on which commercial banks in the City of New York, New York are authorized
or required by law or executive order to close.
"Capital Stock" of any Person means any and all shares, interests,
-------------
participations or other equivalents (however designated) of such Person's
capital stock (or equivalent ownership interests in a Person not a corporation)
whether now outstanding or hereafter issued, including, without limitation, all
common stock and preferred stock and any rights, warrants or options to purchase
such Person's capital stock.
"Common Stock" shall mean the Class A Common Stock, the Class B Common
------------
Stock and each other class of Capital Stock, of the Company that does not have a
preference over any other class of Capital Stock of the Company as to dividends
or upon liquidation, dissolution or winding up of the Company and, in each case,
shall include any other class of Capital Stock of the Company into which such
stock is reclassified or reconstituted.
"Conversion Price" means $26.55, subject to adjustment as set forth in
----------------
Section 8(d) of the Amendment to the Company's Articles of Incorporation, dated
October 27, 1999.
"Exercise Price" shall have the meaning given it in the first
--------------
paragraph hereof.
"Fair Market Value" shall mean the amount which a willing buyer, under
-----------------
no compulsion to buy, would pay a willing seller, under no compulsion to sell,
in an arm's-length transaction (assuming (i) that the Common Stock is valued "as
if fully distributed", (ii) that the shares of Class A Common Stock and shares
of Class B Common Stock are treated as one class of Common Stock with no
consideration being given to any distinction between them, and (iii) no
consideration is given for minority investment discounts, or discounts related
to illiquidity or restrictions on transferability).
<PAGE>
12
"HSR Act" shall mean the Hart-Scott-Rodino Anti-Trust Improvements Act
-------
of 1976, as amended and the rules and regulations of the Federal Trade
Commission promulgated thereunder.
"Issue Date" shall mean [__________],/3/ 1999.
----------
"Market Price" shall mean, per share of Common Stock, on any date
------------
specified herein: (a) if the Common Stock is not then listed or admitted to
trading on any national securities exchange but is designated as a national
market system security, the last trading price of the Common Stock on such date;
or (b) if there shall have been no trading on such date or if the Common Stock
is not so designated, the average of the reported closing bid and asked price of
the Common Stock, on such date as shown by NASDAQ and reported by any member
firm of the NYSE selected by the Company; or (c) if neither (a) nor (b) is
applicable, the Fair Market Value per share determined in good faith by the
Board of Directors of the Company which shall be deemed to be Fair Market Value
unless holders of at least 15% of Common Stock issued or issuable upon exercise
of the Warrants request that the Company obtain an opinion of a nationally
recognized investment banking firm chosen by the Company (who shall bear the
expense) and reasonably acceptable to such requesting holders of the Warrants,
in which event the Fair Market Value shall be as determined by such investment
banking firm.
"NASDAQ" shall mean the National Market System of the Nasdaq Stock
------
Market.
"Number Issuable" shall have the meaning given it in the second
---------------
paragraph hereof.
"NYSE" shall mean the New York Stock Exchange, Inc.
----
"Person" shall mean any individual, corporation, limited liability
------
company, partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Securities Purchase Agreement" shall mean that certain Securities
-----------------------------
Purchase Agreement, dated as of October 29, 1999, between the Company and The
1818 Fund III, L.P., as the same may be amended or modified from time to time in
accordance with its terms.
"Special Notice" shall mean the notice sent by a holder to the Company
--------------
indicating its preference to have any special distribution set aside for its
benefit upon exercise of the Warrant.
_____________
/3/ Insert date of issuance of Warrant.
<PAGE>
13
"Warrant Exercise Documentation" shall have the meaning given it in
------------------------------
Section 1 hereof.
Section 13. Notices. All notices, demands and other communications
-------
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, courier
services or personal delivery, (a) if to the holder of a Warrant, at such
holder's last known address appearing on the books of the Company; and (b) if to
the Company, at its principal executive office in the United States located at
the address designated for notices in the Securities Purchase Agreement, or such
other address as shall have been furnished to the party given or making such
notice, demand or other communication. All such notices and communications
shall be deemed to have been duly given: (i) when delivered by hand, if
personally delivered; (ii) when delivered to a courier if delivered by
commercial overnight courier service; and (iii) five (5) Business Days after
being deposited in the mail, postage prepaid, if mailed.
<PAGE>
14
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed as of the Issue Date.
US UNWIRED INC.
By:_____________________________
Name:
Title:
<PAGE>
15
[Form of Assignment Form]
[To be executed upon assignment of Warrants]
The undersigned hereby assigns and transfers this Warrant Certificate
to ____________________ whose Social Security Number or Tax ID Number is
_________________ and whose record address is _________________________
____________, and irrevocably appoints ________________ as agent to transfer
this security on the books of the Company. Such agent may substitute another to
act for such agent.
Signature:
_______________________________
Signature Guarantee:
________________________________
Date: ___________________________
<PAGE>
EXHIBIT 10.7
================================================================================
REGISTRATION RIGHTS AGREEMENT
between
US UNWIRED INC.
and
THE 1818 FUND III, L.P.
---------------------------------------
October 29, 1999
---------------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Background........................................................... 1
2. Registration......................................................... 1
2.1 Registration on Request......................................... 1
2.2 Incidental Registration......................................... 3
2.3 Shelf Registration.............................................. 5
2.4 Registration Procedures......................................... 5
2.5 Underwritten Offerings.......................................... 9
2.6 Preparation; Reasonable Investigation........................... 10
2.7 Limitations, Conditions and Qualifications to Obligations under
Registration Covenants.......................................... 10
2.8 Indemnification................................................. 11
3. Definitions.......................................................... 14
4. Rule 144 and Rule 144A............................................... 16
5. Amendments and Waivers............................................... 17
6. Nominees for Beneficial Owners....................................... 17
7. Notices.............................................................. 17
8. Assignment........................................................... 18
9. Calculation of Percentage Interests in Registrable Securities........ 18
10. No Inconsistent Agreements........................................... 18
11. Remedies............................................................. 18
12. Certain Distributions................................................ 18
13. Severability......................................................... 19
14. Entire Agreement..................................................... 19
15. Headings............................................................. 19
16. GOVERNING LAW........................................................ 19
17. Counterparts......................................................... 19
</TABLE>
i
<PAGE>
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of October
---------
29, 1999, between US UNWIRED INC., a Louisiana corporation (the "Company"), and
-------
THE 1818 FUND III, L.P., a Delaware limited partnership (the "Purchaser").
---------
1. Background. Pursuant to a Securities Purchase Agreement, dated
----------
as of October 29, 1999, by and among the Company and the Purchaser (the
"Securities Purchase Agreement"), the Purchaser has agreed to purchase from the
- ------------------------------
Company, and the Company has agreed to issue to the Purchaser, 500,000 shares of
the Company's Senior Redeemable Convertible Preferred Stock, Series A, no par
value (the "Preferred Stock"). Capitalized terms used herein but not otherwise
---------------
defined shall have the meanings given them in the Securities Purchase Agreement.
2. Registration
------------
2.1 Registration on Request.
-----------------------
(a) Request. At any time, or from time to time
-------
following the earlier of (i) an Initial Public Offering and (ii) the fifth
anniversary of the Closing Date, one or more holders (the "Initiating Holders")
------------------
of 20% or more of the total number of shares of Common Stock issued or issuable
upon conversion of the shares of Preferred Stock and upon exercise of the
Warrants, may, upon written request, require the Company to effect the
registration under the Securities Act of any Registrable Securities held by such
Initiating Holders. The Company promptly will give written notice of such
requested registration to all other holders of Registrable Securities who may
join in such registration, and thereupon the Company will use its best efforts
to effect, at the earliest possible date, the registration under the Securities
Act, of
(i) the Registrable Securities that the Company
has been so requested to register by such Initiating Holders, and
(ii) all other Registrable Securities that the
Company has been requested to register by the holders thereof (such holders
together with the Initiating Holders hereinafter are referred to as the
"Selling Holders") by written request given to the Company within 30 days
------- -------
after the giving of such written notice by the Company, all to the extent
requisite to permit the disposition of the Registrable Securities so to be
registered.
(b) Registration of Other Securities. Whenever the
--------------------------------
Company shall effect a registration pursuant to this Section 2.1, no securities
other than Registrable Securities shall be included among the securities covered
by such registration unless the Selling Holders of not less than 51% of all
Registrable Securities
<PAGE>
2
to be covered by such registration shall have consented in writing to the
inclusion of such other securities.
(c) Registration Statement Form. Registrations under this
---------------------------
Section 2.1 shall be on such appropriate registration form of the Commission as
shall be reasonably selected by the Company.
(d) Effective Registration Statement. A registration
--------------------------------
requested pursuant to this Section 2.1 shall not be deemed to have been effected
(i) unless a registration statement with respect thereto has become effective
and remained effective in compliance with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by such
registration statement until the earlier of (x) such time as all of such
Registrable Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement and (y) 180 days after the effective date of such
registration statement, (ii) if after it has become effective, such registration
is interfered with by any stop order, injunction or other order or requirement
of the Commission or other governmental agency or court for any reason not
attributable to the Selling Holders and has not thereafter become effective, or
(iii) if the conditions to closing specified in the underwriting agreement, if
any, entered into in connection with such registration are not satisfied or
waived, other than by reason of a failure on the part of the Selling Holders.
(e) Selection of Underwriters. The underwriter or
-------------------------
underwriters of each underwritten offering of the Registrable Securities so to
be registered shall be selected by the Selling Holders of not less than 51% of
the Registrable Securities to be covered by such registration and shall be
reasonably acceptable to the Company.
(f) Priority in Requested Registration. If the managing
----------------------------------
underwriter of any underwritten offering shall advise the Company in writing
(and the Company shall so advise each Selling Holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration exceeds the number that can be
sold in such offering within a price range acceptable to the Selling Holders of
66-2/3% of the Registrable Securities requested to be included in such
registration, the Company, except as provided in the following sentence, will
include in such registration, to the extent of the number and type that the
Company is so advised can be sold in such offering, Registrable Securities
requested to be included in such registration, pro rata among the Selling
Holders requesting such registration on the basis of the estimated gross
proceeds from the sale thereof. If the total number of Registrable Securities
requested to be included in such registration cannot be included as provided in
the preceding sentence, holders of Registrable Securities requesting
registration thereof pursuant to Section 2.1,
<PAGE>
3
representing not less than 33-1/3% of the Registrable Securities with respect to
which registration has been requested and constituting not less than 66-2/3% of
the Initiating Holders, shall have the right to withdraw the request for
registration by giving written notice to the Company within 20 days after
receipt of such notice by the Company and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which holders of Registrable Securities are entitled pursuant to Section 2.1
hereof. In connection with any such registration to which this Section 2.1(f) is
applicable, no securities other than Registrable Securities shall be covered by
such registration.
(g) Limitations on Registration on Request. Notwithstanding
--------------------------------------
anything in this Section 2.1 to the contrary, in no event will the Company be
required to (i) effect, in the aggregate, more than two registrations pursuant
to this Section 2.1 or (ii) effect more than one registration pursuant to this
Section 2.1 within the 12-month period occurring immediately subsequent to the
effectiveness (within the meaning of Section 2.1(d)) of a registration statement
filed pursuant to this Section 2.1.
(h) Listing. The Company shall list, if the Company meets
-------
the applicable listing requirements, the Registrable Securities subject to
Section 2.1(a) on the National Market System of the Nasdaq Stock Market, or
another of the national securities exchanges or automated quotation systems.
(i) Expenses. The Company will pay all Registration
--------
Expenses (except for any underwriting commissions or discounts) in connection
with any registration requested pursuant to this Section 2.1.
2.2 Incidental Registration.
-----------------------
(a) Right to Include Registrable Securities. If the
---------------------------------------
Company at any time following an Initial Public Offering proposes to register
any shares of Common Stock or any securities convertible into Common Stock under
the Securities Act by registration on any form other than Forms S-4 or S-8,
whether or not for sale for its own account, it will each such time give prompt
written notice to all registered holders of Registrable Securities of its
intention to do so and of such holders' rights under this Section 2.2. Upon the
written request of any such holder (a "Requesting Holder") made as promptly as
-----------------
practicable and in any event within 30 days after the receipt of any such
notice, the Company will use its best efforts to effect the registration under
the Securities Act of all Registrable Securities that the Company has been so
requested to register by the Requesting Holders thereof; provided, however, that
-------- -------
prior to the effective date of the registration statement filed in connection
with such registration, immediately upon notification to the Company from the
managing underwriter of the price at which such securities are to be sold, if
such price is below
<PAGE>
4
the price that any Requesting Holder shall have indicated to be acceptable to
such Requesting Holder, the Company shall so advise such Requesting Holder of
such price, and such Requesting Holder shall then have the right to withdraw its
request to have its Registrable Securities included in such registration
statement; provided, further, however, that if, at any time after giving written
-------- ------- -------
notice of its intention to register any securities and prior to the effective
date of the registration statement filed in connection with such registration,
the Company shall determine for any reason not to register or to delay
registration of such securities, the Company may, at its election, give written
notice of such determination to each Requesting Holder of Registrable Securities
and (i) in the case of a determination not to register, shall be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from any obligation of the Company to pay the Registration
Expenses in connection therewith), without prejudice, however, to the rights of
any holder or holders of Registrable Securities entitled to do so to cause such
registration to be effected as a registration under Section 2.1, and (ii) in the
case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities. Notwithstanding anything contained in this
Section 2.2(a), the Company shall not, if any Requesting Holder shall have
requested the registration of shares of Common Stock issuable upon exercise of
any Warrants in the registration, consummate the sale of the securities included
in the registration until such time as any applicable waiting period under the
Hart-Scott-Rodino Act shall have expired or early termination thereunder shall
have been granted if such Requesting Holder notifies the Company that it is
required to make a filing under the Hart-Scott-Rodino Act before it may exercise
its Warrants. No registration effected under this Section 2.2 shall relieve the
Company of its obligation to effect any registration upon request under Section
2.1.
(b) Priority in Incidental Registrations. If the managing
------------------------------------
underwriter of any underwritten offering shall inform the Company by letter of
its opinion that the number or type of securities requested to be included in
such registration would materially adversely affect such offering, and the
Company has so advised the Requesting Holders in writing, then the Company will
include in such registration, to the extent of the number and type that the
Company is so advised can be sold in (or during the time of) such offering,
first, all securities proposed by the Company to be sold for its own account,
- -----
second the Registrable Securities requested to be included in such registration
- ------
pursuant to this Section 2.2 and any other securities requested to be included
in such registration pursuant to the Shareholders Agreement, dated as of
September 24, 1999 among the Company and the shareholders who are signatories
thereto, pro rata among such Requesting Holders and such other shareholders, as
the case may be, on the basis of the estimated proceeds from the sale thereof,
and third, all other securities proposed to be registered.
-----
<PAGE>
5
(c) Expenses. The Company will pay all Registration Expenses (except
--------
for any underwriting commissions or discounts) in connection with any
registration effected pursuant to this Section 2.2.
2.3 Shelf Registration
------------------
(a) Filing and Effectiveness of Shelf Registration. Within 24 months
----------------------------------------------
of an Initial Public Offering, the Company shall file an "evergreen" shelf
registration statement solely with respect to the Registrable Securities and
pursuant to Rule 415 under the Securities Act (the "Shelf Registration") on Form
------------------
S-3 (or any successor form). The Company shall use its best efforts to have the
Shelf Registration declared effective as soon as practicable after such filing,
and shall use its best efforts to keep the Shelf Registration effective and
updated, from the date such Shelf Registration is declared effective until such
time as all of the Registrable Securities shall cease to be Registrable
Securities.
(b) Supplements and Amendments; Expenses. The Company shall
------------------------------------
supplement or amend, if necessary, the Shelf Registration, as required by the
instructions applicable to such registration form or by the Securities Act or as
reasonably requested by the holders of (or any underwriter for) not less than
51% of the Registrable Securities and the Company shall furnish to the holders
of the Registrable Securities to which the Shelf Registration relates copies of
any such supplement or amendment prior to its being used and/or filed with the
Commission. The Company shall pay all Registration Expenses in connection with
the Shelf Registration, whether or not it becomes effective, and whether all,
none or some of the Registrable Securities are sold pursuant to the Shelf
Registration. In no event shall the Shelf Registration include securities other
than Registrable Securities.
(c) Effective Shelf Registration Statement. A Shelf Registration
--------------------------------------
pursuant to this Section 2.3 shall not be deemed to have been effected (i)
unless a Shelf Registration has become effective and remained effective in
compliance with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities and until such time as all of such
Registrable Securities have been disposed of under the Shelf Registration or
(ii) if after it has become effective, the Shelf Registration is interfered with
by any stop order, injunction or other order or requirement of the Commission or
other governmental agency or court for any reason not attributable to the
holders of Registrable Securities and has not thereafter become effective.
2.4 Registration Procedures. If and whenever the Company is required to
-----------------------
effect the registration of any Registrable Securities under the Securities Act
as provided in Sections 2.1, 2.2, and 2.3, the Company will, unless provided
otherwise in this Agreement, as expeditiously as possible:
<PAGE>
6
(i) prepare and (within 90 days after the end of the period
within which requests for registration may be given to the Company or in
any event as soon thereafter as practicable) file with the Commission the
requisite registration statement to effect such registration and thereafter
use its best efforts to cause such registration statement to become
effective; provided, however, that the Company may discontinue any
-------- -------
registration of its securities that are not Registrable Securities (and,
under the circumstances specified in Section 2.2(a), its securities that
are Registrable Securities) at any time prior to the effective date of the
registration statement relating thereto;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities Act
with respect to the disposition of all Registrable Securities covered by
such registration statement until the earlier of (a) such time as all of
such Registrable Securities have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof set forth
in such registration statement and (b) 180 days after the effective date of
such registration statement, except with respect to any registration
statement filed pursuant to Rule 415 under the Securities Act (if the
Company is eligible to file a registration statement on Form S-3), in which
case the Company shall use its best efforts to keep the registration
statement effective and updated, from the date such registration statement
is declared effective until such time as all of the Registrable Securities
cease to be Registrable Securities;
(iii) furnish to each seller of Registrable Securities covered by
such registration statement, such number of conformed copies of such
registration statement and of each such amendment and supplement thereto
(in each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 under the Securities Act and each such amendment and
supplement thereto (in each case including all exhibits), in conformity
with the requirements of the Securities Act, and such other documents, as
such seller may reasonably request;
(iv) use its best efforts (x) to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such other securities or blue sky laws of such States of
the United States of America where an exemption is not available and as the
sellers of Registrable Securities covered by such registration statement
shall reasonably request, (y) to keep such registration or qualification in
effect for so long as such registration
<PAGE>
7
statement remains in effect and (z) to take any other action that may be
reasonably necessary or advisable to enable such sellers to consummate the
disposition in such jurisdictions of the securities to be sold by such
sellers, except that the Company shall not for any such purpose be required
to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this
subdivision (iv) be obligated to be so qualified or to consent to general
service of process in any such jurisdiction;
(v) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by
such other federal or state governmental agencies or authorities as may be
necessary in the opinion of counsel to the Company and counsel to the
seller or sellers of Registrable Securities to enable the seller or sellers
thereof to consummate the disposition of such Registrable Securities;
(vi) in the case of an underwritten or "best efforts" offering,
furnish at the effective date of such registration statement to each seller
of Registrable Securities, and each such seller's underwriters, if any, a
signed counterpart of:
(x) an opinion of counsel for the Company, dated the
effective date of such registration statement and, if applicable, the
date of the closing under the underwriting agreement, and
(y) a "comfort" letter signed by the independent public
accountants who have certified the Company's financial statements
included or incorporated by reference in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
accountants' comfort letter, with respect to events subsequent to the date
of such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' comfort letters delivered to the
underwriters in underwritten public offerings of securities and, in the
case of the accountants' comfort letter, such other financial matters, and,
in the case of the legal opinion, such other legal matters, in either case,
as the underwriters may reasonably request;
(vii) cause representatives of the Company to participate in any
"road show" or "road shows" reasonably requested by any underwriter of an
underwritten or "best efforts" offering of any Registrable Securities;
<PAGE>
8
(viii) notify each seller of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act, upon discovery that,
or upon the happening of any event (including those events referred to in
Section 2.7) as a result of which, the prospectus included in such
registration statement, as then in effect, includes an untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances under which they were made, and at the request of any
such seller promptly prepare and furnish to it a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be
necessary so that, as thereafter delivered to the purchasers of such
securities, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in light
of the circumstances under which they were made; provided, that the Company
--------
shall not be required, pursuant to this Section 2.4(viii), to disclose to
the sellers of Registrable Securities any non-public information that it is
not, whether pursuant to this Agreement or any other agreement, otherwise
obligated to disclose to such sellers;
(ix) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and, if required, make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12 months, but not more
than 18 months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder;
(x) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all Registrable
Securities covered by such registration statement from and after a date not
later than the effective date of such registration; and
(xi) use its best efforts to list, if the Company meets the
applicable listing requirements, all Registrable Securities covered by such
registration statement on the National Market System of the Nasdaq Stock
Market, or any national securities exchange or automated quotation system
and, in the case of an offering of shares of Preferred Stock, shall provide
for redesignation of the Registrable Securities to be offered into
denominations suitable for public trading by depositary share arrangements
or otherwise upon the request of Selling Holders of 51% of the Registrable
Securities requested to be included in such registration.
<PAGE>
9
The Company may require each seller of Registrable Securities as to
which any registration is being effected to promptly furnish the Company such
information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing; provided, however,
-------- -------
that any such information or questionnaires shall be given or made by a seller
of Registrable Securities without representation or warranty of any kind
whatsoever except representations with respect to the identity of such seller,
such seller's Registrable Securities and such seller's intended method of
distribution or any other representations required by applicable law.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in subdivision (viii) of this
Section 2.4, such holder will forthwith discontinue such holder's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until such holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subdivision (viii) of this
Section 2.4 and Section 2.7 and, if so directed by the Company, will deliver to
the Company (at the Company's expense) all copies, other than permanent file
copies, then in such holder's possession of the prospectus relating to such
Registrable Securities current at the time of receipt of such notice.
2.5 Underwritten Offerings.
----------------------
(a) Requested Underwritten Offerings. If requested by the
--------------------------------
underwriters for any underwritten offering by holders of Registrable Securities
pursuant to a registration requested under Section 2.1 or 2.3, the Company will
use its best efforts to enter into an underwriting agreement with such
underwriters for such offering, such agreement to be reasonably satisfactory in
substance and form to the Company, each such holder and the underwriters and to
contain such representations and warranties by the Company and such other terms
as are generally prevailing in agreements of that type, including, without
limitation, indemnities to the effect and to the extent provided in Section 2.8.
The holders of the Registrable Securities proposed to be sold by such
underwriters will reasonably cooperate with the Company in the negotiation of
the underwriting agreement. Such holders of Registrable Securities to be sold by
such underwriters shall be parties to such underwriting agreement and may, at
their option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such holders of
Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. No
holder of Registrable Securities shall be required to make any representations
or warranties to, or agreements with, the Company other than representations,
warranties or agreements regarding the
<PAGE>
10
identity of such holder, such holder's Registrable Securities and such holder's
intended method of distribution or any other representations required by
applicable law.
(b) Incidental Underwritten Offerings. If the Company proposes to
---------------------------------
register any of its securities under the Securities Act as contemplated by
Section 2.2 and such securities are to be distributed by or through one or more
underwriters, the Company will, if requested by any Requesting Holder of
Registrable Securities, use its best efforts to arrange for such underwriters to
include all the Registrable Securities to be offered and sold by such Requesting
Holder among the securities of the Company to be distributed by such
underwriters, subject to the provisions of Section 2.2(b). The holders of
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between the Company and such underwriters and may,
at their option, require that any or all of the representations and warranties
by, and the other agreements on the part of, the Company to and for the benefit
of such underwriters shall also be made to and for the benefit of such holders
of Registrable Securities and that any or all of the conditions precedent to the
obligations of such underwriters under such underwriting agreement be conditions
precedent to the obligations of such holders of Registrable Securities. No
holder of Registrable Securities shall be required to make any representations
or warranties to, or agreements with, the Company or the underwriters other than
representations, warranties or agreements regarding the identity of such holder,
such holder's Registrable Securities and such holder's intended method of
distribution or any other representations required by applicable law.
(c) Underwriting Discounts and Commission. The holders of Registrable
-------------------------------------
Securities sold in any offering pursuant to Section 2.5(a) or Section 2.5(b)
shall pay all underwriting discounts and commissions of the underwriter or
underwriters with respect to the Registrable Securities sold thereby.
2.6 Preparation; Reasonable Investigation. In connection with the
-------------------------------------
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the holders of Registrable
Securities registered under such registration statement, their underwriters, if
any, and their respective counsel the opportunity to participate in the
preparation of such registration statement, each prospectus included therein or
filed with the Commission, and each amendment thereof or supplement thereto, and
will give each of them such reasonable access to its books and records and such
opportunities to discuss the business of the Company with its officers and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of such holders' and such underwriters'
respective counsel, to conduct a reasonable investigation within the meaning of
the Securities Act.
<PAGE>
11
2.7 Limitations, Conditions and Qualifications to Obligations under
---------------------------------------------------------------
Registration Covenants. Anything in this Agreement to the contrary
- ----------------------
notwithstanding, it is understood and agreed that the Company shall not be
required to file a registration statement, amendment or post-effective amendment
thereto or prospectus supplement or to supplement or amend any registration
statement if the Company is then involved in discussions concerning, or is
otherwise engaged in, any material financing, acquisition or investment
transaction, if the board of directors of the Company determines in good faith
that the making of such a filing, supplement or amendment at such time would
interfere with such transaction so long as the Company shall, as soon as
practicable thereafter make such filing, supplement, amendments or post-
effective amendment; provided, however, that the Company shall not postpone such
-------- -------
filings, supplements, amendments or post-effective amendments for more than an
aggregate of 120 days in any 12-month period. The Company shall promptly give
the holders of Registrable Securities written notice of such postponement,
containing a general statement of the reasons for such postponement and an
approximation of the anticipated delay. Upon receipt by a holder of Registrable
Securities of notice of an event of the kind described in this Section 2.7, such
holder shall forthwith discontinue such holder's disposition of Registrable
Securities until such holder's receipt of notice from the Company that such
disposition may continue and of any supplemented or amended prospectus indicated
in such notice. If the Company postpones the filing of a registration
statement, holders of Registrable Securities requesting registration thereof
pursuant to Section 2.1, representing not less than 33-1/3% of the Registrable
Securities with respect to which registration has been requested and
constituting not less than 66-2/3% of the Initiating Holders, shall have the
right to withdraw the request for registration by giving written notice to the
Company within 30 days after receipt of notice of postponement and, in the event
of such withdrawal, such request shall not be counted for purposes of the
requests for registration to which holders of Registrable Securities are
entitled pursuant to Section 2.1.
2.8 Indemnification.
---------------
(a) Indemnification by the Company. The Company will, and hereby
------------------------------
does, indemnify and hold harmless, in the case of any registration statement
filed pursuant to Section 2.1, 2.2 or 2.3, each seller of any Registrable
Securities covered by such registration statement and each other Person who
participates as an underwriter in the offering or sale of such securities and
each other Person, if any, who controls such seller or any such underwriter
within the meaning of the Securities Act, and their respective directors,
officers, partners, members, agents, representatives and affiliates against any
losses, claims, damages or liabilities, joint or several, to which such seller
or underwriter or any such director, officer, partner, member, agent,
representative, affiliate or controlling person may become subject under the
Securities Act or otherwise, including, without limitation, the fees and
expenses of legal counsel (including those incurred in connection with any claim
for
<PAGE>
12
indemnity hereunder), insofar as such losses, claims, damages or liabilities
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company will reimburse such seller or underwriter and each such
director, officer, partner, member, agent, representative, affiliate and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided, however, that the Company shall not
-------- -------
be liable in any such case to the extent that any such loss, claim, damage,
liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in such registration statement, any such preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such seller or underwriter, as the case may be,
specifically stating that it is for use in the preparation thereof; provided,
--------
further, however, that the Company shall not be liable to any Person who
- ------- -------
participates as an underwriter in the offering or sale of Registrable Securities
or any other Person, if any, who controls such underwriter within the meaning of
the Securities Act, in any such case to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of such Person's failure to send or give a copy of the final prospectus, as
the same may be then supplemented or amended, to the Person asserting an untrue
statement or alleged untrue statement or omission or alleged omission at or
prior to the written confirmation of the sale of Registrable Securities to such
Person if such statement or omission was corrected in such final prospectus.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or any such director, officer,
partner, member, agent, representative, affiliate or controlling person and
shall survive the transfer of such securities by such seller.
(b) Indemnification by the Sellers. As a condition to including any
------------------------------
Registrable Securities in any registration statement, the Company shall have
received an undertaking reasonably satisfactory to it from the prospective
seller of such Registrable Securities, to indemnify and hold harmless (in the
same manner and to the same extent as set forth in Section 2.8(a)) the Company,
and each director of the Company, each officer of the Company and each other
Person, if any, who participates as an underwriter in the offering or sale of
such securities and each other Person who controls the Company or any such
underwriter within the meaning of the Securities Act, with respect to any untrue
statement or alleged untrue statement of any material
<PAGE>
13
fact contained in any such registration statement, any preliminary prospectus,
final prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or with respect to any omission or alleged omission to state
a material fact therein required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which they
were made, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by such seller specifically stating that it is for use
in the preparation of such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement; provided, however, that
-------- -------
the liability of such indemnifying party under this Section 2.8(b) shall be
limited to the amount of the net proceeds received by such indemnifying party in
the offering giving rise to such liability. Such indemnity shall remain in full
force and effect, regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling person and shall survive
the transfer of such securities by such seller.
(c) Notices of Claims; Counsel. Promptly after receipt by an
--------------------------
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 2.8(a) or (b), such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party, give written notice to the latter of the commencement of such action;
provided, however, that the failure of any indemnified party to give notice as
- -------- -------
provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 2.8, except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice.
In case any such action shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it may wish, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that any indemnified
-------- -------
party may, at its own expense, retain separate counsel to participate in such
defense. Notwithstanding the foregoing, in any action or proceeding in which
both the Company and an indemnified party is, or is reasonably likely to become,
a party, such indemnified party shall have the right to employ separate counsel
at the Company's expense and to control its own defense of such action or
proceeding if, in the reasonable opinion of counsel to such indemnified party,
(a) there are or may be legal defenses available to such indemnified party or to
other indemnified parties that are different from or additional to those
available to the Company or (b) any conflict or potential conflict exists
between the Company and such indemnified party that would make such separate
representation advisable; provided, further, however, that in no event shall the
-------- ------- -------
Company be required to pay fees and expenses under this Section 2.8 for more
than one firm of attorneys in any jurisdiction in any one legal action or group
of related legal actions. The indemnifying party shall not be liable for any
settlement of any action or proceeding effected without its written consent,
which consent shall not
<PAGE>
14
be unreasonably withheld. The indemnifying party shall not, without the consent
of the indemnified party, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation or which requires action other
than the payment of money by the indemnifying party.
(d) Contribution. If the indemnification provided for in this
------------
Section 2.8 shall for any reason be held by a court to be unavailable to an
indemnified party under Section 2.8(a) or (b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, then, in lieu of the
amount paid or payable under Section 2.8(a) or (b), the indemnified party and
the indemnifying party under Section 2.8(a) or (b) shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same,
including those incurred in connection with any claim for indemnity hereunder),
(i) in such proportion as is appropriate to reflect the relative fault of the
Company and the prospective sellers of Registrable Securities covered by the
registration statement which resulted in such loss, claim, damage or liability,
or action or proceeding in respect thereof, with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action or
proceeding in respect thereof, as well as any other relevant equitable
considerations or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and such prospective
sellers from the offering of the securities covered by such registration
statement; provided, however, that for purposes of this clause (ii), the
-------- -------
relative benefits received by the prospective sellers shall be deemed not to
exceed the amount of proceeds received by such prospective sellers. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation. Such prospective sellers'
obligations to contribute as provided in this Section 2.8(d) are several in
proportion to the relative value of their respective Registrable Securities
covered by such registration statement and not joint. In addition, no Person
shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld.
(e) Other Indemnification. Indemnification and contribution similar
---------------------
to that specified in the preceding subdivisions of this Section 2.8 (with
appropriate modifications) shall be given by the Company and each seller of
Registrable Securities with respect to any required registration or other
qualification of securities under any federal or state law or regulation of any
governmental authority other than the Securities Act.
<PAGE>
15
(f) Indemnification Payments. The indemnification and contribution
------------------------
required by this Section 2.8 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
3. Definitions. As used herein, unless the context otherwise requires,
-----------
the following terms have the following respective meanings:
"Commission" means the Securities and Exchange Commission or any other
----------
similar agency then having jurisdiction to enforce the Securities Act.
"Common Stock" shall mean the Class A Common Stock, the Class B Common
------------
Stock and each other class of capital stock of the Company that does not have a
preference over any other class of capital stock of the Company as to dividends
or upon liquidation, dissolution or winding up of the Company and, in each case,
shall include any other class of capital stock of the Company into which such
stock is reclassified or reconstituted.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
or any other similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time. Reference
to a particular section of the Securities Exchange Act of 1934, as amended,
shall include a reference to the comparable section, if any, of any such similar
federal statute.
"Hart-Scott-Rodino Act" means the Hart-Scott-Rodino Antitrust
---------------------
Improvements Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"Initial Public Offering" means the date on which the Company (a)
-----------------------
becomes a "reporting company" as defined under Section 12(g) of the Exchange
Act, with all of its filings with the Commission being current, and (b) has
completed one or more underwritten offerings of Common Stock registered under
the Securities Act with at least $50 million, in the aggregate, of gross
proceeds.
"Person" means any individual, firm, corporation, partnership, limited
------
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind, and shall include any successor (by merger
or otherwise) of any such entity.
"Registrable Securities" means any shares of Common Stock issued or
----------------------
issuable either upon conversion of the shares of Preferred Stock or upon
exercise of the Warrants, any shares of Preferred Stock, any Related Registrable
Securities and any
<PAGE>
16
shares of Common Stock owned by the Purchaser. As to any particular Registrable
Securities, once issued, such securities shall cease to be Registrable
Securities when (a) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, (b) they shall have been sold as permitted by Rule 144 (or any
successor provision) under the Securities Act and the purchaser thereof does not
receive "restricted securities" as defined in Rule 144, (c) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not, in the opinion of counsel for
the holders, require registration of them under the Securities Act or (d) they
shall have ceased to be outstanding. All references to percentages of
Registrable Securities shall be calculated pursuant to Section 9.
"Registration Expenses" means all expenses incident to the Company's
---------------------
performance of or compliance with Section 2, including, without limitation, all
registration and filing fees, all fees of the New York Stock Exchange, Inc.,
other national securities exchanges or automated quotation systems or the
National Association of Securities Dealers, Inc., all fees and expenses of
complying with securities or blue sky laws, all word processing, duplicating and
printing expenses, messenger and delivery expenses, the fees and disbursements
of counsel for the Company and of its independent public accountants, including
the expenses of "cold comfort" letters required by or incident to such
performance and compliance, any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities (excluding any underwriting
discounts or commissions with respect to the Registrable Securities) and the
reasonable fees and expenses of one counsel to the Selling Holders (selected by
Selling Holders representing not less than 51% of the Registrable Securities
covered by such registration). Notwithstanding the foregoing, in the event the
Company shall determine, in accordance with Section 2.2(a) or Section 2.7, not
to register any securities with respect to which it had given written notice of
its intention to so register to holders of Registrable Securities, all of the
costs of the type (and subject to any limitation to the extent) set forth in
this definition and incurred by the Selling Holders or the Requesting Holders,
as the case may be, in connection with such registration on or prior to the date
the Company notifies the Selling Holders or the Requesting Holders, as the case
may be, of such determination shall be deemed Registration Expenses.
"Related Registrable Securities" means with respect to the shares of
------------------------------
Preferred Stock and the shares of Common Stock issued or issuable either upon
conversion of the shares of Preferred Stock or upon exercise of the Warrants,
any securities of the Company issued or issuable with respect to such shares of
Common Stock or Preferred Stock by way of a dividend or stock split or in
connection with a
<PAGE>
17
combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise.
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act of 1933, as amended, shall include a
reference to the comparable section, if any, of any such similar federal
statute.
"Warrants" means the warrants exercisable into shares of Common Stock,
--------
at an exercise price of $0.01 per warrant, in substantially the form attached as
Exhibit C to the Securities Purchase Agreement.
4. Rule 144 and Rule 144A. The Company shall take all actions
----------------------
reasonably necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the limitation
of the provisions of (a) Rule 144 under the Securities Act, as such Rule may be
amended from time to time, (b) Rule 144A under the Securities Act, as such Rule
may be amended from time to time, or (c) any similar rules or regulations
hereafter adopted by the Commission. Upon the request of any holder of
Registrable Securities, the Company will deliver to such holder a written
statement as to whether it has complied with such requirements.
5. Amendments and Waivers. This Agreement may be amended with the
----------------------
consent of the Company and the Company may take any action herein prohibited, or
omit to perform any act herein required to be performed by it, only if the
Company shall have obtained the written consent to such amendment, action or
omission to act, of the holder or holders of not less than 51% of the
Registrable Securities affected by such amendment, action or omission to act.
Each holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any consent authorized by this Section 5, whether or not such
Registrable Securities shall have been marked to indicate such consent.
6. Nominees for Beneficial Owners. In the event that any
------------------------------
Registrable Securities are held by a nominee for the beneficial owner thereof,
the beneficial owner thereof may, at its election in writing delivered to the
Company, be treated as the holder of such Registrable Securities for purposes of
any request or other action by any holder or holders of Registrable Securities
pursuant to this Agreement or any determination of any number or percentage of
shares of Registrable Securities held by any holder or holders of Registrable
Securities contemplated by this Agreement. If the beneficial owner of any
Registrable Securities so elects, the Company may require assurances reasonably
satisfactory to it of such owner's beneficial ownership of such Registrable
Securities.
<PAGE>
18
7. Notices. All notices, demands and other communications provided
-------
for or permitted hereunder shall be made in writing and shall be by registered
or certified first-class mail, return receipt requested, telecopier, courier
service or personal delivery:
(i) if to the Purchaser, addressed to it in the manner set
forth in the Securities Purchase Agreement, or at such other address as it shall
have furnished to the Company in writing in the manner set forth herein;
(ii) if to any other holder of Registrable Securities, at
the address that such holder shall have furnished to the Company in writing in
the manner set forth herein, or, until any such other holder so furnishes to the
Company an address, then to and at the address of the last holder of such
Registrable Securities who has furnished an address to the Company; or
(iii) if to the Company, addressed to it in the manner set
forth in the Securities Purchase Agreement, or at such other address as the
Company shall have furnished to each holder of Registrable Securities at the
time outstanding in the manner set forth herein.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered to a
courier, if delivered by overnight courier service; five Business Days after
being deposited in the mail, postage prepaid, if mailed; and when receipt is
acknowledged, if telecopied.
8. Assignment. This Agreement shall be binding upon and inure to
----------
the benefit of and be enforceable by the parties hereto and, with respect to the
Company, its respective successors and permitted assigns and, with respect to
the Purchaser, any holder of any Registrable Securities, subject to the
provisions respecting the minimum numbers of percentages of shares of
Registrable Securities required in order to be entitled to certain rights, or
take certain actions, contained herein. Except by operation of law, this
Agreement may not be assigned by the Company without the prior written consent
of the holders of a majority in interest of the Registrable Securities
outstanding at the time such consent is requested.
9. Calculation of Percentage Interests in Registrable Securities.
-------------------------------------------------------------
For purposes of this Agreement, all references to a percentage of the
Registrable Securities shall be calculated based upon the number of shares of
Registrable Securities outstanding at the time such calculation is made,
assuming the conversion of all shares of Preferred Stock and the exercise of all
Warrants into shares of Common Stock.
10. No Inconsistent Agreements. The Company will not hereafter enter
--------------------------
into any agreement with respect to its securities that is inconsistent with the
rights
<PAGE>
19
granted to the holders of Registrable Securities in this Agreement. Without
limiting the generality of the foregoing, the Company will not hereafter enter
into any agreement with respect to its securities that grants, or modifies any
existing agreement with respect to its securities to grant, to the holder of its
securities in connection with an incidental registration of such securities
higher priority to the rights granted to the Purchaser under Section 2.2(b).
11. Remedies. Each holder of Registrable Securities, in addition to
--------
being entitled to exercise all rights granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company agrees that monetary damages would not be adequate
compensation for any loss incurred by reason of a breach by it of the provisions
of this Agreement and hereby agrees to waive the defense in any action for
specific performance that a remedy at law would be adequate.
12. Certain Distributions. The Company shall not at any time make a
---------------------
distribution on or with respect to the shares of Common Stock or the shares of
Preferred Stock (including any such distribution made in connection with a
consolidation or merger in which the Company is the resulting or surviving
corporation and such Registrable Securities are not changed or exchanged) of
securities of another issuer if holders of Registrable Securities are entitled
to receive such securities in such distribution as holders of Registrable
Securities and any of the securities so distributed are registered under the
Securities Act, unless the securities to be distributed to the holders of
Registrable Securities are also registered under the Securities Act.
13. Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any way
impaired thereby, it being intended that all of the rights and privileges of the
Purchaser shall be enforceable to the fullest extent permitted by law.
14. Entire Agreement. This Agreement, together with the Securities
----------------
Purchase Agreement and the Shareholders Agreement and including the exhibits and
schedules thereto, is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the agreement
and understanding of the parties hereto in respect of the subject matter
contained herein and therein. There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein and therein.
This Agreement and the Securities Purchase Agreement (including the exhibits and
schedules thereto) supersede all prior agreements and understandings between the
parties with respect to such subject matter.
<PAGE>
20
15. Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE.
17. Counterparts. This Agreement may be executed in multiple
------------
counterparts, each of which when so executed shall be deemed an original and all
of which taken together shall constitute one and the same instrument.
<PAGE>
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective representatives hereunto duly
authorized as of the date first above written.
US UNWIRED INC.
By: /s/ Robert Piper
---------------------------------
Name: Robert Piper
Title: President
THE 1818 FUND III, L.P.
By: Brown Brothers Harriman & Co.,
its General Partner
By: /s/ Lawrence C. Tucker
---------------------------------
Name: Lawrence C. Tucker
Title:
<PAGE>
EXHIBIT 10.8
EXECUTION COPY
================================================================================
SHAREHOLDERS AGREEMENT
among
US UNWIRED INC.,
THE 1818 FUND III, L.P.
and
THE SHAREHOLDERS NAMED HEREIN
_______________________________________
Dated as of: October 29, 1999
_______________________________________
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
1. Definitions.......................................................... 1
2. Tag Along Rights..................................................... 3
2.1 Sales or Transfers by Principal Shareholders.................... 3
2.2 Offering Notice................................................. 3
2.3 Tag Along Rights; Exercise...................................... 4
2.4 Transfers to Family Members..................................... 4
3. Corporate Governance of the Company.................................. 5
3.1 Election of Directors; Number and Composition................... 5
3.2 Removal of Purchaser Company Directors.......................... 5
3.3 Replacement of Directors........................................ 5
3.4 Company Action.................................................. 6
4. Miscellaneous........................................................ 6
4.1 Notices......................................................... 6
4.2 FCC Requirements................................................ 7
4.3 Amendment and Waiver............................................ 8
4.4 Successors and Assigns.......................................... 8
4.5 Counterparts.................................................... 8
4.6 Specific Performance............................................ 8
4.7 Headings........................................................ 9
4.8 Governing Law................................................... 9
4.9 Jurisdiction.................................................... 9
4.10 Severability.................................................... 9
4.11 Rules of Construction........................................... 9
4.12 Entire Agreement................................................ 10
4.13 Further Assurances.............................................. 10
</TABLE>
i
<PAGE>
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT, dated as of October 29, 1999 (this
"Agreement"), by and among US Unwired Inc., a Louisiana corporation (the
---------
"Company"), The 1818 Fund III, L.P., a Delaware limited partnership (the
- --------
"Purchaser"), and the shareholders of the Company listed on the signature pages
- ----------
hereto.
WHEREAS, pursuant to a Securities Purchase Agreement, dated as of
October __, 1999 (the "Securities Purchase Agreement"), by and among the Company
-----------------------------
and the Purchaser, the Company has agreed to issue and sell to the Purchaser
500,000 shares of the Company's Senior Redeemable Convertible Preferred Stock,
Series A, no par value (the "Preferred Stock"); and
---------------
WHEREAS, the parties hereto wish to provide for, among other things,
tag along rights, corporate governance rights and certain other rights and
obligations with respect to the Company and the other parties hereto.
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein, the adequacy of which are hereby acknowledged, the parties
hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms
-----------
shall have the meanings set forth below:
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
---------
of the General Rules and Regulations under the Exchange Act.
"Board" has the meaning set forth in Section 3.1.
-----
"Business Day" means any day other than a Saturday, Sunday or other
------------
legal holiday on which commercial banks in the City of New York, New York are
authorized or required by law or executive order to close.
"Class A Common Stock" means the Class A common stock, par value $.01
--------------------
per share, of the Company.
"Class B Common Stock" means the Class B common stock, par value $.01
--------------------
per share, of the Company.
"Company" has the meaning set forth in the recitals to this Agreement.
-------
<PAGE>
2
"Common Stock" means the Class A Common Stock, the Class B Common
------------
Stock or any other capital stock of the Company into which such stock is
reclassified or reconstituted and any other common stock of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated thereunder.
"Family Members" has the meaning set forth in Section 2.4.
--------------
"FCC" means the Federal Communications Commission.
---
"Offered Securities" has the meaning set forth in Section 2.2.
------------------
"Offering Notice" has the meaning set forth in Section 2.2.
---------------
"Person" means any individual, corporation, partnership, limited
------
liability company, firm, joint venture, association, joint stock company, trust,
unincorporated organization, governmental authority or other entity.
"Preferred Stock" has the meaning set forth in the recitals to this
---------------
Agreement.
"Principal Shareholders" means any one or more of William L. Henning
----------------------
Sr., William L. Henning Jr., John A. Henning and Thomas G. Henning and their
respective heirs and any trust, corporation, partnership or limited liability
company, all of the beneficial ownership interests in which shall be held by any
of the foregoing.
"Purchaser" has the meaning set forth in the recitals to this
---------
Agreement.
"Purchasing Company Director(s)" has the meaning set forth in Section
------------------------------
3.1.
"Restricted Period" has the meaning set forth in Section 4.2(b).
-----------------
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Securities Purchase Agreement" has the meaning set forth in the
-----------------------------
recitals to this Agreement.
"Selling Stockholder" has the meaning set forth in Section 2.1.
-------------------
<PAGE>
3
"Shareholders" means the Principal Shareholders and the Purchaser and
------------
any transferee thereof who has agreed to be bound by the terms and conditions of
this Agreement.
"Shareholders Meeting" has the meaning set forth in Section 3.1.
--------------------
"Tag-Along Rightholder" means the Purchaser.
---------------------
"Third Party Purchaser" has the meaning set forth in Section 2.1.
---------------------
"Written Consent" has the meaning set forth in Section 3.1.
---------------
2. Tag Along Rights.
----------------
2.1 Sales or Transfers by Principal Shareholders. If any of the
--------------------------------------------
Principal Shareholders (a "Selling Shareholder"), at any time or from time to
-------------------
time, proposes or agrees to sell or transfer all or any portion of its or his
shares of Common Stock to any Person (a "Third Party Purchaser"), the Tag-Along
---------------------
Rightholder shall have the right to sell to such Third Party Purchaser, upon the
terms set forth in the Offering Notice, that number of shares of Common Stock
held by, or issuable upon conversion of shares of Preferred Stock to, the Tag-
Along Rightholder equal to that percentage of the Offered Securities determined
by dividing (i) the total number of shares of Common Stock held by, or issuable
upon conversion of shares of Preferred Stock to, the Tag-Along Rightholder by
(ii) the total number of shares of Common Stock held by such Selling Shareholder
plus the total number of shares of Common Stock held by, or issuable upon
conversion of shares of Preferred Stock to, the Tag-Along Rightholder; provided,
--------
however, that the provisions of this Section 2.1 shall not apply to a proposed
- -------
sale or transfer of any shares of Common Stock by a Selling Shareholder unless
(x) the sum of such shares plus all other shares of Common Stock sold or
transferred by any of the Principal Shareholders during the period from the date
hereof to the date of such proposed sale or transfer is equal to or greater than
twenty percent (20%) of the total number of shares of Common Stock held by the
Principal Shareholders (as a group) on the date hereof, and (y) the Purchaser
and its Affiliates, in the aggregate, hold at least five percent (5%) of the
shares of Common Stock issued or issuable upon conversion of the Preferred Stock
(whether or not the shares of Preferred Stock have been converted) as of the
date of such proposed sale or transfer. The Selling Shareholder and the Tag-
Along Rightholder shall effect the sale of the Offered Securities and the Tag-
Along Rightholder shall have the right to include in the Offered Securities that
number of shares of Common Stock determined in accordance with the previous
sentence with respect to the Tag-Along Rightholder, and the number of Offered
Securities to be sold to the Third Party Purchaser by the Selling Shareholder
shall be reduced accordingly. This Article shall not apply to sales of Common
Stock made (i) pursuant to Rule 144
<PAGE>
4
promulgated under the Securities Act, or (ii) pursuant to an effective
registration statement under the Securities Act.
2.2 Offering Notice. At least twenty (20) days prior to the
---------------
consummation of a proposed sale or transfer by a Selling Shareholder which gives
rise to the rights of the Tag-Along Rightholder as set forth in Section 2.1,
each Selling Shareholder shall give notice (an "Offering Notice") to the Tag-
---------------
Along Rightholder of each such proposed sale. The Offering Notice shall state
(a) the name of such Selling Shareholder, (b) the number of shares of Common
Stock proposed to be sold or transferred (the "Offered Securities"), (c) the
------------------
name and address of the proposed Third Party Purchaser, (d) the proposed amount
and form of consideration and terms and conditions of payment offered by the
Third Party Purchaser, (e) the percent of shares of Common Stock that the Tag-
Along Rightholder may sell to such Third Party Purchaser (determined in
accordance with Section 2.1), and (f) a representation that the Third Party
Purchaser has been informed of the "tag-along" rights provided for in this
Article 2 and has agreed to purchase the shares of Common Stock in accordance
with the terms hereof. If requested by the Tag-Along Rightholder, such Selling
Shareholder shall, promptly upon receipt of such request, provide to the Tag-
Along Rightholder copies of the agreements or documents pursuant to which such
proposed sale is being effected.
2.3 Tag Along Rights; Exercise. In order to exercise its right
--------------------------
to sell shares of Common Stock to a Third Party Purchaser pursuant to this
Article 2, the Tag-Along Rightholder must agree to make substantially the same
representations and warranties with respect to the ownership of the securities
to be sold by it as the Selling Shareholder agrees to make in connection with
the proposed sale by it of Offered Securities to a Third Party Purchaser. The
"tag-along" rights provided by this Article 2 must be exercised by the Tag-Along
Rightholder within ten (10) days following receipt of the Offering Notice, by
delivery of a written notice to such Selling Shareholder indicating the Tag-
Along Rightholder's wish to exercise its "tag-along" rights and specifying the
number of shares of Common Stock (up to the maximum number of shares of Common
Stock that the Tag-Along Rightholder has "tag-along" rights to sell to the Third
Party Purchaser pursuant to Section 2.1) it wishes to sell. The failure of the
Tag-Along Rightholder to respond within such 10-day period shall be deemed to be
a waiver of the Tag-Along Rightholder's rights under this Article 2 with respect
to such Offering Notice. If the Tag-Along Rightholder has properly exercised its
rights under this Article 2 and a Third Party Purchaser fails to purchase shares
of Common Stock from the Tag-Along Rightholder, then none of the Selling
Shareholders shall be permitted to consummate the proposed sale or transfer of
the Offered Securities, and any such attempted sale or transfer shall be null
and void and the Company shall not register any such sale or transfer.
<PAGE>
5
2.4 Transfers to Family Members. Notwithstanding anything to
---------------------------
the contrary contained in this Agreement, at any time, each of the Principal
Shareholders may transfer all or a portion of its or his shares of Common Stock
to or among (i) the other Principal Shareholders; (ii) a member of the Principal
Shareholder's immediate family, which shall include his spouse, siblings,
children, grandchildren, nieces or nephews ("Family Members"); or (iii) a trust,
--------------
corporation, partnership or limited liability company, all of the beneficial
interests in which shall be held by the Principal Shareholder or one or more
Family Members of the Principal Shareholder or which would otherwise be an
Affiliate of the Principal Shareholder; provided, however, that during the
-------- -------
period that any trust, corporation, partnership or limited liability company
holds any right, title or interest in any shares of Common Stock, no Person
other than the Principal Shareholder or one or more Family Members of the
Principal Shareholder may be or become beneficiaries, Shareholders, limited or
general partners or members of such trust, corporation, partnership or limited
liability company.
3. Corporate Governance of the Company.
-----------------------------------
3.1 Election of Directors; Number and Composition. Each
---------------------------------------------
Shareholder shall vote its or his shares of Common Stock or Preferred Stock at
any regular or special meeting of the Company (a "Shareholders Meeting"), or in
--------------------
any written consent executed in lieu of such a meeting of shareholders of the
Company (a "Written Consent"), and shall take all other reasonable actions
---------------
necessary, to ensure that the number of directors constituting the entire Board
of Directors of the Company (the "Board") shall be not greater than 7. So long
-----
as the Purchaser and its Affiliates hold, in the aggregate, at least 50% of the
shares of Common Stock issued or issuable upon conversion of the Preferred Stock
(whether or not the shares of Preferred Stock have been converted), each
Shareholder shall vote its shares at any Shareholders Meeting called for the
purpose of filling positions on the Board or in any Written Consent executed for
such purpose, and with respect to such shares take all other reasonable actions
necessary, to ensure the election to the Board of two (2) individuals designated
by the Purchaser (each a "Purchaser Company Director" and together, the
--------------------------
"Purchaser Company Directors"). So long as the Purchaser and its Affiliates
- ----------------------------
hold, in the aggregate, at least 25% of the shares of Common Stock issued or
issuable upon conversion of the Preferred Stock (whether or not the shares of
Preferred Stock have been converted), each Shareholder shall vote its shares at
any Shareholders Meeting called for the purpose of filing positions on the Board
or in any Written Consent executed for such purpose, and shall take all other
action reasonably necessary, to ensure the election to the Board of one (1)
Purchaser Company Director. One Purchaser Company Director shall have the right
to serve in any committee formed by the Board.
3.2 Removal of Purchaser Company Directors. If, at any
--------------------------------------
time, the Purchaser notifies the other Shareholders of its wish to remove for
any reason
<PAGE>
6
(or no reason) any Purchaser Company Director, then each Shareholder shall vote
all of its or his shares of Common Stock or Preferred Stock, and take all other
reasonable actions necessary, to ensure the removal of such Purchaser Company
Director.
3.3 Replacement of Directors. If, at any time, a vacancy is
------------------------
created on the Board by reason of the incapacity, death, removal or resignation
of any Purchaser Company Director, then the Purchaser shall designate an
individual who shall be elected to fill such vacancy until the next Shareholders
Meeting. Upon receipt of notice of the designation of a nominee, each
Shareholder shall, as soon as practicable after the date of such notice, take
action, including the voting of its or his shares of Common Stock or Preferred
Stock, to elect the director designated by the Purchaser to fill such vacancy.
3.4 Company Actions. The Company shall cause any Purchaser
---------------
Company Director to be included in the slate of nominees recommended by the
Board to the Company's shareholders for election as directors, and the Company
shall use its best efforts to cause the election of such nominee, including
voting all shares for which the Company holds proxies (unless otherwise directed
by the shareholder submitting such proxy) or is otherwise entitled to vote, in
favor of the election of such person. If, at any time, a vacancy is created on
the Board by reason of the incapacity, death, removal or resignation of any
Purchaser Company Director, the Company shall take all action necessary to cause
the election of the individual designated by the Purchaser to fill such vacancy.
4. Miscellaneous.
-------------
4.1 Notices. All notices, demands and other communications
-------
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier services or personal delivery to the following addresses, or to such
other addresses as shall be designated from time to time by a party in
accordance with this Section 4.1:
(a) if to the Purchaser:
The 1818 Fund III, L.P.
c/o Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Attention: Lawrence C. Tucker
Telecopier No.: (212) 493-8429
<PAGE>
7
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Marilyn Sobel, Esq.
Telecopier No.: (212) 757-3990
(b) if to the Company:
US Unwired Inc.
Hibernia Tower
One Lakeshore Drive
Suite 1900
Lake Chambers, LA 70629
Telecopier No.: (318) 497-3197
Attention: William Henning, Jr.
with a copy to:
Thomas G. Henning
Post Office Box 3709
Lake Charles, Louisiana 70602
Telecopier No.: (318) 497-3479
(c) If to the Shareholders, at the address of each such
Shareholder on the books and records of the Company.
All such notices and communications shall be deemed to have been duly
given: (i) when delivered by hand, if personally delivered; (ii) the next
Business Day, if delivered by commercial overnight courier service; (iii) five
Business Days after being deposited in the mail, postage prepaid, if mailed; and
(iv) when receipt is acknowledged (or if not a Business Day, then the next
Business Day), if telecopied.
4.2 FCC Requirements.
----------------
(a) The Company, through its subsidiaries, holds certain of
its FCC licenses pursuant to the FCC's rules, which provide certain benefits to
a licensee that qualifies as a "Designated Entity". In addition, the Company may
wish to bid in future FCC auctions for a spectrum made available to Designated
Entities or otherwise acquire licenses or rights to manage Designated Entity
licenses. In order to continue to qualify as a Designated Entity for licenses
currently held and to remain
<PAGE>
8
eligible for preferences afforded Designated Entities in future actions, the FCC
requires that (i) the Principal Shareholders collectively own greater than 50%
of the equity of the Company, determined on a fully-diluted basis, and (ii) the
Principal Shareholders exercise de jure and de facto control of the Company.
(b) During the time that the FCC requires the Company to
maintain its eligibility to be a Designated Entity (the "Restricted Period"),
-----------------
the Company and the Shareholders shall take no action, nor permit any action to
be taken, including the sale or other encumbrance of capital stock, which would
cause the company to lose its eligibility to hold licenses as a Designated
Entity, unless such actions is approved by a two thirds vote of the
Shareholders. During the Restricted Period, the Principal Shareholders shall
retain de jure and de facto control of the Company.
(c) The Principal Shareholders shall exercise unfettered
control over the day-to-day management of the Company's business. A
Shareholder's right to transfer any of its Shares may be subject to obtaining
prior FCC or other regulatory approval, and shall be void, ab initio, if such
transfer would violate the Communications Act of 1934, as amended by the
Telecommunications Act of 1996, as amended, or any applicable FCC regulations,
or cause the company to lose its eligibility to hold licenses as a Designated
Entity, and such violation or loss of eligibility cannot be cured. The
transferring Shareholder shall bear all expenses associated with obtaining any
necessary regulatory approvals and curing any violations.
4.3 Amendment and Waiver.
--------------------
(a) No failure or delay on the part of any party hereto, in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement and
any consent to any departure by the Company or any Shareholder from the terms of
any provision of this Agreement, shall be effective (i) only if it is made or
given in writing and signed by the party requesting such amendment or waiver and
holders of at least a majority of the shares of Preferred Stock, and (ii) only
in the specific instance and for the specific purpose for which made or given.
4.4 Successors and Assigns. This Agreement can not be assigned
----------------------
but shall be binding upon and inure to the benefit of the parties and their
respective successors, heirs, legatees and legal representatives.
<PAGE>
9
4.5 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, and all of which taken
together shall constitute one and the same instrument.
4.6 Specific Performance. The parties hereto intend that each
--------------------
of the parties have the right to seek damages or specific performance in the
event that any other party hereto fails to perform such party's obligations
hereunder. Therefore, if any party shall institute any action or proceeding to
enforce the provisions hereof, any party against whom such action or proceeding
is brought hereby waives any claim or defense therein that the plaintiff party
has an adequate remedy at law.
4.7 Headings. The headings in this Agreement are for
--------
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
4.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Louisiana, without regard
to principles of conflicts of law.
4.9 Jurisdiction. Each party to this Agreement hereby
------------
irrevocably agrees that any legal action or proceeding arising out of or
relating to this Agreement or any agreements or transactions contemplated hereby
may be brought exclusively in the courts of the State of Delaware or of the
United States of America for the District of Delaware and hereby expressly
submits to the exclusive personal jurisdiction and venue of such courts for the
purposes thereof and expressly waives any claim of improper venue and any claim
that such courts are an inconvenient forum. Each party hereby irrevocably
consents to the service of process of any of the aforementioned courts pursuant
to a contractual provision in any such suit, action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to the
address set forth in Section 4.1, such service to become effective ten (10) days
after such mailing. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT
BE WAIVED, EACH PARTY HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN
ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF OR ANY
FUNDAMENTAL DOCUMENT, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR
WHETHER IN CONTRACT OR TORT OR OTHERWISE.
4.10 Severability. In the event that any one or more of the
------------
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and
<PAGE>
10
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the provisions held
invalid, illegal or unenforceable shall substantially impair the benefits of the
remaining provisions hereof.
4.11 Rules of Construction. Unless the context otherwise
---------------------
requires, "or" is not exclusive, and references to Articles, Sections or
Subsections refer to Articles, Sections or Subsections of this Agreement.
4.12 Entire Agreement. This Agreement, together with the
----------------
exhibits and schedules hereto, is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein or
therein. This Agreement, together with the exhibits hereto, supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
4.13 Further Assurances. Each of the parties shall, and shall
------------------
cause their respective Affiliates to, execute such instruments and take such
action as may be reasonably required or desirable to carry out the provisions
hereof and the transactions contemplated hereby.
<PAGE>
11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their respective officers or partners hereunto duly
authorized as of the date first above written.
US UNWIRED INC.
By: /s/ Robert Piper
---------------------------------
Name: Robert Piper
Title: President
THE 1818 FUND III, L.P.
By: Brown Brothers Harriman & Co.,
its General Partner
By: /s/ Lawrence C. Tucker
----------------------------------
Name: Lawrence C. Tucker
Title: Partner Brown Brothers
Harriman & Co.
Name: /s/ William L. Henning Sr
------------------------------
William L. Henning. Sr.
Name: /s/ William L. Henning Jr.
------------------------------
William L. Henning Jr.
Name: /s/ John A. Henning
------------------------------
John A. Henning
Name: /s/ Thomas G. Henning
------------------------------
Thomas G. Henning
<PAGE>
================================================================================
CREDIT AGREEMENT
DATED AS OF OCTOBER 1, 1999
By and Among
US UNWIRED INC.
as Borrower,
and
COBANK, ACB,
as Administrative Agent and a Lender,
FIRST UNION CAPITAL MARKETS CORP.,
as Syndication Agent and a Co-Arranger,
THE BANK OF NEW YORK,
as Documentation Agent and a Lender,
BNY CAPITAL MARKETS, INC.,
as a Co-Arranger,
FIRST UNION NATIONAL BANK,
as a Lender,
and
the other Lenders referred to herein
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
SECTION 1
AMOUNTS AND TERMS OF LOANS
1.1 Loans.................................................................................... 1
-----
(A) Term Loans.......................................................................... 2
----------
(B) Revolving Loans..................................................................... 2
---------------
(C) Notes............................................................................... 2
-----
(D) Advances............................................................................ 2
--------
1.2 Interest................................................................................. 2
--------
(A) Interest Options.................................................................... 2
----------------
(B) Applicable Margins.................................................................. 3
------------------
(C) Interest Periods.................................................................... 4
----------------
(D) Calculation and Payment............................................................. 5
-----------------------
(E) Default Rate of Interest............................................................ 5
------------------------
(F) Excess Interest..................................................................... 5
---------------
(G) Selection, Conversion or Continuation of Loans; LIBOR Availability.................. 5
------------------------------------------------------------------
1.3 Notice of Borrowing, Conversion or Continuation of Loans................................. 6
--------------------------------------------------------
1.4 Fees and Expenses........................................................................ 7
-----------------
(A) Commitment Fees..................................................................... 7
---------------
(B) Certain Other Fees.................................................................. 7
------------------
(C) LIBOR Breakage Fee.................................................................. 7
------------------
(D) Expenses and Attorneys Fees......................................................... 7
---------------------------
1.5 Payments................................................................................. 8
--------
1.6 Repayments and Reduction of Loans and Commitments and Related Mandatory Repayments....... 9
----------------------------------------------------------------------------------
(A) Scheduled Repayments and Reductions of Loans and Commitments........................ 9
------------------------------------------------------------
(B) Reductions Resulting From Mandatory Repayments...................................... 10
----------------------------------------------
(C) Voluntary Reduction of Revolving Loan Commitment.................................... 10
------------------------------------------------
(D) Mandatory Repayments................................................................ 11
--------------------
1.7 Voluntary Prepayments and Other Mandatory Repayments..................................... 11
----------------------------------------------------
(A) Voluntary Prepayment of Loans....................................................... 11
-----------------------------
(B) Repayments from Excess Cash Flow.................................................... 11
--------------------------------
(C) Repayments from Insurance Proceeds.................................................. 12
----------------------------------
(D) Repayments from Equity Issuances.................................................... 12
--------------------------------
(E) Repayments from Debt Incurrence..................................................... 12
-------------------------------
(F) .................................................................................... 12
(G) Repayments from Asset Dispositions.................................................. 12
----------------------------------
1.8 Application of Repayments; Payment of Breakage Fees, Etc................................. 13
--------------------------------------------------------
1.9 Loan Accounts............................................................................ 13
-------------
1.10 Changes in LIBOR Rate Availability....................................................... 13
----------------------------------
1.11 Capital Adequacy and Other Adjustments................................................... 14
--------------------------------------
</TABLE>
(ii)
<PAGE>
<TABLE>
<S> <C>
1.12 Optional Prepayment/Replacement of Lender in Respect of Increased Costs................. 14
-----------------------------------------------------------------------
1.13 Taxes................................................................................... 15
-----
(A) No Deductions...................................................................... 15
-------------
(B) Foreign Lenders.................................................................... 15
---------------
1.14 Changes in Tax Laws..................................................................... 16
-------------------
1.15 Term of This Agreement.................................................................. 17
----------------------
SECTION 2
AFFIRMATIVE COVENANTS
2.1 Compliance With Laws.................................................................... 17
--------------------
2.2 Maintenance of Books and Records; Properties; Insurance................................. 18
-------------------------------------------------------
2.3 Inspection; Lender Meeting.............................................................. 19
--------------------------
2.4 Legal Existence, Etc.................................................................... 19
--------------------
2.5 Use of Proceeds......................................................................... 19
---------------
2.6 Further Assurances; Notices of Acquisition of Real Property............................. 19
-----------------------------------------------------------
2.7 CoBank Patronage Capital................................................................ 20
------------------------
2.8 Collateral Assignments of Material Contracts............................................ 20
--------------------------------------------
2.9 Year 2000 Preparation................................................................... 20
---------------------
2.10 Enforcement of Sprint Agreements........................................................ 21
--------------------------------
2.11 Covenants of the Unrestricted Subsidiary................................................ 21
----------------------------------------
SECTION 3
NEGATIVE COVENANTS
3.1 Indebtedness............................................................................ 21
------------
3.2 Liens and Related Matters............................................................... 22
-------------------------
(A) No Liens........................................................................... 22
--------
(B) No Negative Pledges................................................................ 22
-------------------
3.3 Investments............................................................................. 22
-----------
3.4 Contingent Obligations.................................................................. 23
----------------------
3.5 Restricted Junior Payments.............................................................. 24
--------------------------
3.6 Restriction on Fundamental Changes...................................................... 24
----------------------------------
3.7 Restriction on Equity Issuance.......................................................... 25
------------------------------
3.8 Disposal of Assets or Subsidiary Stock.................................................. 25
--------------------------------------
3.9 Transactions with Affiliates............................................................ 25
----------------------------
3.10 Management Fees and Compensation........................................................ 26
--------------------------------
3.11 Conduct of Business..................................................................... 26
-------------------
3.12 Fiscal Year............................................................................. 26
-----------
3.13 Subsidiaries............................................................................ 26
------------
3.14 Sprint Agreements....................................................................... 26
-----------------
3.15 Subordinated Debt Documents............................................................. 26
---------------------------
</TABLE>
(iii)
<PAGE>
<TABLE>
<S> <C>
SECTION 4
FINANCIAL COVENANTS AND REPORTING
4.1 Indebtedness to POPs Ratio......................................................... 27
--------------------------
4.2 Minimum Ending Subscribers for LA Unwired and Texas Unwired........................ 28
-----------------------------------------------------------
4.3 Minimum Monthly Revenues per Subscriber for LA Unwired and Texas Unwired........... 28
------------------------------------------------------------------------
4.4 Capital Expenditures for LA Unwired and Texas Unwired.............................. 29
-----------------------------------------------------
4.5 Maximum Loss for LA Unwired and Texas Unwired...................................... 29
---------------------------------------------
4.6 Operating Cash Flow for Unwired Telecom............................................ 30
---------------------------------------
4.7 Capital Expenditures for Unwired Telecom........................................... 31
----------------------------------------
4.8 Total Leverage Ratio............................................................... 31
--------------------
4.9 Senior Debt Leverage Ratio......................................................... 32
--------------------------
4.10 Adjusted Quarterly Interest Coverage Ratio......................................... 33
------------------------------------------
4.11 Fixed Charge Coverage Ratio........................................................ 33
---------------------------
4.12 Pro Forma Debt Service Coverage Ratio.............................................. 33
-------------------------------------
4.13 Financial Statements and Other Reports............................................. 33
--------------------------------------
(A) Quarterly Financials........................................................ 33
--------------------
(B) Year-End Financials......................................................... 34
-------------------
(C) Borrower Compliance Certificate............................................. 34
-------------------------------
(D) Accountants' Reliance Letter................................................ 34
---------------------------
(E) Accountants' Reports........................................................ 34
--------------------
(F) Management Report........................................................... 34
-----------------
(G) Projections................................................................. 35
-----------
(H) SEC Filings and Press Releases.............................................. 35
------------------------------
(I) Events of Default, Etc...................................................... 35
----------------------
(J) Litigation.................................................................. 35
----------
(K) Supplemented Schedules; Notice of Corporate Changes......................... 36
---------------------------------------------------
(L) Regulatory and Other Notices................................................ 36
----------------------------
(M) Filings and Notices Relating to Sprint Agreements........................... 36
-------------------------------------------------
(N) Other Information........................................................... 36
-----------------
4.14 Accounting Terms; Utilization of GAAP for Purposes of Calculations Under Agreement. 36
----------------------------------------------------------------------------------
SECTION 5
REPRESENTATIONS AND WARRANTIES
5.1 Disclosure......................................................................... 37
----------
5.2 No Material Adverse Effect......................................................... 37
--------------------------
5.3 Organization, Powers, Authorization and Good Standing.............................. 37
-----------------------------------------------------
(A) Organization and Powers..................................................... 37
-----------------------
(B) Authorization; Binding Obligation........................................... 38
---------------------------------
(C) Qualification............................................................... 38
-------------
5.4 Compliance of Agreement, Loan Documents and Borrowings with Applicable
----------------------------------------------------------------------
</TABLE>
(iv)
<PAGE>
<TABLE>
<S> <C>
Law....................................................................................... 38
---
5.5 Compliance with Law; Governmental Approvals............................................... 38
-------------------------------------------
5.6 Tax Returns and Payments.................................................................. 39
------------------------
5.7 Environmental Matters..................................................................... 39
---------------------
5.8 Financial Statements...................................................................... 39
--------------------
5.9 Intellectual Property..................................................................... 39
---------------------
5.10 Litigation, Investigations, Audits, Etc................................................... 40
---------------------------------------
5.11 Employee Labor Matters.................................................................... 40
----------------------
5.12 Employee Benefit Plans.................................................................... 40
----------------------
5.13 Communications Regulatory Matters......................................................... 41
---------------------------------
5.14 Perfection and Priority................................................................... 41
-----------------------
5.15 Solvency.................................................................................. 42
--------
5.16 Investment Company Act; Public Utility Holding Act........................................ 42
--------------------------------------------------
5.17 Certain Agreements and Material Contracts................................................. 42
-----------------------------------------
5.18 Capitalization............................................................................ 42
--------------
5.19 Title to Properties....................................................................... 42
-------------------
5.20 Year 2000 Compliance...................................................................... 43
--------------------
SECTION 6
EVENTS OF DEFAULT AND RIGHTS AND REMEDIES
6.1 Event of Default.......................................................................... 43
----------------
(A) Payment............................................................................ 43
-------
(B) Default in Other Agreements........................................................ 43
---------------------------
(C) Breach of Certain Provisions....................................................... 44
----------------------------
(D) Breach of Warranty................................................................. 44
------------------
(E) Other Defaults Under Loan Documents................................................ 44
-----------------------------------
(F) Involuntary Bankruptcy; Appointment of Receiver; Etc............................... 44
----------------------------------------------------
(G) Voluntary Bankruptcy; Appointment of Receiver; Etc................................. 44
--------------------------------------------------
(H) Governmental Liens................................................................. 45
------------------
(I) Judgment and Attachments........................................................... 45
------------------------
(J) Dissolution........................................................................ 45
-----------
(K) Solvency........................................................................... 45
--------
(L) Injunction......................................................................... 45
----------
(M) ERISA; Pension Plans............................................................... 46
--------------------
(N) Environmental Matters.............................................................. 46
---------------------
(O) Invalidity of Loan Documents....................................................... 46
----------------------------
(P) Damage; Strike; Casualty........................................................... 46
------------------------
(Q) Licenses and Permits............................................................... 46
--------------------
(R) Failure of Security................................................................ 47
-------------------
(S) Change in Control.................................................................. 47
-----------------
(T) Material Adverse Effect............................................................ 47
-----------------------
(U) Sprint Agreements and other Material Contracts..................................... 47
----------------------------------------------
6.2 Suspension of Commitments................................................................. 48
-------------------------
</TABLE>
(v)
<PAGE>
<TABLE>
<S> <C>
6.3 Acceleration....................................................................... 48
------------
6.4 Rights of Collection............................................................... 48
--------------------
6.5 Consents........................................................................... 48
--------
6.6 Performance by Administrative Agent................................................ 49
-----------------------------------
6.7 Set Off and Sharing of Payments.................................................... 49
-------------------------------
6.8 Application of Payments............................................................ 49
-----------------------
6.9 Adjustments........................................................................ 50
-----------
SECTION 7
CONDITIONS TO LOANS
7.1 Conditions to Initial Loan......................................................... 50
--------------------------
(A) Executed Loan Documents.................................................... 50
-----------------------
(B) Closing Certificates; Opinions............................................. 51
------------------------------
(C) Collateral................................................................. 52
----------
(D) Consents................................................................... 52
--------
(E) Financial Matters.......................................................... 53
-----------------
(F) Miscellaneous.............................................................. 53
-------------
7.2 Conditions to All Loans............................................................ 54
-----------------------
SECTION 8
ASSIGNMENT AND PARTICIPATION
8.1 Assignments and Participations in Loans and Notes.................................. 55
-------------------------------------------------
8.2 Agents............................................................................. 57
------
(A) Appointment................................................................ 57
-----------
(B) Nature of Duties........................................................... 58
----------------
(C) Rights, Exculpation, Etc................................................... 59
------------------------
(D) Reliance................................................................... 59
--------
(E) Indemnification............................................................ 60
---------------
(F) CoBank Individually........................................................ 60
-------------------
(G) Notice of Default.......................................................... 60
-----------------
(H) Successor Administrative Agent............................................. 61
------------------------------
(1) Resignation......................................................... 61
------------
(2) Appointment of Successor............................................ 61
------------------------
(3) Successor Administrative Agent...................................... 61
------------------------------
(I) Collateral Matters......................................................... 62
------------------
(1) Release of Collateral............................................... 62
---------------------
(2) Confirmation of Authority; Execution of Releases.................... 62
------------------------------------------------
(3) Absence of Duty..................................................... 63
---------------
(J) Agency for Perfection; Enforcement of Security by Administrative Agent..... 63
----------------------------------------------------------------------
(K) Dissemination of Information............................................... 63
----------------------------
8.3 Amendments, Consents and Waivers for Certain Actions............................... 63
----------------------------------------------------
8.4 Disbursement of Funds.............................................................. 64
---------------------
</TABLE>
(vi)
<PAGE>
<TABLE>
<S> <C>
8.5 Disbursements of Advances; Payments................................................ 64
-----------------------------------
(A) Pro Rata Treatment; Application............................................. 64
-------------------------------
(B) Availability of Lender's Pro Rata Share..................................... 64
---------------------------------------
(C) Return of Payments.......................................................... 65
------------------
SECTION 9
MISCELLANEOUS
9.1 Indemnities........................................................................ 65
-----------
9.2 Amendments and Waivers............................................................. 66
----------------------
9.3 Notices............................................................................ 67
-------
9.4 Failure or Indulgence Not Waiver; Remedies Cumulative.............................. 67
-----------------------------------------------------
9.5 Marshaling; Payments Set Aside..................................................... 67
------------------------------
9.6 Severability....................................................................... 68
------------
9.7 Lenders' Obligations Several; Independent Nature of Lenders' Rights................ 68
-------------------------------------------------------------------
9.8 Headings........................................................................... 68
--------
9.9 Applicable Law..................................................................... 68
--------------
9.10 Successors and Assigns............................................................. 68
----------------------
9.11 No Fiduciary Relationship.......................................................... 68
-------------------------
9.12 Construction....................................................................... 68
------------
9.13 Confidentiality.................................................................... 68
---------------
9.14 Consent to Jurisdiction and Service of Process..................................... 69
----------------------------------------------
9.15 Waiver of Jury Trial............................................................... 70
--------------------
9.16 Survival of Warranties and Certain Agreements...................................... 70
---------------------------------------------
9.17 Entire Agreement................................................................... 70
----------------
9.18 Counterparts; Effectiveness........................................................ 71
---------------------------
SECTION 10
DEFINITIONS
10.1 Certain Defined Terms.............................................................. 71
---------------------
10.2 Other Definitional Provisions...................................................... 90
-----------------------------
</TABLE>
(vii)
<PAGE>
SCHEDULES
Schedule 2.8 Material Contracts to be Assigned
Schedule 3.8 Transactions with Affiliates
Schedule 3.9 Permitted Management Fees
Schedule 5.3(A) Jurisdiction of Organization
Schedule 5.3(C) Qualification to Transact Business
Schedule 5.4 Governmental Approvals
Schedule 5.10 Litigation, Etc.
Schedule 5.11 Labor Matters
Schedule 5.13(A) License Information
Schedule 5.17 Certain Agreements and Material Contracts
Schedule 5.18 Capitalization
Schedule 10.1(A) Telecommunications Licenses
Schedule 10.1(B) Service Areas
EXHIBITS
Exhibit 1.3 Form of Notice of Borrowing/Conversion/Continuation
Exhibit 4.10(C) Form of Compliance Certificate
Exhibit 10.1(A) Form of Revolving Loan Promissory Note
Exhibit 10.1(B) Form of Term Loan Promissory Note
(viii)
<PAGE>
INDEX OF DEFINED TERMS
Defined Term Defined in Section
------------ ------------------
Accounting Changes (S)4.14
Adjusted Quarterly Interest Coverage Ratio (S)10.1
Adjustment Date (S)10.1
Administrative Agent (S)10.1
Affiliate (S)10.1
Affected Lender (S)1.12
Agents (S)10.1
Agreement (S)10.1
Annualized Operating Cash Flow (S)10.1
Applicable Commitment Fee Percentage (S)10.1
Applicable Law (S)10.1
Asset Disposition (S)10.1
Available Revolving Loan Commitment (S)10.1
Available Term Loan Commitment (S)10.1
Bankruptcy Code (S)10.1
Base Rate (S)10.1
Base Rate Loan (S)10.1
Base Rate Margin (S)10.1
Benefited Lender (S) 6.9
Borrower Preamble
Borrower Pledge Agreements (S)10.1
Breakage Fee (S) 1.4(C)
Business Day (S)10.1
Calculation Period (S)10.1
Cameron Pledge Agreement (S)10.1
Cash Equivalents (S)10.1
Certificate of Exemption (S)1.13(B)
Closing Date (S)10.1
Co-Arranger(s) (S)10.1
CoBank Preamble
Collateral (S)10.1
Collateral Contract Assignments (S)10.1
Command Connect (S)10.1
Communications Act (S)10.1
Compliance Certificate (S)4.13(C)
Contingent Obligation (S)10.1
Default (S)10.1
Documentation Agent (S)10.1
(ix)
<PAGE>
EBITDA (S)10.1
Environmental Laws (S)10.1
Event of Default (S) 6.1
Excess Cash Flow (S)10.1
Expiration Date (S)10.1
Facilities (S)10.1
FCC (S)10.1
FDPA (S) 2.2
Federal Funds Rate (S)10.1
First Union's Prime Rate (S)10.1
Fixed Charge Coverage Ratio (S)10.1
Fixed Charges (S)10.1
Foreign Lender (S)1.13(B)
Funding Date (S) 7.2
GAAP (S)10.1
Governmental Approvals (S)10.1
Governmental Authority (S)10.1
Guarantors (S)10.1
Indebtedness (S)10.1
Indebtedness to POP Ratio (S)10.1
Indemnitees (S) 9.1
Intellectual Property Rights (S)5.9
Interest Period (S)1.2(C)
Investment (S)10.1
IRC (S)10.1
LA Unwired (S)10.1
LA Unwired Pledge Agreement (S)10.1
Lender(s) (S)10.1
Lender Addition Agreement (S)10.1
Letter of Non-Exemption (S)1.13(B)
LIBOR (S)10.1
LIBOR Loans (S)10.1
LIBOR Margin (S)10.1
Licenses (S)10.1
Lien (S)10.1
Loan(s) (S)10.1
Loan Commitment(s) (S)10.1
Loan Documents (S)10.1
Material Adverse Effect (S)10.1
Material Contracts (S)10.1
Meretel Communications (S)10.1
Mortgages (S)10.1
Negative Pledge Agreement (S)10.1
Net Proceeds (S)10.1
(x)
<PAGE>
Note(s) (S)10.1
Notice of Borrowing/Conversion/Continuation (S) 1.3
Obligations (S)10.1
Omnibus Agreement (S)10.1
Operating Cash Flow (S)10.1
PCS (S)10.1
PCS System (S)10.1
Permitted Encumbrances (S)10.1
Person (S)10.1
Pledge Agreements (S)10.1
POP (S)10.1
Preferred Stock (S)10.1
Preferred Stock Documents (S)10.1
Pro Forma Debt Service Coverage Ratio (S)10.1
Pro Forma Interest Expense (S)10.1
Pro Rata Share (S)10.1
Projections (S)10.1
PUC (S)10.1
Registration Rights Agreement (S)10.1
Replacement Lender (S)1.12(A)
Requisite Lenders (S)10.1
Restricted Junior Payment (S)10.1
Restricted Subsidiaries (S)10.1
Revenues per Subscriber (S)10.1
Revolving Loan(s) (S)10.1
Revolving Loan Commitment (S)10.1
Revolving Loan Facility (S)10.1
Revolving Note(s) (S)10.1
SEC (S)4.13(H)
Security Agreements (S)10.1
Security Documents (S)10.1
Security Interest (S)10.1
Senior Indebtedness (S)10.1
Senior Leverage Ratio (S)10.1
Service Areas (S)10.1
Sprint (S)10.1
Sprint Agreements (S)10.1
Sprint Consent and Agreement (S)10.1
Statement (S)4.13(B)
Subordinated Debt Documents (S)10.1
Subordinated Note Indenture (S)10.1
Subordinated Notes (S)10.1
Subscribers (S)10.1
Subsidiary (S)10.1
(xi)
<PAGE>
Subsidiary Guarantees (S)10.1
Subsidiary Guarantor (S)10.1
Syndication Agent (S)10.1
Tax Liabilities (S)1.13(A)
Term Loan(s) (S)10.1
Term Loan Availability Expiration Date (S)10.1
Term Loan Commitment (S)10.1
Term Loan Facility (S)10.1
Term Note(s) (S)10.1
Texas Unwired (S)10.1
Total Lender Loan Commitment (S)10.1
Total Leverage Ratio (S)10.1
Total Vendor Purchases (S)10.1
Unrestricted Subsidiary (S)10.1
Unwired Telecom (S)10.1
Unwired Telecom Pledge Agreement (S)10.1
Vendor (S)10.1
Vendor Guarantor (S)10.1
Vendor Guaranty (S)10.1
Warrants (S)10.1
Wireless System (S)10.1
Year 2000 Compliant (S)5.20
Year 2000 Problem (S)5.20
(xii)
<PAGE>
CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT (this "Agreement") is entered into as of October 1,
1999, among US UNWIRED INC., a Louisiana corporation ("Borrower"), COBANK, ACB
(in its individual capacity ("CoBank")), as a Lender and in its capacity as
Administrative Agent, FIRST UNION CAPITAL MARKETS CORP., in its capacity as
Syndication Agent and Co-Arranger, THE BANK OF NEW YORK, in its capacity as
Documentation Agent and as a Lender, BNY CAPITAL MARKETS, INC., in its capacity
as a Co-Arranger, FIRST UNION NATIONAL BANK, as a Lender, and such other Lenders
as may become a party to this Agreement. Capitalized terms used and not
otherwise defined herein shall have the meanings given to them in Section 10.1
of this Agreement.
R E C I T A L S:
- - - - - - - -
WHEREAS, Borrower desires that Lenders extend a term loan facility and
revolving credit facility to Borrower available to refinance existing
indebtedness of LA Unwired and Unwired Telecom, to finance the construction of
the Wireless System associated with the Service Areas, to finance permitted
capital contributions in Texas Unwired or a permitted intercompany loan to Texas
Unwired, to provide working capital financing for Borrower and the Restricted
Subsidiaries, and to provide funds for other general corporate purposes of
Borrower and the Restricted Subsidiaries; and
WHEREAS, Borrower intends to secure all of its Obligations under the Loan
Documents by granting to Administrative Agent, for the benefit of the
Administrative Agent and Lenders, a first priority security interest in and lien
upon substantially all of its now owned or hereafter acquired personal and real
property; and
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
SECTION 1
AMOUNTS AND TERMS OF LOANS
1.1 Loans. Subject to the terms and conditions of this Agreement and in
-----
reliance upon the representations, warranties and covenants of Borrower, and the
Subsidiaries and Vendor Guarantor contained herein and in the other Loan
Documents:
<PAGE>
(A) Term Loans. Each Lender, severally and not jointly, agrees to
----------
lend to Borrower, during the period commencing on the date all conditions
precedent set forth in Subsections 7.1 and 7.2 are satisfied or waived as
provided herein and ending on the Term Loan Availability Expiration Date, its
Pro Rata Share of each Term Loan; provided that the aggregate principal amount
--------
of all Term Loans advanced may not exceed the Available Term Loan Commitment.
Amounts borrowed under this Subsection 1.1(A) that are repaid may not be
reborrowed.
(B) Revolving Loans. Each Lender, severally and not jointly,
---------------
agrees to lend to Borrower, during the period commencing on the date the entire
Term Loan Commitment has been advanced and all conditions precedent set forth in
Subsections 7.1 and 7.2 are satisfied or waived as provided herein and ending on
the Business Day immediately preceding the Expiration Date, its Pro Rata Share
of each Revolving Loan; provided that at any one time the aggregate principal
--------
amount of all Revolving Loans outstanding may not exceed the Available Revolving
Loan Commitment. Within the limits of the Available Revolving Loan Commitment
and this Subsection 1.1(B), amounts borrowed under this Subsection 1.1(B) may be
prepaid and reborrowed at any time prior to the Expiration Date.
(C) Notes. Borrower shall execute and deliver to each Lender a
-----
Term Note, in the principal amount of such Lender's Pro Rata Share of the Term
Loan Commitment, and a Revolving Note, in the principal amount of such Lender's
Pro Rata Share of the Revolving Loan Commitment.
(D) Advances. Loans will be made available by wire transfer of
--------
immediately available funds. Except as specifically provided in the following
sentence, wire transfers will be made to such account or accounts as may be
authorized by Borrower. Each Loan or portion of a Loan advanced to finance the
purchase price of equipment or services purchased by Borrower from Vendor shall,
subject to prior approval by Borrower of the related invoice and written
authorization by Borrower to Administrative Agent to make the Loan or portion
thereof, be paid directly by Administrative Agent to Vendor in accordance with
payment instructions provided by Vendor to Administrative Agent, unless Vendor
consents in writing to all or such portion of such Loan being paid to Borrower.
1.2 Interest.
--------
(A) Interest Options. From the date each Loan is made, based upon
----------------
Borrower's election at such time and from time to time thereafter (as provided
in Subsection 1.3 and subject to the conditions set forth in such Subsection and
Subsection 1.2 (C)), each Loan shall accrue interest as follows:
2
<PAGE>
(1) as a Base Rate Loan, at the sum of the Base Rate plus the
----
Base Rate Margin applicable from time to time as provided in Subsection 1.2(B);
or
(2) as a LIBOR Loan, for the applicable Interest Period (as
defined in Subsection 1.2 (C)), at the sum of LIBOR plus the LIBOR Margin
----
applicable on the first day of the applicable Interest Period or as applicable
from time to time as otherwise provided in Subsection 1.2(B).
Except as otherwise provided in Subsection 6.6, interest on all other
Obligations shall accrue at the Base Rate plus 2.250% per annum.
----
(B) Applicable Margins. Initially, and continuing through the day
------------------
immediately preceding the first Adjustment Date occurring after the first
consecutive four (4) fiscal quarter period in which Borrower achieves positive
Operating Cash Flow for such period, the applicable Base Rate Margin and LIBOR
Margin shall be 2.250% and 3.500% per annum, respectively. Commencing on such
Adjustment Date, the applicable Base Rate Margin and LIBOR Margin shall be for
each Calculation Period the applicable per annum percentage set forth in the
pricing table below opposite the Total Leverage Ratio of Borrower; provided,
--------
that effective upon the occurrence of an Event of Default and until such Event
of Default is cured or waived the applicable Base Rate Margin and LIBOR Rate
Margin shall be 2.250% and 3.500% per annum, respectively.
For purposes of this Subsection 1.2(B), Operating Cash Flow and Total
Leverage Ratio shall be calculated on a consolidated basis for Borrower and its
Restricted Subsidiaries, but excluding the Unrestricted Subsidiary; provided
--------
that the results of Texas Unwired shall be consolidated with Borrower only to
the extent of LA Unwired's percentage ownership interest in Texas Unwired.
3
<PAGE>
PRICING TABLE
-------------
========================================================
Total Base Rate
Leverage Ratio Margin LIBOR Margin
--------------------------------------------------------
* 10.00:1 2.000% 3.250%
*
8.00:1**10.00:1 1.750% 3.000%
*
6.00:1**8.00:1 1.500% 2.750%
*
4.00:1**6.00:1 1.250% 2.500%
** 4.00:1 1.000% 2.250%
========================================================
(C) Interest Periods. Each LIBOR Loan may be obtained for a one
----------------
(1), two (2), three (3) or six (6) month period (each such period being an
"Interest Period"). With respect to all LIBOR Loans:
(i) the Interest Period will commence on the date that the
LIBOR Loan is made or the date on which any portion of the Base Rate Loan
is converted into a LIBOR Loan, or, in the case of immediately successive
Interest Periods, each successive Interest Period shall commence on the day
on which the immediately preceding Interest Period expires;
(ii) if the Interest Period would otherwise expire on a day that
is not a Business Day, then it will expire on the next Business Day,
provided, that if any Interest Period would otherwise expire on a day that
--------
is not a Business Day and such day is a day of a calendar month after which
no further Business Day occurs in such month, such Interest Period shall
expire on the Business Day next preceding such day;
(iii) any Interest Period that begins on the last Business Day
of a calendar month or on a day for which there is no numerically
corresponding day in the last calendar month in such Interest Period shall
end on the last Business Day of the last calendar month in such Interest
Period;
(iv) no Interest Period shall be selected for any Loan if, in
order to make repayments required pursuant to Subsection 1.6(D) in
connection with scheduled
** Greater than
* Less than
4
<PAGE>
reductions of the Loan Commitments pursuant to Subsection 1.6(A), repayment
of all or any portion of such Loan prior to the expiration of such Interest
Period would be necessary; and
(v) no Interest Period shall extend beyond the date set forth in
clause (iii) of the definition of the term "Expiration Date."
(D) Calculation and Payment. Interest on all LIBOR Loans shall be
-----------------------
calculated daily on the basis of a three hundred sixty (360) day year for the
actual number of days elapsed. The interest on the Base Rate Loan and all other
Obligations and the amount of any fees set forth in Subsection 1.4 shall be
calculated daily on the basis of a three hundred sixty-five or -six (365-6) day
year for the actual number of days elapsed. The date of funding or conversion to
a Base Rate Loan and the first day of an Interest Period with respect to a LIBOR
Loan shall be included in the calculation of interest. The date of payment of
any Loan and the last day of an Interest Period with respect to a LIBOR Loan
shall be excluded from the calculation of interest; provided, if a Loan is
--------
repaid on the same day that it is made, one (1) day's interest shall be charged.
Interest accruing on the Base Rate Loan is payable in arrears on each
of the following dates or events: (i) the last day of each calendar quarter,
(ii) the prepayment of such Loan (or portion thereof) and (iii) the Expiration
Date, whether by acceleration or otherwise. Interest accruing on each LIBOR
Loan is payable in arrears on each of the following dates or events: (i) the
last day of each calendar quarter, (ii) the last day of each applicable Interest
Period, (iii) the prepayment of such Loan (or portion thereof) and (iv) the
Expiration Date, whether by acceleration or otherwise.
(E) Default Rate of Interest. At the election of Administrative
------------------------
Agent or Requisite Lenders, after the occurrence of an Event of Default and for
so long as it continues, all Loans and other Obligations shall bear interest at
variable rates that are two percent (2.000%) in excess of the rates otherwise in
effect, including, without limitation, rates in effect pursuant to the proviso
in the second sentence of Subsection 1.2(B), with respect to such Loans and
other Obligations.
(F) Excess Interest. Under no circumstances will the rate of
---------------
interest chargeable be in excess of the maximum amount permitted by law. If any
such excess interest is charged and paid in error, then the excess amount will
be promptly refunded.
(G) Selection, Conversion or Continuation of Loans; LIBOR
-----------------------------------------------------
Availability. Provided that no Default or Event of Default has occurred and
- ------------
is then continuing, Borrower shall have the option to (i) select all or any part
of a new borrowing to be a LIBOR Loan in a principal amount equal to $3,000,000
or any whole multiple of $500,000 in excess thereof, (ii) convert at any time
all or any portion of the Base Rate Loan in a principal amount equal to
$3,000,000 or
5
<PAGE>
any whole multiple of $500,000 in excess thereof into one or more LIBOR Loans,
(iii) upon the expiration of any Interest Period, convert all or any part of any
LIBOR Loan into the Base Rate Loan, and (iv) upon the expiration of its Interest
Period, continue any LIBOR Loan in a principal amount of $3,000,000 or any whole
multiple of $500,000 in excess thereof into one or more LIBOR Loans for such new
Interest Period(s) as selected by Borrower. Each LIBOR Loan must be made under
either the Term Loan Facility or the Revolving Loan Facility, but may not be
made under both concurrently. During any period in which any Default or Event of
Default is continuing, as the Interest Periods for LIBOR Loans then in effect
expire, such Loans shall be converted into the Base Rate Loan and the LIBOR
option will not be available to Borrower until all Events of Default are cured
or waived. Notwithstanding the foregoing, there may be no more than a total of
six (6) Loans outstanding under the Facilities at any one time (including, as a
single Loan, all amounts under a single Facility accruing interest at the Base
Rate).
1.3 Notice of Borrowing, Conversion or Continuation of Loans.
--------------------------------------------------------
Whenever Borrower desires to request a Loan pursuant to Subsection 1.1
or to convert or continue Base Rate or LIBOR Loans pursuant to Subsection
1.2(G), Borrower shall give Administrative Agent irrevocable prior written
notice in the form attached hereto as Exhibit 1.3 (a "Notice of
Borrowing/Conversion/Continuation"), (i) if requesting a borrowing of,
conversion to or continuation of the Base Rate Loan (or any portion thereof),
not later than 11:00 a.m. (Denver time), one (1) Business Day before the
proposed borrowing, conversion or continuation is to be effective or (ii), if
requesting a borrowing of, a conversion to or a continuation of a LIBOR Loan,
not later than 11:00 a.m. (Denver time), three (3) Business Days before the
proposed borrowing, conversion or continuation is to be effective. Each Notice
of Borrowing/Conversion/Continuation shall specify (a) the Loan (or portion
thereof) to be converted or continued and, with respect to any LIBOR Loan to be
converted or continued, the last day of the current Interest Period therefor,
(b) the effective date of such borrowing, conversion or continuation (which
shall be a Business Day), (c) the principal amount of such Loan to be borrowed,
converted or continued, (d) the Interest Period to be applicable to any new
LIBOR Loan, and (e) the Facility under which such borrowing, conversion or
continuation is to be made. In the event Borrower fails to elect a LIBOR Loan
upon any advance hereunder or upon the termination of any Interest Period,
Borrower shall be deemed to have elected to have such amount constitute a
portion of the Base Rate Loan.
1.4 Fees and Expenses.
-----------------
(A) Commitment Fees.
---------------
(1) Term Loan Commitment Fee. From the Closing Date through the
------------------------
Term Loan Availability Expiration Date, Borrower shall pay Administrative Agent,
for the benefit of all Lenders (based upon their respective Pro Rata Shares of
the Term Loan Commitment), a
6
<PAGE>
fee in an amount equal to (i) the Term Loan Commitment less the average daily
----
outstanding balance of Term Loans during the preceding calendar quarter
multiplied by (ii) the Applicable Commitment Fee Percentage. Such fee is to paid
- ---------- --
quarterly in arrears on the last day of each calendar quarter for such calendar
quarter (or a portion thereof) with the final such payment due on the Term Loan
Availability Expiration Date.
(2) Revolving Loan Commitment Fee. From the Closing Date,
Borrower shall pay Administrative Agent, for the benefit of all Lenders (based
upon their respective Pro Rata Shares of the Revolving Loan Commitment), a fee
in an amount equal to (i) the Revolving Loan Commitment less the average daily
----
outstanding balance of Revolving Loans during the preceding calendar quarter
multiplied by (ii) the Applicable Commitment Fee Percentage. Such fee is to be
- ---------- --
paid quarterly in arrears on the last day of each calendar quarter for such
calendar quarter (or portion thereof), with the final such payment due on the
Expiration Date.
(B) Certain Other Fees. Borrower shall pay the fees specified in
------------------
that certain letter agreement, dated October 6, 1999, among Borrower, the
Agents, First Union and the BNY Capital Markets, Inc., at such times and to such
entities as specified in such letter agreement.
(C) LIBOR Breakage Fee. Upon any repayment or payment of a LIBOR
------------------
Loan on any day that is not the last day of the Interest Period applicable
thereto (regardless of the source of such repayment or prepayment and whether
voluntary, mandatory, by acceleration or otherwise), Borrower shall pay
Administrative Agent, for the benefit of all affected Lenders, an amount (the
"Breakage Fee") equal to the amount of any losses, expenses and liabilities
(including any loss (including interest paid) sustained by each such affected
Lender in connection with the re-employment of such funds) that any such
affected Lender may sustain as a result of the payment of such LIBOR Loan on
such day.
(D) Expenses and Attorneys Fees. Borrower agrees to pay promptly
---------------------------
all fees, costs and expenses (including those of attorneys) incurred by
Administrative Agent in connection with (i) any matters contemplated by or
arising out of the Loan Documents, and (ii) the continued administration of the
Loan Documents, including any such fees, costs and expenses incurred in
perfecting, maintaining, determining the priority of and releasing any security,
any tax payable in connection with any Loan Documents and any amendments,
modifications and waivers. In addition to fees due under Subsection 1.4(B),
Borrower shall also reimburse on demand each of the Agents, First Union and BNY
Capital Markets, Inc. for their respective out-of-pocket expenses (including
reasonable attorneys' fees and expenses and syndication costs and expenses)
incurred in connection with the transactions contemplated herein. Borrower
agrees to pay promptly all fees, costs and expenses incurred by Administrative
Agent and Lenders in connection with any action to enforce any Loan Document or
to collect any payments due from Borrower. All fees, costs and expenses for
which Borrower is responsible under this Subsection 1.4(D) shall be
7
<PAGE>
deemed part of the Obligations when incurred, payable upon demand and in
accordance with the second paragraph of Subsection 1.5 and secured by the
Collateral.
1.5 Payments. All payments by Borrower of the Obligations shall be made
--------
in same day funds and delivered to Administrative Agent, for the benefit of
Administrative Agent and Lenders, as applicable, by wire transfer to the
following account or such other place as Administrative Agent may from time to
time designate:
Account Number 3070-8875-4
Federal Reserve Bank of Kansas City
Reference: CoBank for the benefit of US Unwired Inc.
Borrower shall receive credit on the day of receipt for funds received by
Administrative Agent by 11:00 a.m. (Denver time) on any Business Day. Funds
received on any Business Day after such time shall be deemed to have been paid
on the next Business Day. Whenever any payment to be made hereunder shall be
stated to be due on a day that is not a Business Day, the payment shall be due
on the next succeeding Business Day and such extension of time shall be included
in the computation of the amount of interest and fees due hereunder.
Borrower hereby authorizes Lenders to make (but Lenders shall not be
obligated to make) a Base Rate Loan under the Revolving Loan Facility, on the
basis of their respective Pro Rata Shares of the Revolving Loan Facility, for
the payment of interest, commitment fees and Breakage Fees. Prior to an Event of
Default, other fees, costs and expenses (including those of attorneys)
reimbursable pursuant to Subsections 1.4(A), 1.4(B) and 1.4(D) or elsewhere in
any Loan Document may be debited to the Base Rate Loan under the Revolving Loan
Facility after fifteen (15) days notice. After the occurrence of an Event of
Default, any such other fees, costs and expenses may be debited to the Base Rate
Loan under the Revolving Loan Facility without notice.
To the extent Borrower or any Guarantor makes a payment or payments to
Administrative Agent for the ratable benefit of Lenders or for the benefit of
Administrative Agent in its individual capacity, which payments or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law or equitable cause,
then, to the extent of such payment or proceeds repaid, the Obligations or part
thereof intended to be satisfied shall be revived and continued in full force
and effect as if such payment or proceeds had not been received by
Administrative Agent.
1.6 Repayments and Reduction of Loans and Commitments and Related
-------------------------------------------------------------
Mandatory Repayments.
- --------------------
(A) Scheduled Repayments and Reductions of Loans and Commitments.
------------------------------------------------------------
8
<PAGE>
(1) Term Loan. Commencing on June 30, 2003, Borrower shall repay
---------
the aggregate outstanding principal balance of the Term Loans on each date set
forth below in the amount set forth opposite such date:
Quarterly Payment
Dates of Repayment Amount
------------------ ----------------
June 30, 2003, September 30, 2003 and $1,333,333.34
December 31, 2003
March 31, 2004, June 30, 2004, September 30, $2,500,000.00
2004, and December 31, 2004
March 31, 2005, June 30, 2005, September 30, $3,750,000.00
2005, and December 31, 2005
March 31, 2006, June 30, 2006, September 30, $3,750,000.00
2006, and December 31, 2006
March 31, 2007, June 30, 2007 and September 30, $2,000,000.00
2007
(2) Revolving Loan Commitment. Commencing on June 30, 2002, the
-------------------------
Revolving Loan Commitment shall be permanently reduced on each date shown below
in an amount set forth opposite each such date (which reductions shall be in
addition to those provided for in Subsection 1.6(B) and, to the extent set forth
therein, Subsection 1.6(C)):
9
<PAGE>
Quarterly Amount of
Reduction
Dates of Commitment Reduction Revolving Loan Commitment
----------------------------- -------------------------
June 30, 2002, September 30, 2002 and $1,333,333.34
December 31, 2002
March 31, 2003, June 30, 2003, September 30, $2,000,000.00
2003, and December 31, 2003
March 31, 2004, June 30, 2004, September 30, $2,000,000.00
2004, and December 31, 2004
March 31, 2005, June 30, 2005, September 30, $6,000,000.00
2005, and December 31, 2005
March 31, 2006, June 30, 2006, September 30, $6,000,000.00
2006, and December 31, 2006
March 31, 2007, June 30, 2007 and $4,000,000.00
September 30, 2007
(B) Reductions Resulting From Mandatory Repayments. The Revolving
----------------------------------------------
Loan Commitment also shall be permanently reduced to the extent and in the
amount that Borrower is required, pursuant to Section 1.8, to apply mandatory
repayments to be made pursuant to Subsection 1.7 (B), (C), (D), (E), (F) or (G)
to the Revolving Loan Facility (whether or not any Revolving Loans are then
outstanding and available to be repaid). All reductions provided for in this
Subsection 1.6(B) shall be in addition to (and shall not serve to reduce the
amount or date of) the scheduled reductions provided for in Subsection 1.6(A)
and the voluntary reductions provided for in Subsection 1.6(C) and, accordingly,
may result in the termination of the Revolving Loan Commitment prior to the date
set forth in clause (iii) of the definition of the term "Expiration Date."
(C) Voluntary Reduction of Revolving Loan Commitment. Borrower
------------------------------------------------
shall have the right, upon at least three Business Days' notice to
Administrative Agent, to permanently reduce the then unused portion of the
Revolving Loan Commitment. Each reduction shall be in a minimum amount of at
least $1,000,000, or any whole multiple of $500,000 in excess thereof, and shall
be applied as to each Lender based upon its Pro Rata Share. Notwithstanding the
foregoing, no reduction shall be permitted if, after giving effect thereto and
to any prepayment
10
<PAGE>
made therewith, the aggregate principal balance of the Loans then outstanding
would exceed the Revolving Loan Commitment as so reduced. Each reduction
pursuant to this Subsection 1.6(C) may be used as a one-time credit against the
next succeeding scheduled reduction(s) required pursuant to Subsection 1.6(A).
(D) Mandatory Repayments. On the date of each Revolving Loan
--------------------
Commitment reduction provided for in this Subsection 1.6, Borrower shall repay
Revolving Loans in an amount at least sufficient to reduce the aggregate
principal balance of Revolving Loans then outstanding to the amount of the
Revolving Loan Commitment as so reduced. If at any time the aggregate
outstanding amount of Revolving Loans exceeds the Available Revolving Loan
Commitment, Borrower shall repay Revolving Loans in an amount at least
sufficient to reduce the aggregate principal balance of Revolving Loans then
outstanding to the amount of the Available Revolving Loan Commitment, and until
such repayment is made, Lenders shall not be obligated to make Loans. Any
repayments pursuant to this Subsection 1.6(D) shall be applied in accordance
with Subsection 1.8, and shall be accompanied by accrued interest on the amount
repaid and any amount required pursuant to Subsection 1.4(C).
1.7 Voluntary Prepayments and Other Mandatory Repayments.
----------------------------------------------------
(A) Voluntary Prepayment of Loans. Subject to the provisions of
-----------------------------
Section 1.8, at any time, with one day's notice, Borrower may prepay the Base
Rate Loan, in whole or in part, without penalty. Subject to the provisions of
Section 1.8, payment of the Breakage Fee pursuant to Subsection 1.4(C) and the
notice requirement in the following sentences, at any time Borrower may prepay
any LIBOR Loan, in whole or in part. Notice of any prepayment of a LIBOR Loan
shall be given not later than 11:00 a.m. (Denver time) on the third Business Day
preceding the date of prepayment. All prepayment notices shall be irrevocable.
All prepayments shall be accompanied by accrued interest on the amount prepaid
and any amount required pursuant to Subsection 1.4(C).
(B) Repayments from Excess Cash Flow. Within one hundred twenty
--------------------------------
(120) days after the end of each of its fiscal years, commencing with the fiscal
year ending December 31, 2002, Borrower shall repay the Loans in an amount equal
to fifty percent (50%) of the Excess Cash Flow for such fiscal year. For the
purposes of this Subsection 1.7(B), Excess Cash Flow shall be calculated on a
consolidated basis for Borrower and its Restricted Subsidiaries, but excluding
the Unrestricted Subsidiary; provided, however, that the results of Texas
-------- -------
Unwired shall be consolidated only to the extent of LA Unwired's percentage
ownership interest in Texas Unwired. All such repayments shall be applied in
accordance with Subsection 1.8.
(C) Repayments from Insurance Proceeds. Borrower shall repay the
----------------------------------
Loans in an amount equal to all Net Proceeds received by Borrower or any of its
Restricted Subsidiaries which are insurance proceeds from any Asset Disposition
to the extent that such proceeds are not
11
<PAGE>
reinvested in equipment or other assets that are used or useful in the business
of Borrower or such Restricted Subsidiary, as applicable, within nine months of
receipt by Borrower or such Restricted Subsidiary of such proceeds; provided,
--------
however, that in the event of an Asset Disposition by Texas Unwired, prepayment
- -------
pursuant to this Subsection 1.7(C) will only be required in proportion to LA
Unwired's percentage ownership interest in Texas Unwired. All such repayments
shall be applied in accordance with Subsection 1.8.
(D) Repayments from Equity Issuances. Immediately upon receipt of
--------------------------------
proceeds from the issuance of any ownership interests in Borrower or any rights
to purchase any such interest, Borrower shall repay the Loans in an amount
equal to fifty percent (50%) of the amount of (i) such proceeds minus (ii) all
-----
fees, costs and expenses actually incurred in connection with such equity
issuance; provided, however, that Borrower shall not be required to repay Loans
-------- -------
from proceeds of the issuance of the Preferred Stock. All such repayments shall
be applied in accordance with Subsection 1.8.
(E) Repayments from Debt Incurrence. Immediately upon receipt of
-------------------------------
proceeds from the incurrence of any additional Indebtedness, other than the
Indebtedness described in Subsection 3.1(C), Borrower shall repay the Loans in
an amount equal to the amount of (i) such proceeds minus (ii) all fees, costs
-----
and expenses actually incurred in connection with such debt incurrence. All
such repayments shall be applied in accordance with Subsection 1.8.
(F) Repayments from proceeds of Intercompany Debt. Immediately upon
---------------------------------------------
receipt by Borrower or LA Unwired of proceeds of repayment of all or any part of
the loans from Borrower or LA Unwired to Texas Unwired permitted pursuant to
Subsection 3.1(C)(4), Borrower shall repay the Loans in an amount equal to the
amount of such proceeds.
(G) Repayments from Asset Dispositions. Immediately upon receipt
----------------------------------
by Borrower or any of its Restricted Subsidiaries of Net Proceeds other than
insurance proceeds from any Asset Disposition, Borrower shall repay the Loans in
an amount equal to such Net Proceeds; provided, however, that in the event of an
-------- -------
Asset Disposition by Texas Unwired, prepayment pursuant to this Subsection
1.7(F) will only be required in proportion to LA Unwired's percentage ownership
interest in Texas Unwired; provided further, however, that Borrower shall not be
---------------- -------
required to repay the Loans from Asset Dispositions by Texas Unwired to the
extent that the proceeds thereof were applied to repayments of the indebtedness
of Texas Unwired described in Subsection 3.1(C)(4) and to the repayment of the
Loans pursuant to Subsection 1.7(F). All such repayments shall be applied in
accordance with Subsection 1.8.
1.8 Application of Repayments; Payment of Breakage Fees, Etc. All
---------------------------------------------------------
repayments made pursuant to Subsections 1.7(B), (C), (D), (E), (F) and (G) shall
be applied first to Loans outstanding under the Term Loan Facility and then to
Loans outstanding under the Revolving Loan Facility. All repayments made
pursuant to Subsection 1.7(A) shall be applied first to Loans
12
<PAGE>
outstanding under the Revolving Loan Facility and then to Loans outstanding
under the Term Loan Facility. All repayments made pursuant to Subsections 1.6
and 1.7 shall first be applied to such of the applicable type of Loans as
Borrower shall direct in writing and, in the absence of such direction, shall
first be applied to the Base Rate Loan and then to such LIBOR Loans as Borrower
and Administrative Agent shall agree. All repayments required or permitted
hereunder shall be accompanied by payment of all applicable Breakage Fees and
accrued interest on the amount repaid. All repayments applied to Loans
outstanding under the Term Loan Facility shall be applied to principal
installments in the inverse order of maturity.
1.9 Loan Account. Administrative Agent will maintain loan account
-------------
records for (i) all Loans, interest charges and payments thereof, (ii) the
charging and payment of all fees, costs and expenses and (iii) all other debits
and credits pursuant to this Agreement. The balance in the loan accounts shall
be presumptive evidence of the amounts due and owing to Lenders, provided that
--------
any failure by Administrative Agent to maintain such records shall not limit or
affect Borrower's obligation to pay. During the continuance of an Event of
Default, Borrower irrevocably waives the right to direct the application of any
and all payments and Borrower hereby irrevocably agrees that Administrative
Agent shall have the continuing exclusive right to apply and reapply payments in
any manner it deems appropriate.
1.10 Changes in LIBOR Rate Availability. If with respect to any
----------------------------------
proposed Interest Period, Administrative Agent or any Lender (after consultation
with Administrative Agent) determines that deposits in dollars (in the
applicable amount) are not being offered to each Lender in the relevant market
for such Interest Period, Administrative Agent shall forthwith give notice
thereof to Borrower and Lenders, whereupon and until Administrative Agent
notifies Borrower that the circumstances giving rise to such situation no longer
exist, the obligations of any affected Lender to make its portion of such type
of LIBOR Loan shall be suspended.
If the introduction of, or any change in, any Applicable Law or any
change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender with any request or
directive (whether or not having the force of law) of any such Governmental
Authority, central bank or comparable agency, shall make it unlawful or
impossible for one or more Lenders to honor its obligations hereunder to make or
maintain any LIBOR Loan, such Lender shall promptly give notice thereof to
Administrative Agent, and Administrative Agent shall promptly give notice
thereof to Borrower and all other Lenders. Thereafter, until Administrative
Agent notifies Borrower that such circumstances no longer exist, (i) the
obligations of Lenders to make LIBOR Loans and the right of Borrower to convert
any Loan or continue any Loan as a LIBOR Loan shall be suspended and (ii) if any
Lender may not lawfully continue to maintain a LIBOR Loan to the end of the then
current Interest Period applicable thereto, such Loan shall immediately be
converted to the Base Rate Loan.
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1.11 Capital Adequacy and Other Adjustments.
--------------------------------------
(A) If the introduction of or the interpretation of any law, rule, or
regulation would increase the reserve requirement or otherwise increase the cost
to any Lender of making or maintaining a LIBOR Loan, then Administrative Agent,
on behalf of all affected Lenders, shall submit a certificate to Borrower
setting forth the amount and demonstrating the calculation of such increased
cost. Borrower shall pay the amount of such increased cost to Administrative
Agent for the benefit of the affected Lenders within fifteen (15) days after
receipt of such certificate. Such certificate shall, absent manifest error, be
final, conclusive and binding for all purposes. There is no limitation on the
number of times such a certificate may be submitted.
(B) In the event that any Lender shall have determined that the
adoption after the date hereof of any law, treaty, governmental (or quasi-
governmental) rule, regulation, guideline or order regarding capital adequacy,
reserve requirements or similar requirements or compliance by any Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy, reserve requirements or similar requirements (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful) from any central bank or governmental agency or body having
jurisdiction does or shall have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by such Lender or any
corporation controlling such Lender and thereby reducing the rate of return on
such Lender's or such corporation's capital as a consequence of its obligations
hereunder, then Borrower shall from time to time within fifteen (15) days after
notice and demand from such Lender (together with the certificate referred to in
the next sentence and with a copy to Administrative Agent) pay to Administrative
Agent, for the account of such Lender, additional amounts sufficient to
compensate such Lender for such reduction. A certificate as to the amount of
such cost and showing the basis of the computation of such cost submitted by
such Lender to Borrower and Administrative Agent shall, absent manifest error,
be final, conclusive and binding for all purposes. There is no limitation on
the number of times such a certificate may be submitted.
1.12 Optional Prepayment/Replacement of Lender in Respect of Increased
-----------------------------------------------------------------
Costs. Within fifteen (15) days after receipt by Borrower of written notice
- -----
and demand from any Lender (an "Affected Lender") for payment of additional
costs as provided in Subsection 1.11, Borrower may, at its option, notify
Administrative Agent and such Affected Lender of its intention to do one of the
following:
(A) Borrower may obtain, at Borrower's expense, a replacement Lender
("Replacement Lender") for such Affected Lender, which Replacement Lender shall
be reasonably satisfactory to Administrative Agent. In the event Borrower
obtains a Replacement Lender within ninety (90) days following notice of its
intention to do so, the Affected Lender shall sell and assign its Loans and its
obligations under the Loan Commitments to such Replacement Lender, provided
--------
14
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that Borrower has reimbursed such Affected Lender for its increased costs for
which it is entitled to reimbursement under this Agreement through the date of
such sale and assignment; or
(B) Borrower may prepay in full all outstanding Obligations owed to
such Affected Lender and terminate such Affected Lender's Pro Rata Share of the
Loan Commitments, in which case the Loan Commitments will be permanently reduced
by the amount of such Pro Rata Share. Borrower shall, within ninety (90) days
following notice of its intention to do so, prepay in full all outstanding
Obligations owed to such Affected Lender (including all applicable Breakage Fees
and such Affected Lender's increased costs for which it is entitled to
reimbursement under this Agreement through the date of such prepayment), and
terminate such Affected Lender's obligations under the Loan Commitments. Any
such prepayment pursuant to this Subsection 1.12(B) shall be applied in
accordance with Subsection 1.8 and shall be accompanied by payment of all
applicable Breakage Fees and accrued interest on the amount repaid.
1.13 Taxes.
-----
(A) No Deductions. Any and all payments or reimbursements made
-------------
hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto (all such taxes, levies,
imposts, deductions, charges or withholdings and all liabilities with respect
thereto excluding such taxes imposed on net income, herein "Tax Liabilities"),
excluding, however, taxes imposed on the net income of a Lender or
Administrative Agent. If Borrower shall be required by law to deduct any such
amounts from or in respect of any sum payable hereunder to any Lender or
Administrative Agent, then, except as provided in Subsection 1.13(B), the sum
payable hereunder shall be increased as may be necessary so that, after making
all required deductions, such Lender or Administrative Agent receives an amount
equal to the sum it would have received had no such deductions been made.
(B) Foreign Lenders. Each Lender organized under the laws of a
---------------
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Notes are exempt from United States
withholding tax or are subject to United States withholding tax at a reduced
rate under an applicable statute or tax treaty shall provide to Borrower and
Administrative Agent (1) a properly completed and executed Internal Revenue
Service Form 4224 or Form 1001 or other applicable form, certificate or document
prescribed by the Internal Revenue Service of the United States certifying as to
such Foreign Lender's entitlement to such exemption or reduced rate of
withholding with respect to payments to be made to such Foreign Lender under
this Agreement and under the Notes (a "Certificate of Exemption") or (2) a
letter from any such Foreign Lender stating that it is not entitled to any such
exemption or reduced rate of withholding (a "Letter of Non-Exemption"). Prior
to becoming a Lender under this Agreement and within fifteen (15) days after a
reasonable written request of Borrower or Administrative Agent from time to time
thereafter, each Foreign Lender that becomes
15
<PAGE>
a Lender under this Agreement shall provide a Certificate of Exemption or a
Letter of Non-Exemption to Borrower and Administrative Agent.
If a Foreign Lender is entitled to an exemption with respect to
payments to be made to such Foreign Lender under this Agreement (or to a reduced
rate of withholding) and does not provide a Certificate of Exemption to Borrower
and Administrative Agent within the time periods set forth in the preceding
paragraph, Borrower shall withhold taxes from payments to such Foreign Lender at
the applicable statutory rates and Borrower shall not be required to pay any
additional amounts as a result of such withholding, provided that all such
--------
withholding shall cease or be reduced, as appropriate, upon delivery by such
Foreign Lender of a Certificate of Exemption to Borrower and Administrative
Agent.
1.14 Changes in Tax Laws. In the event that, subsequent to the Closing
-------------------
Date, (i) any changes in any existing law, regulation, treaty or directive or in
the interpretation or application thereof, (ii) any new law, regulation, treaty
or directive enacted or any interpretation or application thereof, or (iii)
compliance by Administrative Agent or any Lender with any request or directive
(whether or not having the force of law) from any Governmental Authority:
(i) does or shall subject Administrative Agent or any Lender
to any tax of any kind whatsoever with respect to this Agreement, the other Loan
Documents or any Loans made hereunder, or change the basis of taxation of
payments to Administrative Agent or such Lender of principal, fees, interest or
any other amount payable hereunder (except for net income taxes, or franchise
taxes imposed in lieu of net income taxes, imposed generally by federal, state
or local taxing authorities with respect to interest or commitment or other fees
payable hereunder or changes in the rate of tax on the overall net income of
Administrative Agent or such Lender); or
(ii) does or shall impose on Administrative Agent or any Lender
any other condition or increased cost in connection with the transactions
contemplated hereby or participations herein;
and the result of any of the foregoing is to increase the cost to Administrative
Agent or any such Lender of making or continuing any Loan, or to reduce any
amount receivable hereunder, then, in any such case, Borrower shall promptly pay
to Administrative Agent or such Lender, upon its demand, any additional amounts
necessary to compensate Administrative Agent or such Lender, on an after-tax
basis, for such additional cost or reduced amount receivable, as determined by
Administrative Agent or such Lender with respect to this Agreement or the other
Loan Documents. If Administrative Agent or such Lender becomes entitled to
claim any additional amounts pursuant to this Subsection 1.14, it shall promptly
notify Borrower of the event by reason of which Administrative Agent or such
Lender has become so entitled. A certificate as to any additional amounts
payable pursuant to the foregoing sentence submitted by Administrative Agent
16
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or such Lender to Borrower and Administrative Agent shall, absent manifest
error, be final, conclusive and binding for all purposes. There is no limitation
on the number of times such a certificate may be submitted.
1.15 Term of This Agreement. All of the Obligations shall become due
----------------------
and payable as otherwise set forth herein, but in any event, all of the
remaining Obligations shall become due and payable on the date set forth in
clause (iii) of the definition of the term "Expiration Date." This Agreement
shall remain in effect through and including, and shall terminate immediately
after, the date on which all Obligations shall have been indefeasibly and
irrevocably paid and satisfied in full.
SECTION 2
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as this Agreement is in effect
and until payment in full of all Obligations, unless Requisite Lenders shall
otherwise give their prior written consent, Borrower shall perform and comply,
and shall cause its Restricted Subsidiaries to perform and comply, with all
covenants in this Section 2.
2.1 Compliance With Laws. Borrower will (i) comply with and will cause
--------------------
its Restricted Subsidiaries to comply with the requirements of all Applicable
Laws (including laws, rules, regulations and orders relating to taxes, employer
and employee contributions, securities, employee retirement and welfare
benefits, environmental protection matters and employee health and safety) as
now in effect and which may be imposed in the future in all jurisdictions in
which Borrower or any of its Restricted Subsidiaries are now or hereafter doing
business, other than those laws, rules, regulations and orders the noncompliance
with which could not reasonably be expected to have, either individually or in
the aggregate, a Material Adverse Effect, and (ii) obtain and maintain and will
cause each of its Restricted Subsidiaries to obtain and maintain all licenses,
qualifications and permits (including the Licenses) now held or hereafter
required to be held by Borrower or any of its Restricted Subsidiaries, the loss,
suspension or revocation of which or which the failure to obtain or renew could
reasonably be expected to have a Material Adverse Effect. This Subsection 2.1
shall not preclude Borrower or any of its Restricted Subsidiaries from
contesting any taxes or other payments, if they are being diligently contested
in good faith and if adequate reserves therefor are maintained in conformity
with GAAP.
2.2 Maintenance of Books and Records; Properties; Insurance. Borrower
-------------------------------------------------------
will and will cause each of its Subsidiaries to keep adequate records and books
of account, in which complete entries will be made in accordance with GAAP
consistently applied, reflecting all financial transactions. Borrower will and
will cause each of its Restricted Subsidiaries to maintain or cause to be
maintained in good repair, working order and condition all material properties
used in the
17
<PAGE>
business of the Borrower and its Restricted Subsidiaries, and will make or cause
to be made all appropriate repairs, renewals and replacements thereof. Borrower
will and will cause each of its Restricted Subsidiaries to maintain or cause to
be maintained, with financially sound and reputable insurers, public liability,
property loss and damage and business interruption insurance with respect to its
business and properties and the business and properties of Borrower and its
Restricted Subsidiaries against loss and damage of the kinds customarily carried
or maintained by corporations of established reputation engaged in the cellular
telephone and wireless communications industry and in amounts acceptable to
Administrative Agent and will deliver evidence thereof to Administrative Agent.
If any part of the Collateral lies within a "special flood hazard area" as
defined and specified by the Federal Emergency Management Agency (or other
appropriate Governmental Authority) pursuant to the Flood Disaster Protection
Act of 1973, as amended (the "FDPA"), and Administrative Agent or any Lender
determines that flood insurance coverage is required to be obtained for such
Collateral in order for Administrative Agent or such Lender to comply with the
FDPA, Borrower shall or shall cause the applicable Subsidiary Guarantor to,
obtain and maintain such flood insurance policies as Administrative Agent or
such Lender reasonably requests so that Administrative Agent or such Lender
shall be deemed in compliance with the FDPA and shall deliver evidence thereof
to Administrative Agent or such Lender. Such policies of flood insurance shall
be in form satisfactory to Administrative Agent or such Lender and shall be in
an amount of at least the lessor of the value of such Collateral constituting
buildings, structures or personal property located within the "special flood
hazard area" or the maximum limit of coverage available under Applicable Law.
Borrower will, and will cause each of the Subsidiary Guarantors to, cause
Administrative Agent, for the benefit of Administrative Agent and Lenders,
pursuant to endorsements and assignments in form and substance reasonably
satisfactory to Administrative Agent to be named, (i) as a lender loss payee in
the case of casualty insurance, (ii) as an additional insured in the case of all
liability insurance, (iii) as assignee in the case of all business interruption
insurance and (iv) as an additional insured in the case of all flood insurance.
All insurance policies required hereunder shall (i) include effective waivers by
the insurer of subrogation, (ii) provide that all insurance proceeds shall be
adjusted with and paid to Administrative Agent and (iii) be non-cancelable as to
Administrative Agent except upon thirty (30) days prior written notice given by
the insurer to Administrative Agent.
2.3 Inspection; Lender Meeting. Borrower will and will cause each of
--------------------------
its Subsidiaries to permit any authorized representatives of any Lender (i) to
visit and inspect any of the properties of Borrower and its Subsidiaries,
including their financial and accounting records, and to make copies and take
extracts therefrom, (ii) for the purpose of determining or monitoring the value
of the collateral, to obtain environmental audits or assessments (including soil
samples) by an independent engineer of any Collateral constituting real estate
or interests in real estate, and (iii) to discuss its and their affairs,
finances and business with its and their officers, employees and certified
public accountants, at such reasonable times during normal business hours and as
often as may be reasonably requested. Without in any way limiting the
foregoing, Borrower will and
18
<PAGE>
will cause each of its Subsidiaries to participate and will cause its and their
key management personnel to participate in a meeting with Administrative Agent
and Lenders at least once during each year, which meeting shall be held at such
time and such place as may be reasonably requested by Administrative Agent.
2.4 Legal Existence, Etc. Except as otherwise permitted by Subsection
---------------------
3.6, Borrower will and will cause each of its Restricted Subsidiaries to at all
times preserve and keep in full force and effect its legal existence and good
standing and all rights and franchises material to its or their business.
2.5 Use of Proceeds. Borrower will use the proceeds of the Loans solely
---------------
for the purposes described in the recital paragraphs to this Agreement. No part
of any Loan will be used to purchase any margin securities or otherwise in
violation of the regulations of the Federal Reserve System.
2.6 Further Assurances; Notices of Acquisition of Real Property.
-----------------------------------------------------------
Borrower will and will cause each of the Subsidiary Guarantors, from time to
time, do, execute and deliver all such additional and further acts, documents
and instruments as Administrative Agent or any Lender reasonably requests to
consummate the transactions contemplated hereby and to vest completely in and
assure Administrative Agent and Lenders of their respective rights under this
Agreement and the other Loan Documents, including such financing statements,
documents, security agreements and reports to evidence, perfect or otherwise
implement the security for repayment of the Obligations contemplated by the Loan
Documents. Borrower will notify Administrative Agent in writing prior to the
acquisition (including by way of lease) by Borrower or any Subsidiary Guarantor
of any real property or any interest therein (and the cost thereof or annual
rentals with respect thereto) and will, prior to any such acquisition, execute
and deliver all such additional documents and instruments as Administrative
Agent may require pursuant to this Section 2.6 (including mortgages, title
insurance policies, environmental audits, surveys and legal opinions).
2.7 CoBank Patronage Capital. So long as CoBank is a Lender hereunder,
------------------------
Borrower will acquire non-voting participation certificates in CoBank in such
amounts and at such times as CoBank may require in accordance with CoBank's
Bylaws and Capital Plan (as each may be amended from time to time), except that
the maximum amount of participation certificates that Borrower may be required
to purchase in CoBank in connection with the Loans may not exceed the maximum
amount permitted by the Bylaws at the time this Agreement is entered into. The
rights and obligations of the parties with respect to such participation
certificates and any distributions made on account thereof or on account of
Borrower's patronage with CoBank shall be governed by CoBank's Bylaws. Borrower
hereby consents and agrees that the amount of any distributions with respect to
its patronage with CoBank that are made in qualified written notices of
allocation (as defined in 26 U.S.C. (S) 1388) and that are received by Borrower
from CoBank, will be taken into account by Borrower at the stated dollar amounts
whether the distribution is
19
<PAGE>
evidenced by a participation certificate or other form of written notice that
such distribution has been made and recorded in the name of Borrower on the
records of CoBank. CoBank's Pro Rata Share of the Loans and other Obligations
due to CoBank shall be secured by a statutory first lien on all equity which
Borrower may now own or hereafter acquire in CoBank. Such equity shall not,
however, constitute security for the Obligations due to any other Lender. CoBank
shall not be obligated to set off or otherwise apply such equities to Borrower's
obligations to CoBank.
2.8 Collateral Assignments of Material Contracts. On the Closing Date,
--------------------------------------------
Borrower shall and shall cause each Subsidiary Guarantor to, execute and deliver
to Administrative Agent, for the benefit of itself and all Lenders, Collateral
Contract Assignments with respect to each of the Material Contracts listed on
Schedule 2.8. Thereafter, Borrower shall and shall cause each Subsidiary
- ------------
Guarantor to, promptly execute and deliver to Administrative Agent, for the
benefit of itself and all Lenders, all such Collateral Contract Assignments with
respect to Material Contracts as Administrative Agent may request from time to
time.
2.9 Year 2000 Preparation. Borrower shall take all action necessary to
---------------------
assure that Borrower's and each Restricted Subsidiary's computer-based systems
are able to operate and effectively process data including dates prior to, on
and after January 1, 2000 (that is, be "Year 2000 compliant") and to implement
the plan described in Subsection 5.20 in accordance with the timetable described
in Subsection 5.20. Borrower shall use its best efforts to assure that its and
its Restricted Subsidiaries' material third-party customers, suppliers and
vendors develop and implement programs to be Year 2000 compliant. At the
request of any Lender, Borrower shall provide such Lender assurance reasonably
satisfactory to such Lender of Borrower's and its Restricted Subsidiaries'
compliance with this Subsection 2.9. Borrower shall advise the Administrative
Agent and the Lenders promptly of any reasonably anticipated Material Adverse
Effect resulting from an inability of Borrower's and its Restricted
Subsidiaries' or any third-party's computer-based systems to be Year 2000
compliant.
2.10 Enforcement of Sprint Agreements. Borrower will diligently enforce
--------------------------------
and will cause its Restricted Subsidiaries diligently to enforce the obligations
of Sprint under the Sprint Agreements.
2.11 Covenants of the Unrestricted Subsidiary. Borrower will cause the
----------------------------------------
Unrestricted Subsidiary to comply with covenants set forth in Sections 4.05,
4.07, 4.09, 4.10, 4.11, 4.12, 4.13, 4.18 and 4.19 of the Subordinated Indenture,
without giving effect to any amendment, waiver or termination thereof unless
Requisite Lenders shall have consented in writing to such amendment, waiver or
termination.
SECTION 3
NEGATIVE COVENANTS
20
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Borrower covenants and agrees that so long as this Agreement is in effect
and until payment in full of all Obligations, unless Requisite Lenders shall
otherwise give their prior written consent, Borrower shall perform and comply
with all covenants in this Section 3.
3.1 Indebtedness. Borrower will not and will not permit any of its
------------
Restricted Subsidiaries directly or indirectly to create, incur, assume,
guaranty or otherwise become or remain liable with respect to any Indebtedness
other than:
(A) the Obligations;
(B) Contingent Obligations permitted by Section 3.4; and
(C) the following Indebtedness:
(1) the Subordinated Notes, in an amount not to exceed the
amount of such Notes necessary to be issued in order to result in Borrower
receiving $225,000,000 in gross proceeds from the issuance thereof;
(2) Indebtedness incurred by Borrower for the purpose of
financing the acquisition, construction and renovation of a headquarters
building and associated rights in real estate, in a principal amount not to
exceed $7,000,000;
(3) Indebtedness of Command Connect to the FCC to be assumed by
LA Unwired in connection with the transfer by Command Connect to LA Unwired of
certain Licenses, in an amount not to exceed $1,600,000; and
(4) Indebtedness incurred by Texas Unwired to LA Unwired, in an
amount not to exceed $20,000,000; provided that (a) such Indebtedness shall not
--------
be incurred prior to the date that Texas Unwired is formed, and the existing
Beaumont and Lufkin, Texas PSC properties and operations of Meretel
Communications shall have been transferred to Texas Unwired, on terms and
conditions satisfactory to Agents as described in Subsection 6.1(Y), (b) such
Indebtedness is secured by a first priority pledge of all assets, real and
personal, of Texas Unwired, (c) such Indebtedness is guaranteed by the minority
partners of Texas Unwired in an amount equal to their percentage ownership
interests in Texas Unwired, (d) such Indebtedness is pursuant to terms and
conditions, including, without limitation, amortization schedule, and is
evidenced by notes, mortgages, security agreements, guaranties and other
documents, consistent with this Agreement and otherwise satisfactory in all
respects to Administrative Agent, (e) Lenders receive an opinion of counsel to
Texas Unwired or other evidence of enforceability of such documents and pledge
and the priority of such pledge satisfactory to Administrative Agent; and (f)
such documents and rights thereunder have been collaterally assigned to
Administrative Agent, for its benefit and the benefit of Lenders, all pursuant
to terms and documents acceptable to
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Administrative Agent; provided further, that (i) any pledge by Texas Unwired of
-------- -------
its assets, whether real or personal, pursuant to this Subsection 3.1(C)(4)
shall be solely for purposes of securing Indebtedness incurred by Texas Unwired
to LA Unwired pursuant to this Subsection 3.1(C)(4) and shall not constitute
security for any other Indebtedness under this Agreement, and (ii) any guarantee
given by the minority partners of Texas Unwired pursuant to this Subsection
3.1(C)(4) shall be solely with respect to Indebtedness incurred by Texas Unwired
to LA Unwired pursuant to this Subsection 3.1(C)(4) and shall not constitute a
guarantee of any other Indebtedness under this Agreement.
3.2 Liens and Related Matters.
-------------------------
(A) No Liens. Borrower will not and will not permit any of its
--------
Restricted Subsidiaries directly or indirectly to create, incur, assume or
permit to exist any Lien on or with respect to any property or asset (including
any document or instrument with respect to goods or accounts receivable) of
Borrower or its Restricted Subsidiaries, whether now owned or hereafter
acquired, or any income or profits therefrom, except Permitted Encumbrances.
(B) No Negative Pledges. Borrower will not and will not permit any
-------------------
of its Restricted Subsidiaries directly or indirectly to enter into or assume
any agreement (other than the Loan Documents and the Subordinated Debt
Documents) prohibiting the creation or assumption of any Lien upon its or their
properties or assets, whether now owned or hereafter acquired.
3.3 Investments. Borrower will not and will not permit any of its
-----------
Restricted Subsidiaries directly or indirectly to make or own any Investment in
any Person except:
(A) Borrower and the Restricted Subsidiaries may make and own
Investments in Cash Equivalents; provided that such Cash Equivalents (other than
--------
deposit accounts in which no more than $50,000 is held overnight) are not
subject to set off rights;
(B) Investments by Borrower in LA Unwired and Unwired Telecom;
(C) Investments by Borrower or LA Unwired in Texas Unwired which, if
in the form of equity contributions, shall not, in the aggregate, exceed
$4,000,000 or, if in the form of loans permitted pursuant to Subsection
3.1(C)(iv), shall not, in the aggregate, exceed $20,000,000;
(D) Investments by Borrower in the Unrestricted Subsidiary; provided
--------
such Investments are made upon the following terms and conditions:
(1) Investments by Borrower made as of the Closing Date that
shall not, in the aggregate, exceed $5,000,000;
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(2) other Investments by Borrower that shall not, in the
aggregate, exceed $10,000,000, provided that if such Investment occurs
--------
subsequent to the earlier to occur of (i) nine months from the Closing Date
or (ii) the initial Loan hereunder, immediately prior to and after giving
effect to such other Investment, Borrower, the Restricted Subsidiaries and
the Unrestricted Subsidiary will be in compliance on a pro forma basis with
all of the covenants on their part contained herein or in any other Loan
Document and no Default or Event of Default then exists or shall result
from such other Investment; and
(3) Investments by Borrower consisting of LMDS licenses
contributed by Borrower to the Unrestricted Subsidiary.
(E) Investments by Borrower or any of its Restricted Subsidiaries in
Meretel Communications and Command Connect existing on the Closing Date that
shall not, in the aggregate, exceed $16,500,000;
(F) equities in CoBank, as set forth in Subsection 2.7; and
(G) other Investments by Borrower and the Restricted Subsidiaries
which shall not, in the aggregate for Borrower and the Restricted Subsidiaries,
exceed $1,000,000.
3.4 Contingent Obligations. Borrower will not and will not permit any
----------------------
of its Restricted Subsidiaries directly or indirectly to create or become or be
liable with respect to any Contingent Obligation except those:
(A) resulting from endorsement of negotiable instruments for
collection in the ordinary course of business;
(B) arising under indemnity agreements to title insurers in
connection with mortgagee title insurance policies in favor of Administrative
Agent;
(C) arising with respect to customary indemnification obligations
incurred in connection with permitted Asset Dispositions;
(D) incurred in the ordinary course of business with respect to
surety and appeal bonds, performance and return-of-money bonds and other similar
obligations not exceeding at any time outstanding $100,000 in aggregate
liability; and
(E) arising with respect to the following Contingent Obligations:
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(1) a guarantee by Borrower of Indebtedness of Meretel
Communications in the maximum principal amount of $4,000,000; provided that such
--------
guarantee is made pursuant to documentation containing terms and conditions
reasonably satisfactory to Administrative Agent;
(2) a guarantee by Borrower of Indebtedness of the Unrestricted
Subsidiary in the maximum principal amount of $4,500,000; provided that such
--------
guarantee is made pursuant to documentation containing terms and conditions
reasonably satisfactory to Administrative Agent; and
(3) guarantees by Unwired Telecom and LA Unwired of the
Subordinated Notes, which guarantees shall be subordinated as provided in the
Subordinated Debt Documents.
3.5 Restricted Junior Payments. Borrower will not and will not permit
--------------------------
any of its Restricted Subsidiaries directly or indirectly to declare, order,
pay, make or set apart any sum for any Restricted Junior Payment, including,
without limitation, (i) payments with respect to any put, redemption or similar
rights granted to the holders of the Preferred Stock or the Subordinated Notes,
(ii) payments with respect to any purchase or repurchase options granted to the
holders of the Subordinated Notes, or (iii) payments of "Liquidated Damages" as
defined in the Registration Rights Agreement; provided, however, that Borrower
-------- -------
may make scheduled payments of cash interest on the Subordinated Notes.
3.6 Restriction on Fundamental Changes. Borrower will not and will not
----------------------------------
permit any of its Restricted Subsidiaries directly or indirectly to: (i) unless
and only to the extent required by law, amend, modify or waive any term or
provision of its articles of organization, partnership agreement, operating
agreement, management agreements, articles of incorporation, certificates of
designations pertaining to preferred stock or by-laws; (ii) enter into any
transaction of merger or consolidation except any Subsidiary of Borrower may be
merged with or into Borrower or any wholly-owned Subsidiary of Borrower
(excluding the Unrestricted Subsidiary), provided that Borrower or such wholly-
--------
owned Subsidiary of Borrower is the surviving entity; (iii) liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution); or (iv) acquire
by purchase or otherwise all or any substantial part of the business or assets
of any other Person.
3.7 Restriction on Equity Issuance. Borrower will not and will not
------------------------------
permit any Restricted Subsidiary directly or indirectly to issue any capital
stock or other equity interests in Borrower or any Restricted Subsidiary (other
than the Preferred Stock, the Warrants, capital stock issued upon the conversion
or exercise of the Preferred Stock or Warrants pursuant to the terms of the
Preferred Stock Documents and equity interests issued and outstanding on the
date of this Agreement and reflected on Schedule 5.18 hereto).
-------------
24
<PAGE>
3.8 Disposal of Assets or Subsidiary Stock. Borrower will not and will
--------------------------------------
not permit any of its Restricted Subsidiaries directly or indirectly to:
convey, sell, lease, sublease, transfer or otherwise dispose of, or grant any
Person an option to acquire, in one transaction or a series of transactions, any
of its property, business or assets, or the capital stock of or other equity
interests in any of its Subsidiaries, whether now owned or hereafter acquired,
except for (i) bona fide sales of inventory to customers for fair value in the
ordinary course of business and dispositions of obsolete equipment not used or
useful in the business; (ii) fair market value sales of Cash Equivalents; (iii)
dispositions among Borrower, LA Unwired and Unwired Telecom or by Texas Unwired
to Borrower, LA Unwired or Unwired Telecom; (iv) dispositions by LA Unwired of
Licenses not covering the Service Areas; and (v) all other Asset Dispositions if
all of the following conditions are met: (a) the aggregate market value of
assets sold in any one transaction or series of related transactions does not
exceed $250,000; (b) the aggregate market value of assets (including such assets
but excluding any assets sold pursuant to clauses (i) through (v) above
inclusive) sold or otherwise disposed of in the immediately preceding 12-month
period does not exceed $1,000,000 in the aggregate for Borrower and its
Restricted Subsidiaries; (c) the consideration received is at least equal to the
fair market value of such assets; (d) the sole consideration received is cash;
(e) after giving effect to the sale or other disposition of such assets,
Borrower, on a consolidated basis with the Restricted Subsidiaries as set forth
in Section 4, but excluding the Unrestricted Subsidiary, is in compliance on a
pro forma basis with the covenants set forth in Section 4 recomputed for the
most recently ended month for which information is available and Borrower is in
compliance with all other terms and conditions contained in this Agreement; and
(f) no Default or Event of Default then exists or shall result from such sale or
other disposition.
3.9 Transactions with Affiliates. Borrower will not and will not permit
----------------------------
any of its Restricted Subsidiaries directly or indirectly to enter into or
permit to exist any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) with any Affiliate or with any
director, officer or employee of Borrower or any Affiliate, except (i) as set
forth on Schedule 3.9; (ii) transactions in the ordinary course of and pursuant
------------
to the reasonable requirements of the business of Borrower or such Restricted
Subsidiary and upon fair and reasonable terms which are fully disclosed to
Lenders and are no less favorable to Borrower or such Restricted Subsidiary than
would be obtained in a comparable arm's length transaction with a Person that is
not an Affiliate; or (iii) payment of compensation to directors, officers and
employees in the ordinary course of business for services actually rendered in
their capacities as directors, officers and employees, provided such
compensation is reasonable and comparable with compensation paid by companies of
like nature and similarly situated. Notwithstanding the foregoing, upon the
election of Administrative Agent or Requisite Lenders no payments may be made
with respect to any items set forth in clauses (i) and (ii) of the preceding
sentence upon the occurrence and during the continuation of a Default or Event
of Default.
3.10 Management Fees and Compensation. Borrower will not and will not
--------------------------------
permit any of its Restricted Subsidiaries directly or indirectly to pay any
management, consulting or other
25
<PAGE>
similar fees to any Person, except (i) fees paid by Borrower or any Restricted
Subsidiary to Borrower or LA Unwired; provided, that prior to December 31, 1999,
--------
Borrower or LA Unwired may pay such fees to Unwired Telecom, and (ii) other
management, consulting or similar fees as set forth on Schedule 3.10.
-------------
Notwithstanding the foregoing, upon the election of Administrative Agent or
Requisite Lenders no payments may be made with respect to any items set forth on
Schedule 3.10 upon the occurrence and during the continuation of a Default or
- -------------
Event of Default.
3.11 Conduct of Business. Borrower will not permit any of its
-------------------
Restricted Subsidiaries directly or indirectly to engage in any business other
than businesses of owning, constructing, managing, operating and investing
(subject to Section 3.3) in Wireless Systems. Borrower will not engage in any
business other than the ownership of its Subsidiaries and provision of certain
administrative services to its Subsidiaries, and shall acquire no equipment or
other assets not reasonably associated with such ownership or provisions of such
administrative services.
3.12 Fiscal Year. Borrower will not and will not permit any of its
-----------
Restricted Subsidiaries to change its fiscal year.
3.13 Subsidiaries. Borrower will not and will not permit any of its
------------
Restricted Subsidiaries directly or indirectly to establish, create or acquire
any Subsidiary.
3.14 Sprint Agreements. Borrower will not and will not permit LA Unwired
-----------------
or Texas Unwired to (a) agree or enter into any amendment or termination of any
of the Sprint Agreements or (b) exercise any of its or their elections or rights
under Section 11 of the Management Agreements that are part of the Sprint
Agreements.
3.15 Subordinated Debt Documents.
---------------------------
(A) Borrower shall not amend or otherwise change the terms of any of
the Subordinated Debt Documents. Borrower shall not make any payment which would
not have been made in the absence of an amendment or change of terms of the
Subordinated Debt Documents unless such amendment or change has been approved by
the Requisite Lenders.
(B) Borrower shall deliver to Administrative Agent (i) a copy of each
notice or other communication delivered by it or on its behalf to the trustee
under the Subordinated Note Indenture, such delivery to be made at the same time
and by the same means as such notice or other communication is delivered to such
trustee, and (ii) a copy of each notice or other communication received by
Borrower from any such trustee, such delivery to be made promptly after such
notice or other communication is received by Borrower; provided that unless
--------
Administrative Agent or the Lenders shall so request, notices of or
communications regarding amounts due and changes in interest rates which are
provided to Borrower in the ordinary course by any such trustee shall not be
required to be delivered to the Administrative Agent.
26
<PAGE>
3.16 Preferred Stock Documents. Borrower shall not amend or otherwise
-------------------------
change the terms of any of the Preferred Stock Documents. Borrower shall
promptly deliver to Administrative Agent a copy of each notice or other
communication delivered by it (or on its behalf) or to it under the Preferred
Stock Documents.
SECTION 4
FINANCIAL COVENANTS AND REPORTING
Borrower covenants and agrees that so long as this Agreement is in effect
and until payment in full of all Obligations, unless Requisite Lenders shall
otherwise give their prior written consent, Borrower shall perform and comply
with, and shall cause its Restricted Subsidiaries to perform and comply with,
all covenants in this Section 4. For the purposes of this Section 4, all
covenants calculated for Borrower shall be calculated on a consolidated basis
for Borrower and its Restricted Subsidiaries, but excluding the Unrestricted
Subsidiary; provided that the results of Texas Unwired shall be consolidated
--------
with Borrower only to the extent of LA Unwired's percentage ownership interest
in Texas Unwired. For the purposes of this Section 4, all covenants for LA
Unwired and Texas Unwired shall be calculated on a combined basis for LA Unwired
and Texas Unwired, but in the case of Texas Unwired only to the extent of LA
Unwired's percentage ownership interest in Texas Unwired.
4.1 Indebtedness to POPs Ratio. Commencing on the Closing Date,
--------------------------
Borrower shall maintain at all times during each period set forth below a ratio
of Indebtedness to POPs of not more than the ratio set forth opposite such
period:
Period Ratio
------ -----
Closing Date through June 30, 2000 30.0:1.0
July 1, 2000 through December 31, 2000 37.0:1.0
January 1, 2001 through June 30, 2001 42.0:1.0
July 1, 2001 through December 31, 2001 45.0:1.0
January 1, 2002 through December 31, 2002 52.0:1.0
January 1, 2003 and thereafter 55.0:1.0
4.2 Minimum Ending Subscribers for LA Unwired and Texas Unwired.
-----------------------------------------------------------
Commencing on December 31, 1999, Borrower shall cause LA Unwired and Texas
Unwired, on a combined
27
<PAGE>
basis, to achieve at each of the dates set forth below, and to maintain until
the next such date, a number of Subscribers not less than the amounts set forth
below opposite such date:
Date Subscribers
---- -----------
December 31, 1999 38,000
March 31, 2000 43,000
June 30, 2000 52,000
September 30, 2000 66,000
December 31, 2000 86,000
March 31, 2001 95,000
June 30, 2001 113,000
September 30, 2001 138,000
December 31, 2001 174,000
March 31, 2002 187,000
June 30, 2002 206,000
September 30, 2002 230,000
December 31, 2002 and thereafter 270,000
4.3 Minimum Monthly Revenues per Subscriber for LA Unwired and Texas
----------------------------------------------------------------
Unwired. Commencing on the Closing Date, Borrower shall cause LA Unwired and
- -------
Texas Unwired, on a combined basis, to achieve for each fiscal quarter end
occurring during each period set forth below, Revenues per Subscriber of at
least the amount set forth opposite such period:
Revenues
Period Per Subscriber
------ --------------
Closing Date through December 31, 1999 $36
January 1, 2000 through December 31, 2000 $45
January 1, 2001 and thereafter $47
4.4 Capital Expenditures for LA Unwired and Texas Unwired. Commencing
-----------------------------------------------------
on the Closing Date, Borrower will not, prior to each date set forth below,
permit LA Unwired and Texas Unwired, on a combined basis, to make capital
expenditures for the period commencing on January 1, 1999 and ending on each
date set forth below in a cumulative amount that exceed, in the aggregate for LA
Unwired and Texas Unwired, the amount set forth below opposite such date:
28
<PAGE>
Maximum Cumulative
Date Capital Expenditures
---- --------------------
December 31, 1999 $ 70,000,000
December 31, 2000 $215,000,000
December 31, 2001 $260,000,000
December 31, 2002 $270,000,000
December 31, 2003 $280,000,000
4.5 Maximum Loss for LA Unwired and Texas Unwired. Commencing December 31,
---------------------------------------------
1999, Borrower shall cause LA Unwired and Texas Unwired, on a combined basis, to
achieve for each period of four consecutive fiscal quarters ending on fiscal
quarter end set forth below, EBITDA for such period of not less than the amounts
set forth below opposite such period end:
Four Fiscal Quarters Maximum EBITDA
Ending Loss
------ ----
December 31, 1999 ($20,500,000)
March 31, 2000 ($24,500,000)
June 30, 2000 ($28,500,000)
September 30, 2000 ($35,000,000)
December 31, 2000 ($37,000,000)
March 31, 2001 ($39,000,000)
June 30, 2001 ($41,000,000)
September 30, 2001 ($43,000,000)
December 31, 2001 ($44,000,000)
March 31, 2002 ($37,000,000)
June 30, 2002 ($28,000,000)
September 30, 2002 ($17,000,000)
December 31, 2002 ($7,000,000)
29
<PAGE>
4.6 Operating Cash Flow for Unwired Telecom. Commencing December 31, 1999,
---------------------------------------
Borrower shall cause Unwired Telecom to achieve, on a stand alone basis
(unconsolidated with any other Person), for each period of four fiscal quarters
ending on the fiscal quarter end set forth below, Operating Cash Flow for such
period of four fiscal quarters of not less than the amount set forth below
opposite such fiscal quarter end:
Four Fiscal Quarters Minimum Operating
Ending Cash Flow
------ ---------
December 31, 1999 $11,500,000
March 31, 2000 $11,500,000
June 30, 2000 $11,500,000
September 30, 2000 $11,500,000
December 31, 2000 $11,000,000
March 31, 2001 $11,000,000
June 30, 2001 $11,000,000
September 30, 2001 $11,000,000
December 31, 2001 $11,000,000
March 31, 2002 $11,000,000
June 30, 2002 $11,000,000
September 30, 2002 $11,000,000
December 31, 2002 $10,700,000
March 31, 2003 $10,700,000
June 30, 2003 $10,700,000
September 30, 2003 $10,700,000
December 31, 2003 $10,500,000
4.7 Capital Expenditures for Unwired Telecom. Commencing on the Closing
----------------------------------------
Date, Borrower will not, prior to each date set forth below, permit Unwired
Telecom, on a stand alone basis (unconsolidated with any other Person), to make
capital expenditures for the period
30
<PAGE>
commencing on January 1, 1999 and ending on each date set forth below in a
cumulative amount that exceeds, in the aggregate, the amount set forth below
opposite such date:
Maximum Cumulative
Date Capital Expenditures
---- --------------------
December 31, 1999 $25,000,000
December 31, 2000 $30,000,000
December 31, 2001 $35,000,000
December 31, 2002 $40,000,000
December 31, 2003 $45,000,000
4.8 Total Leverage Ratio. Commencing January 1, 2003, Borrower shall
--------------------
maintain at all times, measured at each fiscal quarter end set forth below and
maintained through the next measurement date, a Total Leverage Ratio less than
or equal to the ratio set forth below opposite such date:
Date Ratio
---- -----
March 31, 2003 22.5:1.0
June 30, 2003 12.5:1.0
September 30, 2003 12.5:1.0
December 31, 2003 12.5:1.0
March 31, 2004 10.0:1.0
June 30, 2004 7.5:1.0
September 30, 2004 7.5:1.0
December 31, 2004 7.5:1.0
March 31, 2005 6.5:1.0
June 30, 2005 5.0:1.0
September 30, 2005 5.0:1.0
December 31, 2005
through June 29, 2006 5.0:1.0
31
<PAGE>
Date Ratio
---- -----
June 30, 2006 and
thereafter 4.0:1. 0
4.9 Senior Debt Leverage Ratio. Commencing January 1, 2003, Borrower
--------------------------
shall maintain at all times, measured at each fiscal quarter end occurring on
each date set forth below and maintained through the next measurement date, a
Senior Debt Leverage Ratio less than or equal to the ratio set forth below
opposite such date:
Date Ratio
---- -----
March 31, 2003 6.0:1.0
June 30, 2003 3.5:1.0
September 30, 2003 3.5:1.0
December 31, 2003 3.5:1.0
through June 29, 2004
June 30, 2004 and thereafter 2.5:1.0
4.10 Adjusted Quarterly Interest Coverage Ratio. Commencing January 1,
------------------------------------------
2003, Borrower shall maintain at all times, measured at each fiscal quarter end,
from March 31, 2003 through March 30, 2004, an Adjusted Quarterly Interest
Coverage Ratio greater than or equal to 1.5:1.0, and from March 31, 2004 and
thereafter, an Adjusted Quarterly Interest Coverage Ratio greater than or equal
to 2.0:1.0.
4.11 Fixed Charge Coverage Ratio. Commencing January 1, 2003, Borrower
---------------------------
shall maintain at all times, measured at each fiscal quarter end commencing with
the fiscal quarter ending March 31, 2003, a Fixed Charge Coverage Ratio greater
than or equal to 1.0:1.0.
4.12 Pro Forma Debt Service Coverage Ratio. Commencing January 1, 2003,
-------------------------------------
Borrower shall maintain at all times, measured at each fiscal quarter end
commencing with the fiscal quarter ending March 31, 2003, a Pro Forma Debt
Service Coverage Ratio greater than or equal to 1.0:1.0.
4.13 Financial Statements and Other Reports. Borrower will maintain,
--------------------------------------
and cause each of its Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in conformity with GAAP (it being
understood that quarterly financial statements are not required to have footnote
32
<PAGE>
disclosures). Borrower will deliver each of the financial statements and other
reports described below to Administrative Agent (and each Lender in the case of
the financial statements and other reports described in Subsections 4.13(A),
(B), (C), (F), (H) and (I)). In addition, so long as the Vendor Guaranty is in
effect, Borrower shall provide to Vendor Guarantor (concurrently with providing
such information to Administrative Agent), copies of all information, reports,
certificates and other documents set forth in Subsections (A) thorough (G), (I)
and (L) below, and so long as any Event of Default exists, copies of all
information or data delivered to Administrative Agent pursuant to Subsection (M)
below.
(A) Quarterly Financials. As soon as available and in any event
--------------------
within sixty (60) days after the end of each fiscal quarter, Borrower will
deliver the consolidated and consolidating balance sheets of Borrower and its
Subsidiaries, as at the end of such fiscal quarter, and the related consolidated
and consolidating statements of income, stockholder's equity and cash flow for
such fiscal quarter and for the period from the beginning of the then current
fiscal year of Borrower to the end of such quarter.
(B) Year-End Financials. As soon as available and in any event
-------------------
within one hundred twenty (120) days after the end of each fiscal year of
Borrower, Borrower will deliver (i) the consolidated and consolidating balance
sheets of Borrower and its Subsidiaries, as at the end of such year, and the
related consolidated and consolidating statements of income, stockholders'
equity and cash flow for such fiscal year and (ii) a report with respect to the
financial statements from a firm of certified public accountants selected by
Borrower and reasonably acceptable to Administrative Agent, which report shall
be prepared in accordance with Statement of Auditing Standards No. 58 (the
"Statement") entitled "Reports on Audited Financial Statements" and such report
shall be "Unqualified" (as such term is defined in such Statement).
(C) Borrower Compliance Certificate. Together with each delivery
-------------------------------
of consolidated and consolidating financial statements of Borrower and its
Subsidiaries pursuant to Subsections 4.13(A) and 4.13(B), Borrower will deliver
a fully and properly completed compliance certificate in substantially the same
form as Exhibit 4.13(C) (each, a "Compliance Certificate") signed by the chief
executive officer or chief financial officer of Borrower.
(D) Accountants' Reliance Letter. Together with each delivery of
----------------------------
consolidated and consolidating financial statements of Borrower and its
Subsidiaries pursuant to Subsection 4.13(B), Borrower will deliver a copy of a
letter addressed to Borrower's certified public accountants informing such
accountants that a primary intent of Borrower for the professional services such
accountants provided to Borrower in preparing their audit report was to benefit
or influence Lenders and their successors or assigns, and identifying Lenders as
parties that Borrower intends to rely on such professional services provided to
Borrower by such accountants.
33
<PAGE>
(E) Accountants' Reports. Promptly upon receipt thereof, Borrower
--------------------
will deliver copies of all significant reports submitted by Borrower's firm of
certified public accountants in connection with each annual, interim or special
audit or review of any type of the financial statements or related internal
control systems of Borrower made by such accountants, including any comment
letter submitted by such accountants to management in connection with their
services.
(F) Management Report. Together with each delivery of consolidated
-----------------
and consolidating financial statements of Borrower and its Subsidiaries pursuant
to Subsections 4.13(A) and 4.13(B), Borrower will deliver a management report
(i) outlining principal factors affecting performance in each market and
describing the operations and financial condition of Borrower, each of its
Restricted Subsidiaries for the quarter then ended and the portion of the
current fiscal year then elapsed (or for the fiscal year then ended in the case
of year-end financials), including a report on key subscriber, penetration,
churn, additions, deactivations and operating statistics, (ii) setting forth in
comparative form the corresponding figures for the corresponding periods of the
previous fiscal year and the corresponding figures from the most recent
Projections for the current fiscal year delivered pursuant to Subsection 4.13(G)
and (iii) discussing the reasons for any significant variations. The information
above shall be presented in reasonable detail and shall be certified by the
chief financial officer of Borrower to the effect that such information fairly
presents the results of operations and financial condition of Borrower each of
its Restricted Subsidiaries as at the dates and for the periods indicated.
(G) Projections. As soon as available and in any event prior to
-----------
the end of each of Borrower's fiscal years, Borrower will deliver Projections of
Borrower and each of its Restricted Subsidiaries for such fiscal year, quarter
by quarter. Together with each delivery of consolidated and consolidating
financial statements of Borrower and its Subsidiaries pursuant to Subsections
4.13(A) and 4.13(B), Borrower will deliver a schedule comparing the actual
performance of Borrower and each of its Restricted Subsidiaries for such fiscal
quarter and for the portion of the fiscal year then ended against the
Projections for the then-current fiscal year delivered pursuant to this
Subsection 4.13(G). Promptly after becoming aware thereof, Borrower will notify
Administrative Agent of any material amendment to or deviation from such
Projections.
(H) SEC Filings and Press Releases. Promptly upon their becoming
------------------------------
available, Borrower will deliver copies of (i) all financial statements,
reports, notices and proxy statements sent or made available by Borrower or any
of its Subsidiaries to its or their security holders, (ii) all regular and
periodic reports and all registration statements and prospectuses, if any, filed
by Borrower or any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission (the "SEC") or any governmental or private
regulatory authority, and (iii) all press releases and other statements made
available by Borrower or any of its Subsidiaries to the public concerning
developments in the business of any such Person.
34
<PAGE>
(I) Events of Default, Etc. Promptly upon any officer of Borrower
-----------------------
obtaining knowledge of any of the following events or conditions, Borrower shall
deliver copies of all notices given or received by Borrower or any of its
Subsidiaries with respect to any such event or condition and a certificate of
Borrower's chief executive officer specifying the nature and period of existence
of such event or condition and what action Borrower has taken, is taking and
proposes to take with respect thereto: (i) any condition or event that
constitutes an Event of Default or Default; (ii) any notice that any Person has
given to Borrower or any of its Subsidiaries or any other action taken with
respect to a claimed default or event or condition of the type referred to in
Subsection 6.1(B); or (iii) any event or condition that could reasonably be
expected to have a Material Adverse Effect.
(J) Litigation. Promptly upon any officer of Borrower obtaining
----------
knowledge of (i) the institution of any action, suit, proceeding, governmental
investigation or arbitration against or affecting Borrower or any of its
Restricted Subsidiaries not previously disclosed by Borrower to Administrative
Agent or (ii) any material development in any action, suit, proceeding,
governmental investigation or arbitration at any time pending against or
affecting Borrower or any of its Subsidiaries which, in each case, could
reasonably be expected to have a Material Adverse Effect, Borrower will promptly
give notice thereof to Administrative Agent and provide such other information
as may be reasonably available to Borrower to enable Administrative Agent and
its counsel to evaluate such matter.
(K) Supplemented Schedules; Notice of Corporate Changes. Annually,
---------------------------------------------------
concurrently with Borrower's delivery of the Projections required by Subsection
4.13(G), Borrower shall supplement in writing and deliver revisions of the
Schedules annexed to this Agreement to the extent necessary to disclose new or
changed facts or circumstances after the Closing Date; provided that subsequent
--------
disclosures shall not constitute a cure or waiver of any Default or Event of
Default resulting from the matters disclosed.
(L) Regulatory and Other Notices. Within fifteen (15) days after
----------------------------
filing, receipt or becoming aware thereof, copies of any filings or
communications sent to or notices and other communications received by Borrower
or any of its Subsidiaries from any Governmental Authority, including the FCC,
any applicable PUC and the SEC, relating to any noncompliance by Borrower or any
of its Subsidiaries with any law or with respect to any matter or proceeding the
effect of which could reasonably be expected to have a Material Adverse Effect
or which could reasonably be expected to result in a material adverse amendment,
change or termination of any License.
(M) Filings and Notices Relating to Sprint Agreements. Promptly
-------------------------------------------------
upon receipt or availability, Borrower will deliver copies of (i) all FCC
filings, orders or other writings relating to (a) the "Licenses," as defined in
the Sprint Agreements, (b) any of the Sprint Agreements or (c) the transactions
contemplated thereby, and (ii) all notices delivered to or given by Borrower
35
<PAGE>
relating to a breach, default or "Event of Termination," as defined in the
Sprint Agreements, including any threatened action with respect thereto, under
any of the Sprint Agreements.
(N) Other Information. With reasonable promptness, Borrower will
-----------------
deliver such other information and data with respect to Borrower and any of its
Subsidiaries as from time to time may be reasonably requested by Administrative
Agent.
4.14 Accounting Terms; Utilization of GAAP for Purposes of Calculations
------------------------------------------------------------------
Under Agreement. For purposes of this Agreement, all accounting terms not
- ---------------
otherwise defined herein shall have the meanings assigned to such terms in
conformity with GAAP. Except as otherwise expressly provided, financial
statements and other information furnished to Administrative Agent pursuant to
this Agreement shall be prepared in accordance with GAAP as in effect at the
time of such preparation. No "Accounting Changes" (as defined below) shall
affect financial covenants, standards or terms in this Agreement; provided that
--------
Borrower shall prepare footnotes to each Compliance Certificate and the
financial statements required to be delivered hereunder that show the
differences between the financial statements delivered (which reflect such
Accounting Changes) and the basis for calculating financial covenant compliance
(without reflecting such Accounting Changes). "Accounting Changes" means: (i)
changes in accounting principles required by GAAP and implemented by Borrower;
(ii) changes in accounting principles recommended by Borrower's certified public
accountants and implemented by Borrower; and (iii) changes in carrying value of
Borrower's or any of its Subsidiaries' assets, liabilities or equity accounts.
All such adjustments resulting from expenditures made subsequent to the Closing
Date (including, but not limited to, capitalization of costs and expenses or
payment of pre-Closing Date liabilities) shall be treated as expenses in the
period the expenditures are made.
SECTION 5
REPRESENTATIONS AND WARRANTIES
In order to induce Administrative Agent and Lenders to enter into this
Agreement and to make Loans, Borrower represents and warrants to Administrative
Agent and each Lender on the Closing Date and on the date of each request for a
Loan that the following statements are true, correct and complete:
5.1 Disclosure. No information furnished by or on behalf of Borrower or
----------
any Subsidiary contained in this Agreement, the financial statements referred to
in Subsection 5.8 or any other document, certificate, opinion or written
statement furnished to any Agent or any Lender for use in connection with the
Loan Documents contains any untrue statement of a material fact or omitted,
omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading in light of the
circumstances in which the same were made. Borrower is not aware of any facts
which it has not disclosed in writing to the Agents
36
<PAGE>
having a Material Adverse Effect, or insofar as Borrower can now foresee, that
could reasonably be expected to have a Material Adverse Effect.
5.2 No Material Adverse Effect. Since December 31, 1998, there has been
--------------------------
no event or change in facts or circumstance affecting Borrower or any of its
Restricted Subsidiaries which individually or in the aggregate have had or could
reasonably be expected to have a Material Adverse Effect and that have not been
disclosed herein or in the attached Schedules.
5.3 Organization, Powers, Authorization and Good Standing.
-----------------------------------------------------
(A) Organization and Powers. Each of Borrower and its Restricted
-----------------------
Subsidiaries is a limited liability company, corporation or partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation (which jurisdiction is set forth on Schedule
--------
5.3(A)). Each of Borrower and each of its Restricted Subsidiaries has all
- ------
requisite legal power and authority to own and operate its properties, to carry
on its business as now conducted and proposed to be conducted, to enter into
each Loan Document to which it is a party and to carry out its respective
obligations with respect thereto.
(B) Authorization; Binding Obligation. Each of Borrower and its
---------------------------------
Restricted Subsidiaries has taken all necessary corporate and other action to
authorize the execution, delivery and performance of this Agreement and each of
the other Loan Documents to which it is a party. This Agreement is, and the
other Loan Documents when executed and delivered will be, the legally valid and
binding obligations of the applicable parties thereto (other than Administrative
Agent and the Lenders), each enforceable against each of such parties, as
applicable, in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar state or federal debt or relief laws from time to time in effect
which affect the enforcement of creditors' rights in general and general
principles of equity.
(C) Qualification. Each of Borrower and its Restricted
-------------
Subsidiaries is duly qualified and authorized to do business and in good
standing in each jurisdiction where the nature of its business and operations
requires such qualification and authorization, except where the failure to be so
qualified, authorized and in good standing could not reasonably be expected to
have a Material Adverse Effect. All jurisdictions in which each such Person is
qualified and authorized to do business are set forth on Schedule 5.3 (C).
----------------
5.4 Compliance of Agreement, Loan Documents and Borrowings with
-----------------------------------------------------------
Applicable Law. The execution, delivery and performance by Borrower and each
- --------------
of its Restricted Subsidiaries of the Loan Documents to which each such Person
is a party, the borrowings hereunder and the transactions contemplated hereby
and thereby do not and will not, by the passage of time, the giving of notice or
otherwise, (i) except as set forth on Schedule 5.4 hereto, require any
------------
Governmental Approval or violate any Applicable Law relating to Borrower or any
of its
37
<PAGE>
Restricted Subsidiaries, (ii) conflict with, result in a breach of or constitute
a default under the articles of incorporation, bylaws or other organizational
documents of Borrower or any of its Restricted Subsidiaries or any Material
Contract to which such Person is a party or by which any of its properties may
be bound or any Governmental Approval relating to such Person or (iii) result in
or require the creation or imposition of any Lien upon or with respect to any
property now owned or hereafter acquired by such Person.
5.5 Compliance with Law; Governmental Approvals. Each of Borrower and
-------------------------------------------
each of its Restricted Subsidiaries (i) has all material Governmental Approvals,
including the Licenses, required by any Applicable Law for it to conduct its
business and (ii) is in material compliance with each Governmental Approval,
including the Licenses, applicable to it and in compliance with all other
Applicable Laws relating to it or any of its respective properties the violation
of which could reasonably be expected to have a Material Adverse Effect. Each
such Governmental Approval is in full force and effect, is final and not subject
to review on appeal and is not the subject of any pending or threatened attack
by direct or collateral proceeding.
5.6 Tax Returns and Payments. Each of Borrower and each of its
------------------------
Restricted Subsidiaries has duly filed or caused to be filed all federal, state,
local and other tax returns required by Applicable Law to be filed, and has
paid, or made adequate provision for the payment of, all federal, state, local
and other taxes, assessments and governmental charges or levies upon it and its
property, income, profits and assets which are due and payable, except where the
------
payment of such tax is being diligently contested in good faith and adequate
reserves therefor have been established in compliance with GAAP. The charges,
accruals and reserves on the books of Borrower and each of its Restricted
Subsidiaries in respect of federal, state, local and other taxes for all fiscal
years and portions thereof are in the judgment of Borrower adequate, and neither
Borrower nor any of its Restricted Subsidiaries anticipates any additional
material taxes or assessments for any of such years.
5.7 Environmental Matters. Each of Borrower and each of its Restricted
---------------------
Subsidiaries is in compliance in all material respects with all applicable
Environmental Laws, and there is no contamination at, under or about such
properties or such operations which interfere in any material respect with the
continued operation of such properties or impair in any material respect the
fair saleable value thereof, except for any such violations or contamination as
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
5.8 Financial Statements. All financial statements concerning Borrower
--------------------
and its Subsidiaries which have been or will hereafter be furnished to
Administrative Agent pursuant to this Agreement have been or will be prepared in
accordance with GAAP consistently applied (except as disclosed therein) and do
or will present fairly the financial condition of the Persons covered thereby as
of the date thereof and the results of their operations for the periods covered
thereby and do and will disclose all material liabilities and Contingent
Obligations of any of
38
<PAGE>
Borrower or its Subsidiaries as at the dates thereof. Neither Borrower nor any
of its Restricted Subsidiaries has outstanding, as of the Closing Date, and
after giving effect to the initial Loans hereunder on the Closing Date, any
Indebtedness for borrowed money or Contingent Obligations other than (i) the
Loans, (ii) the Indebtedness permitted under Subsection 3.1, and (iii) the
Contingent Obligations permitted under Subsection 3.4.
5.9 Intellectual Property. Each of Borrower and its Restricted
---------------------
Subsidiaries owns, or possesses through valid licensing arrangements, the right
to use all patents, copyrights, trademarks, trade names, service marks,
technology know-how and processes used in or necessary for the conduct of its
business as currently conducted (collectively, the "Intellectual Property
Rights") without infringing upon any validly asserted rights of others. No
event has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such rights. Neither Borrower nor
any of its Restricted Subsidiaries has been threatened with any litigation
regarding Intellectual Property Rights that would present a material impediment
to the business of any such Person.
5.10 Litigation, Investigations, Audits, Etc. Except as set forth on
----------------------------------------
Schedule 5.10, there is no action, suit, proceeding or investigation pending
- -------------
against, or, to the knowledge of Borrower, threatened against or in any other
manner relating adversely to, Borrower or any of its Restricted Subsidiaries or
any of their respective properties, including the Licenses, in any court or
before any arbitrator of any kind or before or by any Governmental Authority
(including the FCC). None of the actions, suits, proceedings or investigations
disclosed on Schedule 5.10 (i) calls into question the validity of this
-------------
Agreement or any other Loan Document, or (ii) individually or collectively
involves the possibility of any judgment or liability not fully covered by
insurance which, if determined adversely to Borrower or any of its Restricted
Subsidiaries, could reasonably be expected to have a Material Adverse Effect.
Neither Borrower nor any of its Restricted Subsidiaries is the subject of any
review or audit by the Internal Revenue Service or any investigation by any
Governmental Authority concerning the violation or possible violation of any
law.
5.11 Employee Labor Matters. Except as set forth on Schedule 5.11, (i)
---------------------- -------------
none of Borrower, its Restricted Subsidiaries nor any of their respective
employees is subject to any collective bargaining agreement, (ii) no petition
for certification or union election is pending with respect to the employees of
any such Person and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of any such Person
and (iii) there are no strikes, slowdowns, work stoppages or controversies
pending or, to the best knowledge of Borrower after due inquiry, threatened
between any such Person and its respective employees, other than employee
grievances arising in the ordinary course of business which could not reasonably
be expected to have, either individually or in the aggregate, a Material Adverse
Effect.
39
<PAGE>
5.12 Employee Benefit Plans. Borrower and its Restricted Subsidiaries
----------------------
are in compliance in all material respects with the applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
and published interpretations thereunder, the failure to comply with which could
reasonably be expected to have a Material Adverse Effect.
5.13 Communications Regulatory Matters.
---------------------------------
(A) Schedule 5.13(A) sets forth a true and complete list of the
----------------
following information for each License issued to Borrower or any of its
Restricted Subsidiaries: the name of the licensee, the type of service, the
expiration date and the geographic area covered by such License.
(B) The Licenses are valid and in full force and effect without
conditions except for such conditions as are generally applicable to holders of
such Licenses. No event has occurred and is continuing which could reasonably be
expected to (i) result in the imposition of a material forfeiture or the
revocation, termination or adverse modification of any such License or (ii)
materially and adversely affect any rights of Borrower or any of its Restricted
Subsidiaries thereunder. Borrower has no reason to believe and has no knowledge
that any Licenses will not be renewed in the ordinary course, except that all of
the Licenses are subject to revocation if LA Unwired fails to meet required
build-out requirements due to obligations to Sprint pursuant to the Sprint
Agreements to use Sprint spectrum. Neither Borrower nor any of its Restricted
Subsidiaries is a party to any investigation, notice of violation, order or
complaint issued by or before the FCC, and there are no proceedings pending by
or before the FCC which could in any manner threaten or adversely affect the
validity of any License.
(C) All of the material properties, equipment and systems owned,
leased or managed by Borrower and its Restricted Subsidiaries are, and (to the
best knowledge of Borrower) all such property, equipment and systems to be
acquired or added in connection with any contemplated system expansion or
construction will be, in good repair, working order and condition (reasonable
wear and tear excepted) and are and will be in compliance with all terms and
conditions of the Licenses and all standards or rules imposed by any
Governmental Authority or as imposed under any agreements with telephone
companies and customers.
(D) Each of Borrower and its Restricted Subsidiaries has paid all
franchise, license or other fees and charges which have become due pursuant to
any Governmental Approval in respect of its business and has made appropriate
provision as is required by GAAP for any such fees and charges which have
accrued.
5.14 Perfection and Priority. The Security Interest is a valid and
-----------------------
perfected first priority lien, security title or security interest in the
Collateral in favor of Administrative Agent, for the
40
<PAGE>
benefit of itself and Lenders, securing, in accordance with the terms of the
Security Documents, the Obligations, and the Collateral is subject to no Lien
other than permitted pursuant to Subsection 3.2. The Security Interest is
enforceable as security for the Obligations in accordance with its terms.
5.15 Solvency. Each of Borrower and its Restricted Subsidiaries: (i)
--------
owns and will own assets the present fair saleable value of which are (a)
greater than the total amount of liabilities (including contingent liabilities)
of Borrower or such Restricted Subsidiary and (b) greater than the amount that
will be required to pay the probable liabilities of its then existing debts and
liabilities as they become absolute and matured considering all financing
alternatives and potential asset sales reasonably available to Borrower or such
Restricted Subsidiary; (ii) has capital that is not unreasonably small in
relation to its business as presently conducted or after giving effect to any
contemplated transaction; and (iii) does not intend to incur and does not
believe that it will incur debts and liabilities beyond its ability to pay such
debts and liabilities as they become due.
5.16 Investment Company Act; Public Utility Holding Act. None of
--------------------------------------------------
Borrower or any of its Restricted Subsidiaries is an "investment company" as
that term is defined in and is not otherwise subject to regulation under, the
Investment Company Act of 1940, as amended. None of Borrower or any of its
Restricted Subsidiaries is a "holding company" as that term is defined in, and
is not otherwise subject to regulation under, the Public Utility Holding Company
Act of 1935, as amended.
5.17 Certain Agreements and Material Contracts. Schedule 5.17 sets
----------------------------------------- -------------
forth a complete and accurate list of all loan agreements, indentures,
guarantees, capital leases and other similar credit or reimbursement agreements
and all Material Contracts of Borrower and its Restricted Subsidiaries. Each of
Borrower and its Restricted Subsidiaries has performed all of its material
obligations under such agreements and Material Contracts and, to the best
knowledge of Borrower, each other party thereto is in compliance with each such
agreement or Material Contract. Each such agreement or Material Contract is in
full force and effect in accordance with the terms thereof. Borrower has made
available a true and complete copy of each such agreement or Material Contract
listed on Schedule 5.17 for inspection by Administrative Agent.
-------------
5.18 Capitalization. The outstanding capital stock or other ownership
--------------
interests of Borrower and its Subsidiaries is described on Schedule 5.18. All
-------------
such capital stock or other ownership interests is owned beneficially and of
record as shown on Schedule 5.18.
-------------
5.19 Title to Properties. Borrower and each Restricted Subsidiary has
-------------------
such title or leasehold interest in and to the real property owned or leased by
it as is necessary or desirable to the conduct of its business and valid and
legal title or leasehold interest in and to all of its personal property,
including those reflected on the balance sheets of Borrower delivered pursuant
to Subsection 5.8, except those which have been disposed of by Borrower
subsequent to such date
41
<PAGE>
which dispositions have been in the ordinary course of business or as otherwise
expressly permitted hereunder. Borrower owns no real property.
5.20 Year 2000 Compliance. Each of Borrower and its Restricted
--------------------
Subsidiaries has (i) initiated a review and assessment of all areas within its
business and operations (including those affected by suppliers, vendors and
customers) that could be adversely affected by the "Year 2000 Problem" (that is,
the risk that computer applications used by such Person (or its suppliers,
vendors and customers) may be unable to recognize and perform properly date-
sensitive functions involving certain dates prior to, on and after December 31,
1999), (ii) developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis, and (iii) to date, implemented that plan in accordance with
the timetable. Based on the foregoing, each of Borrower and its Restricted
Subsidiaries believes that all computer applications (including those of its
suppliers, vendors and customers) that are material to its and their business
and operations are reasonably expected on a timely basis to be able to perform
properly date-sensitive functions for all dates before and after January 1, 2000
(that is, be "Year 2000 compliant"), except to the extent that a failure to do
so could not reasonably be expected to have a Material Adverse Effect.
5.21 Incorporation of Representation and Warranties. The
----------------------------------------------
representations and warranties of Borrower contained in the Preferred Stock
Documents and the Subordinated Debt Documents are true and correct in all
material respects as of each date that the representations and warranties under
this Section 5 are deemed made or remade (and Borrower acknowledges that
Administrative Agent and Lenders are relying on the truth and accuracy of such
representation and warranties in the making of the Loans hereunder).
SECTION 6
EVENTS OF DEFAULT AND RIGHTS AND REMEDIES
6.1 Event of Default. "Event of Default" shall mean the occurrence or
----------------
existence of any one or more of the following:
(A) Payment. Failure to repay any outstanding principal amount of
-------
the Loans at the time required pursuant to this Agreement, or failure to pay,
within five (5) days after the due date, any interest on any Loan or any other
amount due under this Agreement or any of the other Loan Documents; or
(B) Default in Other Agreements. (i) Failure of Borrower or any of
---------------------------
its Restricted Subsidiaries to pay when due or within any applicable grace
period any principal or interest on Indebtedness (other than the Loans) or any
Contingent Obligation, (ii) any other breach or default of Borrower or any of
its Restricted Subsidiaries with respect to any Indebtedness (other than the
Loans) or any Contingent Obligation, including without limitation, with respect
to the
42
<PAGE>
Subordinated Notes and, in the case of Texas Unwired, any Indebtedness to
Borrower permitted pursuant to Subsection 3.1(C)(iv), if the effect of such
breach or default is to cause or to permit the holder or holders then to cause
such Indebtedness or Contingent Obligation having an aggregate principal amount
for Borrower and the Restricted Subsidiaries in excess of $250,000 to become or
be declared due prior to its stated maturity, (iii) any breach or default of
Borrower or any of its Restricted Subsidiaries under any Material Contract,
including, without limitation, any of the Sprint Agreements, (iv) any event
occurs which would give rise to an obligation of Borrower or any Restricted
Subsidiary to pay "Liquidated Damages" pursuant to Section 5 of the Registration
Rights Agreement, or (v) any event occurs which would give rise to an obligation
of Borrower to purchase or repurchase any of the Subordinated Notes from the
holder thereof; or
(C) Breach of Certain Provisions. Failure of Borrower or any
----------------------------
Subsidiary to perform or comply with any term or condition contained in that
portion of Subsection 2.2 relating to Borrower's or a Restricted Subsidiary's
obligation to maintain insurance, Subsection 2.4, Subsection 2.12, Section 3 or
Section 4; or
(D) Breach of Warranty. Any representation, warranty, certification
------------------
or other statement made by Borrower, any of its Restricted Subsidiary or Vendor
Guarantor in any Loan Document or in any statement or certificate at any time
given by Borrower, any of its Restricted Subsidiary or Vendor Guarantor in
writing pursuant or in connection with any Loan Document is false in any
material respect on the date made or deemed made; or
(E) Other Defaults Under Loan Documents. Borrower, any of its
-----------------------------------
Restricted Subsidiaries, Vendor Guarantor or any other party (other than a
Lender) breaches or defaults in the performance of or compliance with any term
contained in this Agreement or the other Loan Documents and such default is not
remedied or waived within fifteen (15) days after receipt by Borrower, such
Restricted Subsidiary, Vendor Guarantor or such other party of notice from
Administrative Agent or Requisite Lenders of such default (other than
occurrences described in other provisions of this Subsection 6.1 for which a
different grace or cure period is specified or which constitute immediate Events
of Default); or
(F) Involuntary Bankruptcy; Appointment of Receiver; Etc. (i) A
-----------------------------------------------------
court enters a decree or order for relief with respect to Borrower, any of its
Restricted Subsidiaries or Vendor Guarantor in an involuntary case under the
Bankruptcy Code, which decree or order is not stayed or other similar relief is
not granted under any applicable federal or state law within forty-five (45)
days; or (ii) the continuance of any of the following events for forty-five (45)
days unless dismissed, bonded or discharged: (a) an involuntary case is
commenced against Borrower, any of its Restricted Subsidiaries or Vendor
Guarantor, under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect; or (b) a decree or order of a court for the appointment
of a receiver, liquidator, sequestrator, trustee, custodian or other officer
having similar powers over Borrower, any of its Restricted Subsidiaries or
Vendor Guarantor, or over
43
<PAGE>
all or a substantial part of its property, is entered; or (c) an interim
receiver, trustee or other custodian is appointed without the consent of
Borrower, any of its Restricted Subsidiaries or Vendor Guarantor, for all or a
substantial part of the property of Borrower, any such Restricted Subsidiary or
Vendor Guarantor; or
(G) Voluntary Bankruptcy; Appointment of Receiver; Etc. Borrower,
---------------------------------------------------
any of its Restricted Subsidiaries or Vendor Guarantor (i) commences a voluntary
case under the Bankruptcy Code, files a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization, winding up or
composition for adjustment of debts of Borrower, any of its Restricted
Subsidiaries or Vendor Guarantor, or consents to, or fails to contest in a
timely and appropriate manner, the entry of an order for relief in an
involuntary case, the conversion of an involuntary case to a voluntary case
under any such law, or the appointment of or taking possession by a receiver,
trustee or other custodian of all or a substantial part of the property of
Borrower, any of its Restricted Subsidiaries or Vendor Guarantor; or (ii) makes
any assignment for the benefit of creditors; or (iii) the Board of Directors of
Borrower, any of its Restricted Subsidiaries or Vendor Guarantor adopts any
resolution or otherwise authorizes action to approve any of the actions referred
to in this Subsection 6.1(G); or
(H) Governmental Liens. Any Lien, levy or assessment (other than
------------------
Permitted Encumbrances) is filed or recorded with respect to or otherwise
imposed upon all or any part of the Collateral or the other assets of Borrower
or any of its Restricted Subsidiaries by the United States or any department or
instrumentality thereof or by any state, county, municipality or other
Governmental Authority; or
(I) Judgment and Attachments. Any money judgment, writ or warrant
------------------------
of attachment or similar process (other than those described in Subsection
6.1(H)) involving an amount in any individual case or in the aggregate for
Borrower and its Restricted Subsidiaries at any time in excess of $250,000 (in
either case not adequately covered by insurance as to which the insurance
company has acknowledged coverage) is entered or filed against Borrower or any
of its Restricted Subsidiaries or any of their respective assets and remains
undischarged, unvacated, unbonded or unstayed for a period of sixty (60) days or
in any event later than five (5) Business Days prior to the date of any proposed
sale thereunder; or
(J) Dissolution. Any order, judgment or decree is entered against
-----------
Borrower, any of its Restricted Subsidiaries or Vendor Guarantor decreeing the
dissolution or split up of Borrower, such Restricted Subsidiary or Vendor
Guarantor and such order remains undischarged or unstayed for a period in excess
of fifteen (15) days; or
(K) Solvency. Borrower, any of its Restricted Subsidiaries or Vendor
--------
Guarantor ceases to be solvent or Borrower, any of its Restricted Subsidiaries
or Vendor Guarantor admits in writing its present or prospective inability to
pay its debts as they become due; or
44
<PAGE>
(L) Injunction. Borrower, any of its Restricted Subsidiaries or
----------
Vendor Guarantor is enjoined, restrained or in any way prevented by the order of
any court or any Governmental Authority from conducting all or any material part
of its business and such order continues for more than fifteen (15) days; or
(M) ERISA; Pension Plans. (i) Borrower, any of its Restricted
--------------------
Subsidiaries or Vendor Guarantor fails to make full payment when due of all
amounts which, under the provisions of any employee benefit plans or any
applicable provisions of the IRC, any such Person is required to pay as
contributions thereto and such failure results in or could reasonably be
expected to have a Material Adverse Effect; or (ii) an accumulated funding
deficiency occurs or exists, whether or not waived, with respect to any such
employee benefit plans; or (iii) any employee benefit plan of Borrower, any of
its Restricted Subsidiaries or Vendor Guarantor loses its status as a qualified
plan under the IRC and such loss results in or could reasonably be expected to
have a Material Adverse Effect; or
(N) Environmental Matters. Borrower or any of its Restricted
---------------------
Subsidiaries fails to: (i) obtain or maintain any operating licenses or permits
required by environmental authorities; (ii) begin, continue or complete any
remediation activities as required by any environmental authorities; (iii) store
or dispose of any hazardous materials in accordance with applicable
environmental laws and regulations; or (iv) comply with any other environmental
laws, if in any such case such failure could reasonably be expected to have a
Material Adverse Effect; or
(O) Invalidity of Loan Documents. Any of the Loan Documents for
----------------------------
any reason, other than a partial or full release in accordance with the terms
thereof, ceases to be in full force and effect or is declared to be null and
void, or Borrower, any Restricted Subsidiary or Vendor Guarantor denies that it
has any further liability under any Loan Documents to which it is party, or
gives notice to such effect; or
(P) Damage; Strike; Casualty. Any material damage to, or loss,
------------------------
theft or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy, or
other casualty which causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of Borrower or any of its Restricted Subsidiaries if any such event or
circumstance results in or could reasonably be expected to have a Material
Adverse Effect; or
(Q) Licenses and Permits. (i) The loss, suspension or revocation
--------------------
of, or failure to renew, any license or permit now held or hereafter acquired by
Borrower or any of its Restricted Subsidiaries, if such loss, suspension,
revocation or failure to renew could reasonably be expected to have a Material
Adverse Effect; or (ii) one or more Licenses shall be terminated, revoked,
substantially adversely modified or fail to be renewed at its stated expiration,
unless such termination, revocation, modification or non-renewal results from LA
Unwired's failure to satisfy
45
<PAGE>
FCC build out or operational requirements as a result of transferring operations
to Sprint's spectrum pursuant to requirements of the Sprint Agreements; or
(R) Failure of Security. Administrative Agent, for the benefit of
-------------------
Administrative Agent and Lenders, does not have or ceases to have a valid and
perfected first priority security interest (subject to Permitted Encumbrances)
in the Collateral or any substantial portion thereof, in each case, for any
reason other than the failure of Administrative Agent to take any action within
its control; or
(S) Change in Control. William L. Henning, Sr., William L.
-----------------
Henning, Jr., Thomas G. Henning and John A. Henning, together, cease to
beneficially own and control at least 51% of the voting stock of Borrower and at
least 51% of all ownership interests (based upon rights to receive payments upon
a distribution of the assets of Borrower) of Borrower, or LA Unwired ceases to
be the Managing Partner of Texas Unwired; or
(T) Material Adverse Effect. Any event not referred to elsewhere
-----------------------
in this Subsection 6.1 shall occur which results in a Material Adverse Effect;
or
(U) Sprint Agreements and other Material Contracts. Any breach,
----------------------------------------------
default, termination or Event of Termination shall have occurred under any of
the Sprint Agreements or other Material Contracts by any of the parties thereto,
or any of the Sprint Agreements or other Material Contracts shall have been
terminated or otherwise have ceased to be in full force and effect; or
(V) Preferred Stock. Borrower shall fail within 10 days of the
---------------
Closing Date (i) to issue and sell the Preferred Stock for gross proceeds of at
least $50,000,000, pursuant to the Preferred Stock Documents, and (ii) deliver
to Agents legal opinions addressed to Agents and Lenders with respect thereto
satisfactory to Agents; or
(W) Subordinated Notes. Borrower shall fail within 10 days of the
------------------
Closing Date (i) to issue and sell the Subordinated Notes within 10 days of the
Closing Date for gross proceeds of at least $200,000,000 but not to exceed
$225,000,000, substantially on the terms set forth in the Subordinated Debt
Documents, and (ii) to deliver to Agents legal opinions with respect thereto
satisfactory to Agents; or
(X) Transfer of PCS Licenses. Command Connect shall fail, within 45
------------------------
days of the Closing Date, to validly transfer all of its PCS licenses to LA
Unwired; or
(Y) Texas Unwired. Within 180 days of the Closing Date, the existing
-------------
Beaumont and Lufkin, Texas PSC properties and operations of Meretel
Communications (including, without limitation, customers) shall not have been
transferred to Texas Unwired, all
46
<PAGE>
on terms and conditions as set forth in the Omnibus Agreement and otherwise
satisfactory to Agents.
6.2 Suspension of Commitments. Upon the occurrence of any Default or
-------------------------
Event of Default, Administrative Agent and each Lender, without notice or
demand, may immediately cease making additional Loans and cause its obligation
to lend its Pro Rata Share of each Loan Commitment to be suspended; provided
--------
that, in the case of a Default, if the subject condition or event is waived,
cured or removed by Requisite Lenders within any applicable grace or cure
period, any suspended portion of the Loan Commitments shall be reinstated.
6.3 Acceleration. Upon the occurrence of any Event of Default described
------------
in the foregoing Subsections 6.1(F) or 6.1(G), the unpaid principal amount of
and accrued interest and fees on the Loans and all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest, notice of intent to accelerate, notice of acceleration or other
requirements of any kind, all of which are hereby expressly waived by Borrower,
and the obligations of Administrative Agent and Lenders to make Loans shall
thereupon terminate. Upon the occurrence and during the continuance of any
other Event of Default, Administrative Agent may, and upon written demand by
Requisite Lenders shall, by written notice to Borrower declare all or any
portion of the Loans and all or some of the other Obligations to be, and the
same shall forthwith become, immediately due and payable together with accrued
interest thereon, and upon such acceleration the obligations of Administrative
Agent and Lenders to make Loans shall thereupon terminate.
6.4 Rights of Collection. Upon the occurrence of any Event of Default
--------------------
and at any time thereafter and unless and until such Event of Default is waived
by Requisite Lenders, Administrative Agent may exercise on behalf of Lenders all
of their other rights and remedies under this Agreement, the other Loan
Documents and Applicable Law, in order to satisfy all of Borrower's Obligations.
6.5 Consents. Borrower acknowledges that certain transactions
--------
contemplated by this Agreement and the other Loan Documents and certain actions
which may be taken by Administrative Agent or Lenders in the exercise of their
respective rights under this Agreement and the other Loan Documents may require
the consent of a Governmental Authority. If counsel to Administrative Agent
reasonably determines that the consent of a Governmental Authority is required
in connection with the execution, delivery and performance of any of the
aforesaid Loan Documents or any Loan Documents delivered to Administrative Agent
or Lenders in connection therewith or as a result of any action which may be
taken pursuant thereto, then Borrower, at Borrower's sole cost and expense,
agrees to use its reasonable efforts, and to cause its Restricted Subsidiaries
to use their reasonable best efforts, to secure such consent and to cooperate
with Administrative Agent and Lenders in any action commenced by Administrative
Agent or any Lender to secure such consent.
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6.6 Performance by Administrative Agent. If Borrower shall fail to
-----------------------------------
perform any covenant, duty or agreement contained in any of the Loan Documents,
Administrative Agent may perform or attempt to perform such covenant, duty or
agreement on behalf of Borrower after the expiration of any cure or grace
periods set forth herein. In such event, Borrower shall, at the request of
Administrative Agent, promptly pay any amount reasonably expended by
Administrative Agent in such performance or attempted performance to
Administrative Agent, together with interest thereon at the highest rate of
interest in effect upon the occurrence of an Event of Default as specified in
Subsection 1.2(E) from the date of such expenditure until paid. Notwithstanding
the foregoing, it is expressly agreed that Administrative Agent shall not have
any liability or responsibility for the performance of any obligation of
Borrower under this Agreement or any other Loan Document.
6.7 Set Off and Sharing of Payments. In addition to any rights now or
-------------------------------
hereafter granted under applicable law and not by way of limitation of any such
rights, during the continuance of any Event of Default, each Lender is hereby
authorized by Borrower at any time or from time to time, with reasonably prompt
subsequent notice to Borrower (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply any and all (A)
balances held by such Lender at any of its offices for the account of Borrower
or any of its Restricted Subsidiaries (regardless of whether such balances are
then due to Borrower or its Restricted Subsidiaries), and (B) except as provided
in Subsection 8.2(J), other property at any time held or owing by such Lender to
or for the credit or for the account of Borrower or any of its Restricted
Subsidiaries, against and on account of any of the Obligations; provided, that
--------
no Lender shall exercise any such right without the prior written consent of
Administrative Agent. Any Lender exercising a right to set off shall, to the
extent the amount of any such set off exceeds its Pro Rata Share of the amount
set off, purchase for cash (and the other Lenders shall sell) interests in each
such other Lender's Pro Rata Share of the Obligations as would be necessary to
cause such Lender to share such excess with each other Lender in accordance with
their respective Pro Rata Shares. Borrower agrees, to the fullest extent
permitted by law, that any Lender may exercise its right to set off with respect
to amounts in excess of its Pro Rata Share of the Obligations and upon doing so
shall deliver such excess to Administrative Agent for the benefit of all Lenders
in accordance with their Pro Rata Shares; provided, that CoBank may exercise its
--------
rights against any equity of CoBank held by Borrower without complying with this
sentence.
6.8 Application of Payments. Subsequent to the acceleration of the Loans
-----------------------
pursuant to Subsection 6.3, all payments received by the Lenders on the
Obligations and on the proceeds from the enforcement of the Obligations shall be
distributed pro rata among the Loans and shall be further applied among
Administrative Agent and the Lenders as follows: First, to all Administrative
Agent's fees and expenses then due and payable, then to all other expenses then
due and payable by Borrower hereunder, then to all indemnitee obligations then
due and payable by Borrower hereunder, then to all commitment and other fees and
commissions then due and payable by Borrower, then to accrued and unpaid
interest on the Loans (pro rata) in accordance
48
<PAGE>
with all such amounts due on the Loans), and then to the principal amount of the
Loans (pro rata among all Loans), in that order.
6.9 Adjustments. If any Lender (a "Benefitted Lender") shall at any
-----------
time receive any payment of all or part of its Loans, or interest thereon in a
greater proportion than any such payment received by any other Lender, if any,
in respect of such other Lender's Loans, or interest thereon, such Benefitted
Lender shall, to the extent permitted by Applicable Law, purchase for cash from
the other Lenders such portion of each such other Lender's Loans as shall be
necessary to cause such Benefitted Lender to share the excess payment or
benefits ratably with each Lender; provided, that if all or any portion of such
--------
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned
to the extent of such recovery, but without interest. Borrower agrees that each
Lender so purchasing a portion of another Lender's Loans may exercise all rights
of payment (including rights of set-off) with respect to such portion as fully
as if such Lender were the direct holder of such portion. This Subsection 6.9
shall not apply to any action taken by CoBank with respect to equity in it held
by Borrower.
SECTION 7
CONDITIONS TO LOANS
The obligations of Lenders to make Loans are subject to satisfaction of all
of the applicable conditions set forth below.
7.1 Conditions to Initial Loan. The obligations of Lenders to make the
--------------------------
initial Loan are, in addition to the conditions precedent specified in
Subsection 7.2, subject to the satisfaction of each of the following conditions:
(A) Executed Loan Documents. (i) This Agreement, (ii) the Notes, (iii)
-----------------------
the Security Agreements, (iv) the Mortgages, (v) the Pledge Agreements, (vi) the
Subsidiary Guaranties, (vii) the Vendor Guaranty, (viii) the Collateral Contract
Assignments, (ix) the Sprint Consent and Agreement, (x) the Negative Pledge
Agreement and (xi) all other documents and instruments contemplated by such
agreements, shall have been duly authorized and executed by each of Borrower and
the applicable Guarantor in form and substance satisfactory to Agents, and each
of Borrower and the applicable Guarantor shall have delivered original
counterparts thereof to Administrative Agent.
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<PAGE>
(B) Closing Certificates; Opinions.
-------------------------------
(1) Officer's Certificate. Administrative Agent shall have received,
---------------------
a certificate from the chief executive officer and chief financial officer of
Borrower and each of the Subsidiary Guarantors, in form and substance reasonably
satisfactory to Agents, to the effect that, as of such date: all
representations and warranties of Borrower and each of the Subsidiary Guarantors
contained in this Agreement and the other Loan Documents are true, correct and
complete; that none of Borrower nor any of its Subsidiaries is in violation of
any of the covenants contained in this Agreement and the other Loan Documents;
that, after giving effect to the transactions contemplated by this Agreement, no
Default or Event of Default has occurred and is continuing; that Borrower and
each of the Subsidiary Guarantors has satisfied each of the closing conditions
to be satisfied hereby; and that Borrower and each of the Subsidiary Guarantors
has filed all required tax returns and owes no delinquent taxes, except where
------
the payment of such tax is being diligently contested in good faith and adequate
reserves therefor have been established in compliance with GAAP.
(2) Certificate of Secretary of Borrower and each Subsidiary
--------------------------------------------------------
Guarantor. Administrative Agent shall have received, a certificate of the
- ---------
secretary or assistant secretary of Borrower and each of the Subsidiary
Guarantors certifying as of such date that attached thereto is a true and
complete copy of the articles of organization or incorporation of Borrower and
each of the Subsidiary Guarantors, as the case may be, and all amendments
thereto, certified as of a recent date by the appropriate Governmental Authority
in its jurisdiction of organization or incorporation; that attached thereto is a
true and complete copy of the operating agreement or bylaws, if any, of Borrower
and each of the Subsidiary Guarantors as in effect on the date of such
certification; that attached thereto is a true and complete copy of consents of
members or resolutions duly adopted by the Board of Directors of Borrower and
each of the Subsidiary Guarantors, as the case may be, authorizing the
borrowings or guaranties contemplated hereunder, the execution, delivery and
performance of this Agreement and the other Loan Documents, and the granting of
the Security Interest; and as to the incumbency and genuineness of the signature
of each officer of Borrower and each of the Subsidiary Guarantors executing Loan
Documents.
(3) Certificates of Good Standing. Administrative Agent shall have
-----------------------------
received long-form certificates as of a recent date of the good standing of
Borrower and each of the Subsidiary Guarantors under the laws of its
jurisdiction of organization and such other jurisdictions as are requested by
Agents.
(4) Opinions of Counsel. Administrative Agent shall have received
-------------------
favorable opinions of (i) counsel to Borrower and each of the Subsidiary
Guarantors addressed to Agents and Lenders with respect to Borrower and each of
the Subsidiary Guarantors (including, without limitation, the formation of
Borrower and the transfer to Borrower of the capital stock or other ownership
interests of Unwired Telecom and LA Unwired), the Loan Documents, the Security
50
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Interest and regulatory matters (including, without limitation, the Licenses)
reasonably satisfactory in form and substance to Agents, (ii) counsel to the
Vendor Guarantor addressed to Agents and Lenders with respect to the Vendor
Guaranty and the other Loan Documents to which it is a party reasonably
satisfactory in form and substance to Agents and (iii) counsel to Sprint
addressed to Agents and Lenders with respect to the Licenses owned by Sprint
reasonably satisfactory in form and substance to Agents.
(C) Collateral.
----------
(1) Filings and Recordings. All filings and recordings that are
----------------------
necessary to perfect the Security Interest in the Collateral constituting
personal property described in the Security Documents shall have been filed in
all appropriate locations and Administrative Agent shall have received evidence
satisfactory to Agents that such Security Interest constitutes a valid and
perfected first priority Lien therein.
(2) Lien Searches. Borrower shall have delivered to Administrative
-------------
Agent the results of a Lien search of all filings made against each of Borrower
and each Restricted Subsidiary under the Uniform Commercial Code as in effect in
any jurisdiction in which any of its respective assets are located, indicating
among other things that Borrower's and the Restricted Subsidiaries' assets are
free and clear of any Lien, except for Permitted Encumbrances.
(3) Insurance. Administrative Agent shall have received certificates
---------
of insurance and certified copies of insurance policies in the form required
under Subsection 2.2 and the Security Documents and otherwise in form and
substance reasonably satisfactory to Agents.
(D) Consents.
--------
(1) Governmental and Third Party Approvals. Borrower and each
--------------------------------------
Subsidiary Guarantor shall have delivered to Administrative Agent all necessary
approvals, authorizations and consents, if any, of all Persons, Governmental
Authorities, including the FCC and all applicable PUC's, and courts having
jurisdiction with respect to the execution and delivery of this Agreement and
the other Loan Documents, the granting of the Security Interest and the
execution and delivery of the Sprint Agreements, and all such approvals shall be
in form and substance satisfactory to Agents.
(2) Permits and Licenses. Administrative Agent shall have received
--------------------
copies of all material permits and licenses, including the Licenses, required
under Applicable Laws for the conduct of Borrower's and its Restricted
Subsidiaries' businesses.
(3) No Injunction, Etc. No action, proceeding, investigation,
------------------
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority
51
<PAGE>
to enjoin, restrain or prohibit, or to obtain substantial damages in respect of,
or which is related to or arises out of this Agreement or the other Loan
Documents or the consummation of the transactions contemplated hereby or
thereby, or which, as determined by Agents in their reasonable discretion, would
make it inadvisable to consummate the transactions contemplated by this
Agreement and such other Loan Documents.
(E) Financial Matters.
-----------------
(1) Financial Statements. Administrative Agent and each Lender shall
--------------------
have received recent annual and interim financial statements and other financial
information with respect to Borrower and each Restricted Subsidiary prepared in
accordance with GAAP.
(2) Fees, Expenses, Taxes, Etc. There shall have been paid by
--------------------------
Borrower to Agents the fees set forth or referenced in Subsection 1.4 and any
other accrued and unpaid fees or commissions due hereunder (including legal fees
and expenses), and to any other Person such amount as may be due thereto in
connection with the transactions contemplated hereby, including all taxes, fees
and other charges in connection with the execution, delivery, recording, filing
and registration of any of the Loan Documents.
(F) Miscellaneous.
-------------
(1) Creation of Borrower as Holding Company; Repayment of Existing
--------------------------------------------------------------
Indebtedness. Administrative Agent shall have received evidence, in form and
- ------------
substance reasonably satisfactory to Agents, that (i) all of the capital stock
or other ownership interests of each Restricted Subsidiary have been validly
transferred to Borrower, (ii) all Indebtedness incurred by such Restricted
Subsidiary prior to the initial Loan hereunder and/or secured by such capital
stock or other ownership interests of or by the assets of such Restricted
Subsidiary has been fully paid, satisfied and discharged, including, without
limitation, the repayment of all Indebtedness of Unwired Telecom pursuant to
that certain Loan Agreement dated as of August 15, 1997, between Unwired Telecom
and the lenders named therein and of LA Unwired pursuant to that certain Credit
Agreement dated as of June 23, 1999, between LA Unwired and lenders named
therein and (iii) that all Liens in respect of any such Indebtedness have been
terminated.
(2) Proceedings and Documents. All opinions, certificates and other
-------------------------
instruments and all proceedings in connection with the transactions contemplated
by this Agreement shall be reasonably satisfactory in form and substance to
Agents. Administrative Agent shall have received copies of all other instruments
and other evidence as Agents may reasonably request, in form and substance
reasonably satisfactory to Agents, with respect to the transactions contemplated
by this Agreement and the taking of all actions in connection therewith.
52
<PAGE>
(3) Sprint Agreements. Borrower and Sprint shall have entered into
-----------------
agreements with respect to Borrower's operations in form and content
satisfactory to Agents and Agents shall have approved the form of the agreements
to be entered into between Texas Unwired and Sprint.
(4) Sprint Certificate. Sprint shall have executed and delivered to
------------------
Administrative Agent a certificate as to breaches or potential Events of
Termination under the Sprint Agreements, in form and content satisfactory to
Agents.
(5) Meretel Communications/Texas Unwired. Meretel Communications and
------------------------------------
its owners (including, without limitation, Borrower) shall have entered into
agreements, including, without limitation, the Omnibus Agreement, with respect
to distribution, and contribution unto Texas Unwired, of the existing PCS
properties and operations serving the Beaumont and Lufkin, Texas BTAs, all in
form and content satisfactory to Agents.
(6) Preferred Stock Issuance. Administrative Agent shall have
------------------------
received evidence, including, without limitation, opinions of counsel,
satisfactory to Agents that the Preferred Stock has been issued and sold as
contemplated on the date hereof, for gross proceeds of at least $50,000,000,
pursuant to the Preferred Stock Documents.
(7) Subordinated Notes Issuance. Administrative Agent shall have
---------------------------
received evidence, including, without limitation, opinions of counsel,
satisfactory to Agents that the Subordinated Notes have been issued and sold as
contemplated on the date hereof, for gross proceeds of between $200,000,000 and
$225,000,000, pursuant to the Subordinated Debt Documents.
7.2 Conditions to All Loans. The several obligations of Lenders to make
-----------------------
Loans, including the initial Loan, on any date (each such date a "Funding Date")
are subject to the further conditions precedent set forth below.
(A) Administrative Agent shall have received, in accordance with the
provisions of Subsection 1.3, a notice requesting an advance of a Loan.
(B) The representations and warranties contained in Section 5 of this
Agreement and elsewhere herein and in the Loan Documents shall be (and each
request by Borrower for a Loan shall constitute a representation and warranty by
Borrower that such representations and warranties are) true, correct and
complete in all material respects on and as of such Funding Date to the same
extent as though made on and as of that date, except for any representation or
warranty limited by its terms to a specific date and taking into account any
amendments to the Schedules or Exhibits as a result of any disclosures made in
writing by Borrower to Administrative Agent after the Closing Date and approved
by Requisite Lenders in writing.
53
<PAGE>
(C) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated that would constitute an
Event of Default or a Default.
(D) No order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport to enjoin or restrain any Lender from
making any Loan.
(E) Since December 31, 1998, there shall not have occurred any event
or condition that has had or could reasonably be expected to have a Material
Adverse Effect.
(F) All Loan Documents shall be in full force and effect.
(G) Borrower and Guarantors shall have delivered to Administrative
Agent such other documents, certificates and opinions as Agents reasonably
request.
SECTION 8
ASSIGNMENT AND PARTICIPATION
8.1 Assignments and Participations in Loans and Notes. Each Lender
-------------------------------------------------
(including CoBank) may assign, subject to the terms of a Lender Addition
Agreement, its rights and delegate its obligations under this Agreement to one
or more Persons, provided that (a) such Lender shall first obtain the written
--------
consent of each of Administrative Agent and, if no Default or Event of Default
shall have occurred and be continuing, Borrower, which consents shall not be
unreasonably withheld or delayed; (b) the Pro Rata Share of a Loan Commitment
being assigned shall in no event be less than the lesser of (i) $5,000,000
(which may be aggregated where several Lenders are simultaneously assigning to
the same Person) and (ii) the entire amount of the Pro Rata Share of such Loan
Commitment of the assigning Lender; and (c) upon the consummation of each such
assignment the assigning Lender shall pay Administrative Agent a non-refundable
administrative fee of $2,000; provided, that in connection with an assignment
--------
from a Lender to an affiliate of such Lender written consent of Borrower shall
not be required and no administrative fee shall be payable. From and after the
effective date specified in a duly executed, delivered and accepted Lender
Addition Agreement, which effective date shall be at least five (5) Business
Days after the execution thereof (unless Administrative Agent shall otherwise
agree), (A) the assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Lender Addition Agreement, shall have the rights and obligations of the
assigning Lender hereunder with respect thereto and (B) the assigning Lender
shall, to the extent that rights and obligations hereunder have been assigned by
it pursuant to such Lender Addition Agreement, relinquish its rights (other than
rights under the provisions of this Agreement and the other Loan Documents
relating to indemnification or payment of fees, costs
54
<PAGE>
and expenses, to the extent such rights relate to the time prior to the
effective date of such Lender Addition Agreement) and be released from its
obligations under this Agreement other than obligations to the extent relating
to the time prior to the effective date of such Lender Addition Agreement (and,
in the case of a Lender Addition Agreement covering all or the remaining portion
of such assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). The terms and provisions of each
Lender Addition Agreement shall, upon the effectiveness thereof be incorporated
into and made a part of this Agreement, and the covenants, agreements and
obligations of each Lender set forth therein shall be deemed made to and for the
benefit of Administrative Agent and the other parties hereto as if set forth at
length herein. Upon its receipt of a duly completed Lender Addition Agreement
executed by an assigning Lender and an assignee, and Borrower (if required),
together with any Note subject to such assignment and the processing fee
referred to above, Administrative Agent will accept such Lender Addition
Agreement and give notice thereof to Borrower and the other Lenders. In the
event of an assignment pursuant to this Subsection 8.1, Borrower shall, upon
surrender of the assigning Lender's Note, issue a new Note to reflect the
interests of the assigning Lender and the Person to which interests are to be
assigned.
Each Lender (including Administrative Agent) may sell participations in all
or any part of its Pro Rata Share of each Loan Commitment to one or more
Persons; provided that such Lender shall first obtain the prior written consent
--------
of Administrative Agent; and provided, further, that such Lender's obligations
-------- -------
under this Agreement shall remain unchanged; Borrower, Administrative Agent and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement; all
amounts payable by Borrower hereunder shall be determined as if that Lender had
not sold such participation; and the holder of any such participation shall not
be entitled to require such Lender to take or omit to take any action hereunder
except action directly affecting (i) any reduction, modification or forgiveness
in the principal amount, interest rate or fees payable with respect to any Loan;
(ii) any extension of the Expiration Date, or any change of any date fixed for
any payment of any of the Obligations; and (iii) any consent to the assignment,
delegation or other transfer by Borrower of any of its rights and obligations
under any Loan Document. Borrower hereby acknowledges and agrees that any
participation will give rise to a direct obligation of Borrower to the
participant, and the participant shall for purposes of Subsections 1.11, 1.13,
1.14, 6.7 and 9.1 be considered to be a "Lender."
Except as otherwise provided in this Subsection 8.1, no Lender shall, as
between Borrower and such Lender, be relieved of any of its obligations
hereunder as a result of any sale, assignment, transfer or negotiation of, or
granting of a participation in, all or any part of the Loans, the Note or other
Obligations owed to such Lender. Each Lender may furnish any information
concerning Borrower and its Subsidiaries in the possession of that Lender from
time to time to assignees and participants (including prospective assignees and
participants), subject to the provisions of Subsection 9.13.
55
<PAGE>
Nothing in this Agreement shall be construed to prohibit any Lender from
pledging or assigning all or any portion of its rights and interest hereunder or
under any Note to any Federal Reserve Bank as security for borrowings therefrom;
provided, that no such pledge or assignment shall release a Lender from any of
- --------
its obligations hereunder.
Notwithstanding anything contained in this Agreement to the contrary, so
long as Requisite Lenders shall remain capable of making LIBOR Loans, no Person
shall become a "Lender" hereunder unless such Person shall also be capable of
making LIBOR Loans.
CoBank reserves the right to assign or sell participations in all or any
part of its Pro Rata Share of each Loan Commitment on a non-patronage basis.
8.2 Agents.
------
(A) Appointment. Each Lender hereby irrevocably appoints and
-----------
authorizes (i) CoBank, as Administrative Agent, to act as Administrative Agent
hereunder and under any other Loan Document with such powers as are specifically
delegated to Administrative Agent by the terms of this Agreement and any other
Loan Document, together with such other powers as are reasonably incidental
thereto, (ii) The Bank of New York, as Documentation Agent, to act as
Documentation Agent hereunder and under any other Loan Document with such powers
as are specifically delegated to the Documentation Agent by the terms of this
Agreement and any other Loan Document, together with such other powers as are
reasonably incidental thereto, and (iii) First Union Capital Markets Corp., as
Syndication Agent, to act as Syndication Agent hereunder and under any other
Loan Document with such powers as are specifically delegated to the Syndication
Agent by the terms of this Agreement and any other Loan Document, together with
such other powers as are reasonably incidental thereto. Administrative Agent is
authorized and empowered to amend, modify or waive any provisions of this
Agreement or the other Loan Documents on behalf of Lenders subject to the
requirement that the consent of certain Lenders be obtained in certain
instances as provided in Subsections 8.3 and 9.2. CoBank hereby agrees to act
as Administrative Agent on the express conditions contained in this Subsection
8.2. The provisions of this Subsection 8.2 are solely for the benefit of Agents
and Lenders, and Borrower shall have no rights as a third party beneficiary of
any of the provisions hereof. In performing its functions and duties under this
Agreement, Agent shall act solely as an agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation toward or relationship of
agency or trust with or for Borrower. Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through agents
or attorneys-in-fact and shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact that it selects with reasonable
care.
(B) Nature of Duties. The duties of Agents and Co-Arrangers shall
----------------
be mechanical and administrative in nature. None of Agents shall have by reason
of this Agreement
56
<PAGE>
a fiduciary relationship in respect of any Lender. Nothing in this Agreement or
any of the Loan Documents, express or implied, is intended to or shall be
construed to impose upon Agents any obligations in respect of this Agreement or
any of the Loan Documents except as expressly set forth herein or therein. Each
Lender expressly acknowledges that none of Administrative Agent or any other
Agent or any Co-Arranger nor any of their respective officers, directors,
employees, agents, attorneys-in-fact or Affiliates has made any representation
or warranty to it and that no act by Agent or Co-Arranger or any such Person
hereafter taken, including any review of the affairs of Borrower and its
Subsidiaries, shall be deemed to constitute any representation or warranty by
Agent or Co-Arranger to any Lender. Each Lender represents to Agent and Co-
Arranger that (i) it has, independently and without reliance upon Agents, Co-
Arrangers or any other Lender and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, properties, financial and other condition and
creditworthiness of Borrower and its Subsidiaries and made its own decision to
enter into this Agreement and extend credit to Borrower hereunder, and (ii) it
will, independently and without reliance upon Agents, Co-Arrangers or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit analysis, appraisals and decisions
in taking or not taking action hereunder and under the other Loan Documents and
to make such investigation as it deems necessary to inform itself as to the
business, prospects, operations, properties, financial and other condition and
creditworthiness of Borrower and its Subsidiaries. Neither Administrative Agent,
any other Agent nor Co-Arrangers shall have any duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto (other than as expressly required
herein). If Administrative Agent seeks the consent or approval of any Lenders to
the taking or refraining from taking of any action hereunder, then
Administrative Agent shall send notice thereof to each Lender. Administrative
Agent shall promptly notify each Lender any time that Requisite Lenders have
instructed Administrative Agent to act or refrain from acting pursuant hereto.
(C) Rights, Exculpation, Etc. None of Agents or Co-Arrangers nor
-------------------------
any of their respective officers, directors, employees, agents or attorneys-in-
fact shall be liable to any Lender for any action taken or omitted by them
hereunder or under any of the Loan Documents, or in connection herewith or
therewith, except that each such entity shall be liable with respect to its own
gross negligence or willful misconduct. Administrative Agent shall not be
liable for any apportionment or distribution of payments made by it in good
faith and if any such apportionment or distribution is subsequently determined
to have been made in error the sole recourse of any Lender to whom payment was
due but not made, shall be to recover from other Lenders any payment in excess
of the amount to which they are determined to be entitled (and such other
Lenders hereby agree to return to such Lender any such erroneous payments
received by them). In performing its functions and duties hereunder,
Administrative Agent shall exercise the same care which it would in dealing with
loans for its own account, but Administrative Agent shall not be responsible to
any Lender for any recitals, statements, representations or warranties herein or
for the execution, effectiveness, genuineness, validity, enforceability,
collectibility or sufficiency
57
<PAGE>
of this Agreement or any of the Loan Documents or the transactions contemplated
thereby, or for the financial condition of Borrower. Administrative Agent may at
any time request instructions from Lenders with respect to any actions or
approvals which by the terms of this Agreement or of any of the Loan Documents
Administrative Agent is permitted or required to take or to grant, and if such
instructions are promptly requested, Administrative Agent shall be absolutely
entitled to refrain from taking any action or to withhold any approval and shall
not be under any liability whatsoever to any Person for refraining from any
action or withholding any approval under any of the Loan Documents (i) if such
action or omission would, in the reasonable opinion of Administrative Agent,
violate any Applicable Law or any provision of this agreement or any other Loan
Document, or (ii) until it shall have received such instructions from Requisite
Lenders or all of the Lenders, as applicable. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against Administrative Agent as
a result of Administrative Agent acting or refraining from acting under this
Agreement, the Notes, or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders.
(D) Reliance. Administrative Agent shall be entitled to rely, and
--------
shall be fully protected in relying, upon any written or oral notices,
statements, certificates, orders or other documents or any telephone message or
other communication (including any writing, telex, telecopy or telegram)
believed by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters pertaining to
this Agreement or any of the Loan Documents and its duties hereunder or
thereunder, upon advice of counsel selected by it in connection with the
preparation, negotiation, execution, delivery, administration, amendment,
modification, waiver or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or any of the other Loan Documents.
(E) Indemnification. Lenders will reimburse and indemnify each
---------------
Agent and Co-Arranger and their respective officers, directors, employees,
agents, attorneys-in-fact and Affiliates, on demand for and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, attorney's fees and expenses), advances or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against any Agent or Co-Arranger (i) in any way relating to or
arising out of this Agreement or any of the Loan Documents or any action taken
or omitted by such Agent or Co-Arranger under this Agreement or any of the Loan
Documents, and (ii) in connection with the preparation, negotiation, execution,
delivery, administration, amendment, modification, waiver or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement or any of
the other Loan Documents in proportion to each Lender's Pro Rata Share;
provided, that no Lender shall be liable for any portion of such liabilities,
- --------
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, advances or disbursements resulting from such Agent's or Co-Arranger's
gross negligence or willful misconduct. If any indemnity furnished to
Administrative Agent for any
58
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purpose shall, in the opinion of Administrative Agent, be insufficient or become
impaired, Administrative Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional indemnity
is furnished. The obligations of Lenders under this Subsection 8.2(E) shall
survive the payment in full of the Obligations and the termination of this
Agreement.
(F) CoBank Individually. With respect to its obligations under the
-------------------
Loan Commitments, the Loans made by it, and the Notes issued to it, CoBank shall
have and may exercise the same rights and powers hereunder and is subject to the
same obligations and liabilities as and to the extent set forth herein for any
other Lender. The terms "Lenders" or "Requisite Lenders" or any similar terms
shall, unless the context clearly otherwise indicates, include CoBank in its
individual capacity as a Lender or one of the Requisite Lenders. CoBank may
lend money to, and generally engage in any kind of banking, trust or other
business with, Borrower or any of its Subsidiaries as if it were not acting as
Administrative Agent pursuant hereto.
(G) Notice of Default. Administrative Agent shall not be required
-----------------
to make any inquiry concerning either the performance or observance of any of
the terms, provisions or conditions of this Agreement or any of the Loan
Documents or the financial condition of Borrower or any of its Subsidiaries, or
the existence or possible existence of any Default or Event of Default.
Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default unless Administrative Agent shall
have received written notice from Borrower or a Lender referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that Administrative Agent receives
such a notice, Administrative Agent will give notice thereof to Lenders as soon
as reasonably practicable; provided, that if any such notice has also been
--------
furnished to Lenders, Administrative Agent shall have no obligation to notify
Lenders with respect thereto. Administrative Agent shall (subject to this
Subsection 8.2) take such action with respect to such Default or Event of
Default as shall reasonably be directed by the Required Lenders; provided,
--------
further, that, unless and until Administrative Agent shall have received such
- -------
directions, Administrative Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable and in the best interests of
Lenders.
(H) Successor Administrative Agent.
------------------------------
(1) Resignation. Administrative Agent may resign from the
-----------
performance of all its agency functions and duties hereunder at any time by
giving at least thirty (30) Business Days' prior written notice to Borrower and
Lenders. Such resignation shall take effect upon the acceptance by a successor
Administrative Agent of appointment pursuant to clause (2) below or as otherwise
provided below.
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(2) Appointment of Successor. Upon any such notice of resignation
------------------------
pursuant to clause (1) above, Requisite Lenders shall, upon receipt, if no Event
of Default or Default shall have occurred and be continuing, of Borrower's prior
consent which shall not be unreasonably withheld, appoint a successor
Administrative Agent from among Lenders. If a successor Administrative Agent
shall not have been so appointed within the thirty (30) Business Day period,
referred to in clause (1) above, the retiring Administrative Agent, upon notice
to Borrower, shall then appoint a successor Administrative Agent from among
Lenders who shall serve as Administrative Agent until such time, if any, as
Requisite Lenders, upon receipt of Borrower's prior written consent which shall
not be unreasonably withheld, appoint a successor Administrative Agent as
provided above.
(3) Successor Administrative Agent. Upon the acceptance of any
------------------------------
appointment as Administrative Agent under the Loan Documents by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent, and the retiring Administrative Agent
shall be discharged from its duties and obligations under the Loan Documents.
After any retiring Administrative Agent's resignation as Administrative Agent
under the Loan Documents, the provisions of this Subsection 8.2 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under the Loan Documents.
(I) Collateral Matters.
------------------
(1) Release of Collateral. Lenders hereby irrevocably authorize
---------------------
Administrative Agent, at its option and in its discretion, to release any Lien
granted to or held by Administrative Agent upon any property covered by the
Security Documents (i) upon termination of the Loan Commitments and payment and
satisfaction of all Obligations (other than contingent indemnification
Obligations not then due and payable); (ii) constituting property being sold or
disposed of if Borrower certifies to Administrative Agent that the sale or
disposition is made in compliance with the provisions of this Agreement (and
Administrative Agent may rely in good faith conclusively on any such
certificate, without further inquiry); or (iii) constituting property leased to
Borrower under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been, and
is not intended by Borrower to be, renewed or extended. In addition,
Administrative Agent, with the consent of Requisite Lenders, may release or
compromise any Collateral and the proceeds thereof; provided that in any fiscal
--------
year, the consent of all Lenders shall be required for any release or compromise
of Collateral or the proceeds thereof if (a) such Collateral constitutes a
License or (b) the net book value of such Collateral and proceeds, together with
the net book value of all other Collateral and proceeds released in such fiscal
year, exceeds ten percent (10%) of the net book value of all assets of Borrower
as of the last day of the preceding fiscal year, as determined by Administrative
Agent.
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(2) Confirmation of Authority; Execution of Releases. Without in
------------------------------------------------
any manner limiting Administrative Agent's authority to act without any specific
or further authorization or consent by Lenders (as set forth in Subsection
8.2(I)(1)), each Lender agrees to confirm in writing, upon request by
Administrative Agent or Borrower, the authority to release any property covered
by the Security Documents conferred upon Administrative Agent under clauses (i)
through (iii) of the first sentence of Subsection 8.2(I)(1). Upon receipt by
Administrative Agent of confirmation from Requisite Lenders, if any, of its
authority to release or compromise any particular item or types of property
covered by the Security Documents, and upon at least ten (10) Business Days
prior written request by Borrower, Administrative Agent shall (and is hereby
irrevocably authorized by Lenders to) execute such documents as may be necessary
to evidence the release or compromise of the Liens granted to Administrative
Agent, for the benefit of Administrative Agent and Lenders, upon such
Collateral, provided that (i) Administrative Agent shall not be required to
--------
execute any such document on terms which, in Administrative Agent's opinion,
would expose Administrative Agent to liability or create any obligation or
entail any consequence other than the release or compromise of such Liens
without recourse or warranty, and (ii) such release or compromise shall not in
any manner discharge, affect or impair the Obligations or any Liens upon (or
obligations of Borrower, in respect of), all interests retained by Borrower in
the Collateral, including the proceeds of any sale or other disposition of
Collateral, all of which shall continue to constitute part of the property
covered by the Security Documents.
(3) Absence of Duty. Administrative Agent shall have no obligation
---------------
whatsoever to any Lender or any other Person to assure that the property covered
by the Security Documents exists or is owned by Borrower or is cared for,
protected or insured or has been encumbered or that the Liens granted to
Administrative Agent have been properly or sufficiently or lawfully created,
perfected, protected or enforced or are entitled to any particular priority, or
to exercise at all or in any particular manner or under any duty of care,
disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to Administrative Agent in this
Agreement or in any other Loan Document, it being understood and agreed that in
respect of the property covered by the Security Documents or any act, omission
or event related thereto, Administrative Agent may act in any manner it may deem
appropriate, in its discretion, given Administrative Agent's own interest in
property covered by the Security Documents as one of the Lenders and that
Administrative Agent shall have no duty or liability whatsoever to any of the
other Lenders, provided that Administrative Agent shall exercise the same care
--------
which it would in dealing with loans for its own account.
(J) Agency for Perfection; Enforcement of Security by Administrative
----------------------------------------------------------------
Agent. Administrative Agent and each Lender hereby appoint each other Lender
- -----
as agent for the purpose of perfecting Administrative Agent's security interest
in assets which, in accordance with Article 9 of the Uniform Commercial Code in
---------
any applicable jurisdiction, can be perfected only by possession. Should any
Lender (other than Administrative Agent) obtain possession of any such
61
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Collateral, such Lender shall notify Administrative Agent thereof, and, promptly
upon Administrative Agent's request therefor, shall deliver such Collateral to
Administrative Agent or in accordance with Administrative Agent's instructions.
Each Lender agrees that it will not have any right individually to enforce or
seek to enforce any Security Document or to realize upon any collateral security
for the Loans, it being understood and agreed that such rights and remedies may
be exercised only by Administrative Agent.
(K) Dissemination of Information. Administrative Agent will use
----------------------------
its best efforts to provide Lenders with any information received by
Administrative Agent from Borrower which is required to be provided to a Lender
hereunder, provided that Administrative Agent shall not be liable to Lenders for
--------
any failure to do so, except to the extent that such failure is attributable to
Administrative Agent's gross negligence or willful misconduct.
8.3 Amendments, Consents and Waivers for Certain Actions.
----------------------------------------------------
(A) Except as otherwise provided in this Agreement (including this
Subsection 8.3 and Subsection 9.2), any Lender Addition Agreement or any other
Loan Document, the consent of Requisite Lenders and Borrower will be required to
amend, modify, terminate, or waive any provision of this Agreement or any of the
other Loan Documents.
(B) In the event Administrative Agent requests the consent of a Lender
and does not receive a written consent or denial thereof within ten (10)
Business Days after such Lender's receipt of such request, then such Lender will
be deemed to have denied the giving of such consent.
8.4 Disbursement of Funds. Administrative Agent shall advise each
---------------------
Lender by telephone or telecopy of the amount of such Lender's Pro Rata Share of
any Loan requested by Borrower no later than 11:00 a.m. (Denver time) on the
Funding Date applicable thereto, and each such Lender shall pay Administrative
Agent such Lender's Pro Rata Share of such requested Loan, in same day funds, by
wire transfer to Administrative Agent's account by no later than 1:00 p.m.
(Denver time) on such Funding Date. If any Lender fails to pay the amount of its
Pro Rata Share forthwith upon Administrative Agent's demand, Administrative
Agent shall promptly notify Borrower, and Administrative Agent shall disburse to
Borrower, by wire transfer of immediately available funds, that portion of such
Loan as to which Administrative Agent has received funds. In such event,
Administrative Agent may, on behalf of any Lender not timely paying
Administrative Agent, disburse funds to Borrower for Loans requested, subject to
the provisions of Subsection 8.5(B). Each such Lender shall reimburse
Administrative Agent on demand for all funds disbursed on its behalf by
Administrative Agent. Nothing in this Subsection 8.4 or elsewhere in this
Agreement or the other Loan Documents, including the provisions of Subsection
8.5, shall be deemed to require Administrative Agent to advance funds on behalf
of any Lender or to relieve any Lender from its obligation to fulfill its
commitments hereunder or to prejudice
62
<PAGE>
any rights that Administrative Agent or Borrower may have against any Lender as
a result of any default by such Lender hereunder.
8.5 Disbursements of Advances; Payments.
-----------------------------------
(A) Pro Rata Treatment; Application. Upon receipt by
-------------------------------
Administrative Agent of each payment from Borrower hereunder, other than as
described in the succeeding sentence, Administrative Agent shall credit each
Lender's account with its Pro Rata Share of such payment in accordance with such
Lender's Pro Rata Share and shall wire advice of the amount of such credit to
each Lender. Each payment to Administrative Agent of its fees shall be made in
like manner, but for the account of Administrative Agent.
(B) Availability of Lender's Pro Rata Share.
---------------------------------------
(1) Unless Administrative Agent has been notified by a Lender
prior to a Funding Date of such Lender's intention not to fund its Pro Rata
Share of the Loan amount requested by Borrower, Administrative Agent may assume
that such Lender will make such amount available to Administrative Agent on the
Funding Date. If such amount is not, in fact, made available to Administrative
Agent by such Lender when due, and Administrative Agent disburses funds to
Borrower on behalf of such Lender, Administrative Agent will be entitled to
recover such amount on demand from Borrower, without set-off, counterclaim or
deduction of any kind, with interest thereon at the rate per annum then
applicable to such Loan.
(2) Nothing contained in this Subsection 8.5(B) will be deemed
to relieve a Lender of its obligation to fulfill its commitments or to prejudice
any rights Administrative Agent or Borrower may have against such Lender as a
result of any default by such Lender under this Agreement.
(C) Return of Payments
------------------
(1) If Administrative Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by Administrative Agent from Borrower and such related payment
is not received by Administrative Agent, then Administrative Agent will be
entitled to recover such amount from such Lender without set-off, counterclaim
or deduction of any kind.
(2) If Administrative Agent determines at any time that any
amount received by Administrative Agent under this Agreement must be returned to
Borrower or paid to any other Person pursuant to any solvency law or otherwise,
then, notwithstanding any other term or condition of this Agreement,
Administrative Agent will not be required to distribute any portion thereof to
any Lender. In addition, each Lender will repay to Administrative Agent on
demand
63
<PAGE>
any portion of such amount that Administrative Agent has distributed to
such Lender, together with interest at such rate, if any, as Administrative
Agent is required to pay to Borrower or such other Person, without set-off,
counterclaim or deduction of any kind.
SECTION 9
MISCELLANEOUS
9.1 Indemnities. Borrower agrees to indemnify, pay, and hold each
-----------
Agent, each Co-Arranger and each Lender and their respective officers,
directors, employees, agents, and attorneys (the "Indemnities") harmless from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits and claims of any kind or nature whatsoever that may
be imposed on, incurred by, or asserted against the Indemnitee as a result of
its being a party to this Agreement; provided, that Borrower shall have no
--------
obligation to an Indemnitee hereunder with respect to liabilities arising from
the gross negligence or willful misconduct of that Indemnitee as determined by a
court of competent jurisdiction. This Subsection 9.1 and all indemnification
provisions contained within any other Loan Document shall survive the
termination of this Agreement.
9.2 Amendments and Waivers. Except as otherwise provided herein, no
----------------------
amendment, modification, termination or waiver of any provision of this
Agreement, the Notes or any of the other Loan Documents, or consent to any
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by Borrower and Requisite Lenders (or
Administrative Agent, if expressly set forth herein, in any Note or in any other
Loan Document); provided, that except to the extent permitted by any applicable
--------
Lender Addition Agreement, no amendment, modification, termination or waiver
shall, unless in writing and signed by all Lenders, do any of the following: (i)
increase any Lender's Pro Rata Share of either Loan Commitment; (ii) reduce the
principal of, rate of interest on or fees payable with respect to any Loan;
(iii) extend the Expiration Date or extend the date on which any Obligation is
to be paid; (iv) change the aggregate unpaid principal amount of the Loans; (v)
change the percentage of Lenders which shall be required for Lenders or any of
them to take any action hereunder; (vi) release Collateral (except if the sale
or disposition of such Collateral is permitted under Subsection 8.2 or any other
Loan Document or of any guaranty of the Obligations (except to the extent
expressly contemplated thereby)); (vii) amend or waive this Subsection 9.2 or
the definitions of the terms used in this Subsection 9.2 insofar as the
definitions affect the substance of this Subsection 9.2; or (viii) consent to
the assignment, delegation or other transfer by Borrower of any of its rights
and obligations under any Loan Document; provided, further, that no amendment to
-------- -------
the Sprint Consent and Agreement shall be amended without the consent of Lenders
who have in the aggregate Pro Rata Shares greater than sixty-six percent (66%);
and provided, further, that no amendment, modification, termination or waiver
-------- -------
affecting the rights or duties of Administrative Agent under
64
<PAGE>
any Loan Document shall in any event be effective, unless in writing and signed
by Administrative Agent, in addition to Lenders required hereinabove to take
such action. Each amendment, modification, termination or waiver shall be
effective only in the specific instance and for the specific purpose for which
it was given. No amendment, modification, termination or waiver shall be
required for Administrative Agent to take additional Collateral pursuant to any
Loan Document. No amendment, modification, termination or waiver of any
provision of any Note shall be effective without the written concurrence of the
holder of that Note. No notice to or demand on Borrower in any case shall
entitle Borrower to any other or further notice or demand in similar or other
circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Subsection 9.2 shall be binding upon each
holder of the Notes at the time outstanding, each future holder of the Notes,
and, if signed by Borrower, on Borrower.
9.3 Notices. Any required notice or other communication shall be in
-------
writing addressed to the respective party as set forth below and may be
personally delivered, telecopied, sent by overnight courier service or U.S. mail
and shall be deemed to have been given: (i) if delivered in person, when
delivered; (ii) if delivered by telecopy, on the date of transmission if
transmitted on a Business Day before 2:00 p.m. (Denver time) and otherwise on
the Business Day next succeeding the date of transmission; (c) if delivered by
overnight courier, two (2) days after delivery to the courier properly
addressed; or (d) if delivered by U.S. mail, four (4) Business Days after
deposit with postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrower: US Unwired Inc.
One Lakeshore Drive, Suite 1900
Lake Charles, Louisiana 70602-3709
Attn: Finance Department
Fax No.: 318/439-0769
cc: Thomas G. Henning
Fax No.: 318/497-3479
If to a Lender: To the address set forth on the signature page hereto or
in the applicable Lender Addition Agreement
9.4 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
-----------------------------------------------------
or delay on the part of Administrative Agent or any Lender to exercise, nor any
partial exercise of, any power, right or privilege hereunder or under any other
Loan Documents shall impair such power, right, or privilege or be construed to
be a waiver of any Default or Event of Default. All rights and remedies
existing hereunder or under any other Loan Document are cumulative to and not
exclusive of any rights or remedies otherwise available.
65
<PAGE>
9.5 Marshaling; Payments Set Aside. Neither Administrative Agent nor
------------------------------
any Lender shall be under any obligation to marshal any assets in payment of any
or all of the Obligations. To the extent that Borrower makes payment(s) or
Administrative Agent enforces its Liens or Administrative Agent or any Lender
exercises its right of set-off, and such payment(s) or the proceeds of such
enforcement or set-off is subsequently invalidated, declared to be fraudulent or
preferential, set aside, or required to be repaid by anyone, then to the extent
of such recovery, the Obligations or part thereof originally intended to be
satisfied, and all Liens, rights and remedies therefor, shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or set-off had not occurred.
9.6 Severability. The invalidity, illegality, or unenforceability in
------------
any jurisdiction of any provision under the Loan Documents shall not affect or
impair the remaining provisions in the Loan Documents.
9.7 Lenders' Obligations Several; Independent Nature of Lenders' Rights.
-------------------------------------------------------------------
The obligation of each Lender hereunder is several and not joint and no Lender
shall be responsible for the obligation or commitment of any other Lender
hereunder. In the event that any Lender at any time should fail to make a Loan
as herein provided, the Lenders, or any of them, at their sole option, may make
the Loan that was to have been made by the Lender so failing to make such Loan.
Nothing contained in any Loan Document and no action taken by Administrative
Agent or any Lender pursuant hereto or thereto shall be deemed to constitute
Lenders to be a partnership, an association, a joint venture or any other kind
of entity. The amounts payable at any time hereunder to each Lender shall be a
separate and independent debt.
9.8 Headings. Section and Subsection headings are included herein for
--------
convenience of reference only and shall not constitute a part of this Agreement
for any other purposes or be given substantive effect.
9.9 Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL BE
--------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
COLORADO, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
9.10 Successors and Assigns. This Agreement shall be binding upon and inure
----------------------
to the benefit of the parties hereto and their respective successors and assigns
except that Borrower may not assign its rights or obligations hereunder without
the written consent of all Lenders.
9.11 No Fiduciary Relationship. No provision in the Loan Documents and no
-------------------------
course of dealing between the parties shall be deemed to create any fiduciary
duty owing to Borrower by any Agent, Co-Arranger or Lender.
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<PAGE>
9.12 Construction. Each Agent, each Co-Arranger, each Lender and
------------
Borrower acknowledge that each of them has had the benefit of legal counsel of
its own choice and has been afforded an opportunity to review the Loan Documents
with its legal counsel and that the Loan Documents shall be constructed as if
jointly drafted by each Agent, each Co-Arranger, each Lender and Borrower.
9.13 Confidentiality. Agents, Co-Arrangers and Lenders agree to hold
---------------
any confidential information that they may receive from Borrower and its
Subsidiaries pursuant to this Agreement in confidence, except for disclosure:
(i) on a confidential basis to legal counsel, independent public accountants and
other professional advisors of Agents, Co-Arrangers or Lenders; (ii) to
regulatory officials having jurisdiction over Agents, Co-Arrangers or Lenders;
(iii) as required by Applicable Law or legal process or (iv) in connection with
any legal proceeding between Agents, Co-Arrangers or Lenders and Borrower
(provided that, in the event Agents, Co-Arrangers or Lenders are so required to
disclose such confidential information pursuant to clauses (iii) or (iv) of this
Subsection 9.13, Agents, Co-Arrangers or Lenders shall promptly notify Borrower,
so that Borrower or any of its Subsidiaries may seek a protective order or other
appropriate remedy); and (v) to another Person in connection with a disposition
or proposed disposition to that Person of all or part of that Lender's interests
hereunder or a participation interest in its Pro Rata Share, provided that such
disclosure is made subject to an appropriate confidentiality agreement on terms
substantially similar to this Subsection 9.13. For purposes of the foregoing,
"confidential" information" shall mean all information respecting Borrower or
its Subsidiaries, other than (A) information previously filed by Borrower or any
of its Subsidiaries with any Governmental Authority and available to the public,
and (B) information previously published in any public medium from a source
other than, directly or indirectly, Lenders.
9.14 Consent to Jurisdiction and Service of Process. (A) BORROWER HEREBY
----------------------------------------------
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL COURT OR COLORADO STATE COURT IN THE STATE OF COLORADO HAVING SUBJECT
MATTER JURISDICTION OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
ANY LOAN DOCUMENTS. BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT,
PERSONAL JURISDICTION OF ANY SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF ADMINISTRATIVE AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION.
(B) BORROWER HEREBY AGREES THAT SERVICE OF THE SUMMONS AND COMPLAINT AND
ALL OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH
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SUIT, ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING BY REGISTERED MAIL A COPY
OF SUCH PROCESS TO BORROWER AT THE ADDRESS TO WHICH NOTICES TO BORROWER ARE THEN
TO BE SENT PURSUANT TO SUBSECTION 9.3 AND THAT PERSONAL SERVICE OF PROCESS SHALL
NOT BE REQUIRED. NOTHING HEREIN SHALL BE CONSTRUED TO PROHIBIT SERVICE OF
PROCESS BY ANY OTHER METHOD PERMITTED BY LAW.
9.15 Waiver of Jury Trial. BORROWER, EACH AGENT, EACH CO-ARRANGER AND
--------------------
EACH LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER
LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF
THIS LOAN TRANSACTION AND ANY LENDER/BORROWER RELATIONSHIP THAT IS BEING
ESTABLISHED. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY
AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT
MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
BORROWER, EACH AGENT, EACH CO-ARRANGER AND EACH LENDER ACKNOWLEDGE THAT THIS
WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH
HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH
WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. BORROWER,
EACH AGENT, EACH CO-ARRANGER AND EACH LENDER FURTHER WARRANT AND REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE LOAN DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. BORROWER,
EACH AGENT, EACH CO-ARRANGER AND EACH LENDER ALSO WAIVE ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF EACH
AGENT, EACH CO-ARRANGER AND EACH LENDER.
9.16 Survival of Warranties and Certain Agreements. All agreements,
---------------------------------------------
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, and the execution and
delivery of the Notes. Notwithstanding anything in this Agreement or implied by
law to the contrary, the agreements of Borrower set forth in Subsections
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1.4 (D), 1.11, 9.1, 9.14 and 9.15 shall survive the payment of the Loans and the
termination of this Agreement.
9.17 Entire Agreement. This Agreement, the Notes and the other Loan
----------------
Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, understandings, whether oral or written, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous or subsequent oral agreements or discussions of the
parties hereto.
9.18 Counterparts; Effectiveness. This Agreement and any amendments,
---------------------------
waivers, consents or supplements may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all of which
counterparts together shall constitute but one and the same instrument. This
Agreement shall become effective upon the execution of a counterpart hereof by
each of the parties hereto.
SECTION 10
DEFINITIONS
10.1 Certain Defined Terms. The terms defined below are used in this
---------------------
Agreement as so defined. Terms defined in the preamble and recitals to this
Agreement are used in this Agreement as so defined.
"Adjusted Quarterly Interest Coverage Ratio" means the ratio derived by
dividing (i) Annualized Operating Cash Flow as of the end of the then most
recently completed fiscal quarter by (ii) cash interest expense during the then
most recently completed four fiscal quarters.
"Adjustment Date" means each date which is the fifth Business Day after the
receipt by Administrative Agent of (i) each Compliance Certificate delivered by
Borrower pursuant to Subsection 4.10(C) and (ii) in the case a decrease in an
applicable margin is warranted, a written notice from Borrower to decrease such
margin.
"Administrative Agent" means CoBank in its capacity as administrative agent
for Lenders under this Agreement and each of the other Loan Documents and any
successor in such capacity appointed pursuant to Subsection 8.2.
"Affiliate" means any Person: (i) directly or indirectly controlling,
controlled by, or under common control with, Borrower or any of its Restricted
Subsidiary; (ii) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in Borrower or any of its
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Restricted Subsidiary; or (iii) five percent (5%) or more of whose voting stock
or other equity interest is directly or indirectly owned or held by Borrower or
any of its Restricted Subsidiary. For purposes of this definition, "control"
(including with correlative meanings, the terms "controlling," "controlled by"
and "under common control with") means the possession directly or indirectly of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities or by contract or
otherwise.
"Agents" means, collectively, Administrative Agent, Documentation Agent and
Syndication Agent.
"Agreement" means this Credit Agreement (including all schedules and
exhibits hereto), as amended and supplemented from time to time as permitted
herein.
"Annualized Operating Cash Flow" means, as of any date, (i) Operating Cash
Flow for the two (2) most recently completed fiscal quarters multiplied by (ii)
----------
two (2).
"Applicable Commitment Fee Percentage" means, from time to time, a per
annum percentage equal to (i) 1.500% per annum, if the outstanding balance of
all Loans is less than or equal to 33.33% of the sum of the Term Loan Commitment
and the Revolving Loan Commitment, (ii) 1.250% per annum if the outstanding
balance of all Loans is greater than 33.33%, but less than or equal to 50%, of
the sum of the Term Loan Commitment and the Revolving Loan Commitment, and (iii)
1.000% per annum if the outstanding balance of all Loans is greater than 50% of
the Term Loan Commitment and the Revolving Loan Commitment, in each case as the
Term Loan Commitment shall be adjusted to reflect repayments and prepayments and
as the Revolving Loan Commitment shall be adjusted to reflect mandatory and
voluntary reductions.
"Applicable Law" shall mean, in respect of any Person, all provisions of
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, including the Licenses, the
Communications Act and all Environmental Laws, and all orders, decisions,
judgments and decrees of all courts and arbitrators in proceedings or actions to
which the Person in question is a party or by which it is bound.
"Asset Disposition" means the disposition, whether by sale, lease,
transfer, loss, damage, destruction, condemnation or otherwise, by Borrower or
any of its Restricted Subsidiaries, of any of the following: (i) any of the
capital stock or the ownership interests of any of its Subsidiaries or (ii) any
or all of its assets, other than sales of inventory in the ordinary course of
business, sales of Cash Equivalents for fair value and sales by LA Unwired of
Licenses not covering the Service Areas.
"Available Revolving Loan Commitment" means, at any time, the lesser of (i)
the Revolving Loan Commitment as it may have been reduced pursuant to this
Agreement, minus the
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aggregate principal balance of Revolving Loans then outstanding, (ii) the
product of Total Vendor Purchases multiplied by 1.6, or (iii) the sum of the
---------- --
Total Vendor Purchases plus $43,333,333, minus, in the case of clauses (ii) and
---- -----
(iii), the sum of $50,000,000 plus the aggregate principal balance of all
----
Revolving Loans then outstanding.
"Available Term Loan Commitment" means, at any time, the lesser of (i) the
Term Loan Commitment or (ii) the product of the Total Vendor Purchases
multiplied by 1.6, minus, in either case, the aggregate principal amount of Term
- ---------- -- -----
Loans advanced.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy," as amended from time to time or any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect and all rules and
regulations promulgated thereunder.
"Base Rate" means a variable rate of interest per annum equal, on any day,
to the higher of (i) First Union's Prime Rate or (ii) the Federal Funds Rate
plus 0.50%.
- ----
"Base Rate Loans" means, at any time, the aggregate amount of all Loans
then bearing interest at the rate determined by reference to the Base Rate.
"Base Rate Margin" means the applicable percent per annum determined in
accordance with Subsection 1.2(B).
"Borrower Pledge Agreements" means, collectively, the membership interest
security agreement and the stock pledge agreement dated as of even date
herewith, each executed by Borrower in favor of Administrative Agent, for the
benefit of itself and Lenders, in form and content approved by Agents, pursuant
to which Borrower has pledged, as security for the Obligations, on a first
priority basis, all membership and equity interests, respectively, in LA Unwired
and Unwired Telecom that it now owns or may hereafter acquire, as such
agreements may be amended and supplemented from time to time.
"Business Day" means (i) for all purposes other than as covered by clause
(ii) below, any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of Colorado, or is a day on which banking
institutions located in such state are closed or which the Federal Reserve Banks
are closed, and (ii) with respect to all notices, determinations, fundings and
payments in connection with LIBOR Loans, any day that is a Business Day
described in clause (a) above and that is also a day for trading by and between
banks in U.S. dollar deposits in the applicable interbank LIBOR market.
"Calculation Period" means each period commencing on each Adjustment Date
and ending on the day preceding each subsequent Adjustment Date.
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"Cameron Pledge Agreement" means the membership interest security agreement
dated as of even date herewith, executed by Cameron Communications Corporation
in favor of Administrative Agent, for the benefit of itself and Lenders, in form
and content approved by Agents, pursuant to which Cameron Communications
Corporation has pledged, as security for the Obligations, on a first priority
basis, all membership interests in LA Unwired that it now owns or may hereafter
acquire, as such agreement may be amended and supplemented from time to time.
"Cash Equivalents" means: (i) marketable direct obligations issued or
unconditionally guarantied by the United States Government or issued by any
agency thereof, in each case maturing within one (1) year from the date of
acquisition thereof; (ii) commercial paper maturing no more than one (1) year
from the date issued and, at the time of acquisition, having a rating of at
least A-1 from Standard & Poor's Rating Service or at least P-1 from Moody's
Investors Service, Inc.; (iii) certificates of deposit or bankers' acceptances
maturing within one (1) year from the date of issuance thereof issued by, or
overnight reverse repurchase agreements from, any commercial bank organized
under the laws of the United States of America or any state thereof or the
District of Columbia having combined capital and surplus of not less than
$500,000,000; and (iv) time deposits maturing no more than thirty (30) days from
the date of creation thereof with commercial banks having membership in the
Federal Deposit Insurance Corporation in amounts at any one such institution not
exceeding the lesser of $100,000 or the maximum amount of insurance applicable
to the aggregate amount of Borrower's deposits at such institution.
"Closing Date" means October 28, 1999.
"Co-Arranger" and "Co-Arrangers" mean, individually, each of First Union
Capital Markets Corp. and BNY Capital Markets, Inc., each in their capacity as
Co-Arrangers, and collectively, both such entities.
"Collateral" means, collectively: (i) all "Collateral" as defined in the
Security Documents; (ii) all real property and interests in real property
mortgaged pursuant to the Security Documents; and (iii) any property or interest
provided in addition to or in substitution for any of the foregoing.
"Collateral Contract Assignments" means, collectively, all collateral
assignments of Material Contracts, in form and content approved by
Administrative Agent, executed by Borrower and each Subsidiary Guarantor in
favor of Administrative Agent, for the benefit of itself and Lenders, as
required pursuant to Subsection 2.9, as amended and supplemented from time to
time.
"Command Connect" means Command Connect, LLC, a Louisiana limited liability
company, and its successors and assigns.
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"Communications Act" shall mean the Communications Act of 1934, as amended
and any similar or successor federal statute, and the rules and regulations of
the FCC thereunder, all as the same may be in effect from time to time.
"Contingent Obligation," as applied to any Person, means any direct or
indirect liability of that Person: (i) with respect to any indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; or (iii) under any foreign
exchange contract, currency swap agreement, interest rate swap agreement or
other similar agreement or arrangement designed to alter the risks of that
Person arising from fluctuations in currency values or interest rates.
Contingent Obligations shall also include (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, and (c) any liability of such Person for the
obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to
the amount of the obligation so guaranteed or otherwise supported or, if not a
fixed and determined amount, the maximum amount so guaranteed.
"Default" means a condition or event that, after notice or lapse of time or
both, would constitute an Event of Default if that condition or event were not
cured or removed within any applicable grace or cure period.
"Documentation Agent" means The Bank of New York in its capacity as
Documentation Agent.
"EBITDA" means, as of any fiscal quarter-end, net income for the trailing
four-quarter period, plus interest expense paid or accrued during such period
----
plus any non-cash charges for such period and minus net interest income for such
- ---- -----
period, to the extent included in determining net income, and minus any non-cash
-----
gains for such period, but excluding depreciation and amortization expense to
the extent deducted during such period in calculating net income.
"Environmental Laws" shall mean all applicable federal, state or local
laws, statutes, rules, regulations or ordinances, codes, common law, consent
agreements, orders, decrees, judgments
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or injunctions issued, promulgated, approved or entered thereunder relating to
public health, safety or the pollution or protection of the environment,
including those relating to releases, discharges, emissions, spills, leaching,
or disposals to air, water, land or ground water, to the withdrawal or use of
ground water, to the use, handling or disposal of polychlorinated biphenyls,
asbestos or urea formaldehyde, to the treatment, storage, disposal or management
of hazardous substances (including petroleum, crude oil or any fraction thereof,
or other hydrocarbons), pollutants or contaminants, to exposure to toxic,
hazardous or other controlled, prohibited, or regulated substances, including
any such provisions under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended (42 U.S.C. (S) 9601 et seq.), or the
-- ---
Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. (S) 6901
et seq.).
- -- ---
Excess Cash Flow" means, for any fiscal year, (i) Operating Cash Flow for
such year minus (ii) the sum of (a) Fixed Charges plus (b) net changes in
----- ----
working capital for such year.
"Expiration Date" means the earlier of (i) the suspension (subject to
reinstatement) of the Lenders' obligations to make Loans pursuant to Subsection
6.2, (ii) the acceleration of the Obligations pursuant to Subsection 6.3 or
(iii) September 30, 2007.
"Facilities" means, collectively, the Revolving Loan Facility and the Term
Loan Facility.
"FCC" shall mean the Federal Communications Commission, or any other
similar or successor agency of the federal government administering the
Communications Act.
"Federal Funds Rate" shall mean, for any day, the rate of interest per
annum (rounded upward, if necessary, to the nearest whole multiple of 1/100 of
1%) equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published by the Federal Reserve Bank of New York on the
Business Day next succeeding such day, provided that (i) if such day is not a
Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day and (ii) if no such rate is so
published on the next succeeding Business Day, the Federal Funds Rate for such
day shall be the average rate quoted to Administrative Agent on such day on such
transactions as determined by Administrative Agent.
"First Union's Prime Rate" means, at any time, the rate of interest per
annum then in effect publicly announced from time to time by First Union
National Bank as its prime rate. Each change in the Prime Rate shall be
effective as of the opening of business on the day such change occurs. The
parties hereto acknowledge that First Union's Prime Rate is an index or base
rate and shall not necessarily be First Union National Bank's lowest or best
rate charged to its customers or other banks.
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"Fixed Charge Coverage Ratio" means the ratio derived by dividing (i)
Operating Cash Flow by (ii) Fixed Charges, in each case calculated for the then
most recently completed previous four (4) fiscal quarters.
"Fixed Charges" means the sum of (i) scheduled principal payments
(including any principal paid pursuant to scheduled reductions in commitments to
lend), (ii) cash interest expense, (iii) cash taxes, and (iv) capital
expenditures.
"GAAP" means generally accepted accounting principles as set forth in
statements from Auditing Standards No. 69 entitled "The Meaning of `Present
Fairly in Conformance with Generally Accepted Accounting Principles in the
Independent Auditors Reports'" issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination; provided, however, that
when used with respect to any item that is to be calculated for Borrower and its
Restricted Subsidiaries on a consolidated basis, "GAAP" shall not be
interpreted to require or permit the consolidation of all or any part of any
Subsidiary that is not a Restricted Subsidiary.
"Governmental Approvals" means all authorizations, consents, approvals,
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities, including all Licenses.
"Governmental Authority" means any nation, province, or state or any
political subdivision of any of the foregoing, and any government or any Person
exercising executive, legislative, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing, including the FCC and any PUC.
"Guarantors" means, collectively, the Subsidiary Guarantors and the Vendor
Guarantor.
"Indebtedness," as applied to any Person, means, without duplication: (i)
all indebtedness for borrowed money; (ii) that portion of obligations with
respect to capital leases or other capitalized agreements that is properly
classified as a liability on a balance sheet in conformity with GAAP; (iii)
notes payable and drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money; (iv) any obligation owed for
all or any part of the deferred purchase price of property or services, except
trade payables arising in the ordinary course of business not more than ninety
(90) days past due; (v) all indebtedness secured by any Lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person, but only to the extent of the fair value of such property
or asset; (vi) fixed rate hedging obligations that are due (after giving effect
to any period of grace or notice requirement applicable
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thereto) and remain unpaid; (vii) obligations with respect to principal under
Contingent Obligations for the repayment of money or the deferred purchase price
of property, whether or not then due and payable (calculated as the amount of
such principal); and (viii) obligations under partnership, organizational or
other agreements to fund capital contributions or other equity calls with
respect to any Person or investment, or to redeem, repurchase or otherwise make
payments in respect to capital stock or other securities of such Person.
"Indebtedness to POP Ratio" means the ratio delivered by dividing (i)
Indebtedness by (ii) POP.
--
"Investment" means (i) any direct or indirect purchase or other acquisition
by Borrower or any of its Restricted Subsidiaries of any beneficial interest in,
including stock, partnership interest or other equity securities of, any other
Person; and (ii) any direct or indirect loan, advance, guarantee, assumption of
liability or other obligation of liability, or capital contribution by Borrower
or any of its Restricted Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course
of business. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
----
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"IRC" means the Internal Revenue Code of 1986, as amended from time to time
and all rules and regulations promulgated thereunder.
"LA Unwired" means Louisiana Unwired, LLC, a Louisiana limited liability
company, and its successors and assigns.
"LA Unwired Pledge Agreement" means the partnership interest security
agreement dated as of even date herewith, executed by LA Unwired in favor of
Administrative Agent, for the benefit of itself and Lenders, in form and content
approved by Agents, pursuant to which LA Unwired has pledged, as security for
the Obligations, on a first priority basis, all partnership interests in Texas
Unwired that it now owns or may hereafter acquire, as such agreement may be
amended and supplemented from time to time.
"Lender" or "Lenders" means one or more of the banks identified as Lenders
in the first paragraph of this Agreement and their successors and permitted
assigns pursuant to Subsection 8.1.
"Lender Addition Agreement" means an agreement among Administrative Agent,
a Lender and such Lender's assignee regarding their respective rights and
obligations with respect to
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assignments of the Loans, the Loan Commitments and other interests under this
Agreement and the other Loan Documents.
"LIBOR" means for each applicable Interest Period, a fixed annual rate
equal to: (a) the rate of interest determined by Administrative Agent at which
deposits in U.S. dollars for the relevant Interest Period are offered based on
information presented by the Telerate Service as quoted by the British Bankers
Association as of 11:00 a.m. (London time) on the day which is two (2) Business
Days prior to the first day of such Interest Period, provided, that in the event
--------
British Bankers Association ceases to provide such quotations (as determined by
Administrative Agent), then Administrative Agent will notify Borrower and Agents
and Borrower will agree upon a substitute basis for obtaining such quotations,
divided by (b) a number equal to 1.0 minus the aggregate (but without
- ------- -----
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on the day which is two (2) Business Days prior to the
beginning of such Interest Period for Eurocurrency funding (currently referred
to as "Eurocurrency Liabilities" in Regulation D of such Board) which are
required to be maintained by a member bank of the Federal Reserve System
(including, without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Governors of the Federal Reserve
System or other Governmental Authority having jurisdiction with respect thereto,
as now and from time to time in effect); such rate to be rounded upward to the
next whole multiple of one-sixteenth of one percent (0.0625%).
"LIBOR Loans" means Loans accruing interest at rates determined by
reference to the LIBOR.
"LIBOR Margin" means the applicable percent per annum determined in
accordance with Subsection 1.2(B).
"Licenses" shall mean any cellular telephone, microwave, personal
communications or other telecommunications or similar license, authorization,
waiver, certificate of compliance, franchise, approval or permit, whether for
the acquisition, construction or operation of any Wireless System, granted or
issued by the FCC or any applicable PUC and held by Borrower or any of its
Restricted Subsidiaries, all of which are listed as of the Closing Date on
Schedule 10.1(A).
- ----------------
"Lien" means any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind, whether voluntary or involuntary (including any
conditional sale or other title retention agreement and any lease in the nature
thereof), and any agreement to give any lien, mortgage, pledge, security
interest, charge or encumbrance.
"Loan" or "Loans" means an advance or advances under the Revolving Loan
Commitment or the Term Loan Commitment.
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"Loan Commitment" and "Loan Commitments" mean, individually, each of the
Revolving Loan Commitment and the Term Loan Commitment, and collectively, the
Revolving Loan Commitment and the Term Loan Commitment, as each such commitment
is reduced from time to time as provided in this Agreement.
"Loan Documents" means this Agreement, the Notes, the Security Documents,
the Sprint Consent and Agreement and all other instruments, documents and
agreements executed by or on behalf of Borrower and delivered concurrently
herewith or at any time hereafter to or for the benefit of Administrative Agent
or any Lender in connection with the Loans and other transactions contemplated
by this Agreement, all as amended, supplemented or modified from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
business, operations, properties, assets or condition (financial or otherwise)
of Borrower, any of its Restricted Subsidiaries or Vendor Guarantor or (ii) the
impairment of the ability of Borrower, any of its Restricted Subsidiaries or
Vendor Guarantor to perform its obligations under any Loan Document to which it
is a party or of Administrative Agent or any Lender to enforce any Loan Document
or collect any of the Obligations. In determining whether any individual event
could reasonably be expected to have a Material Adverse Effect, notwithstanding
that such event does not of itself have such effect, a Material Adverse Effect
shall be deemed to have occurred if the cumulative effect of such event and all
other then existing events could reasonably be expected to have a Material
Adverse Effect.
"Material Contracts" means (a) any contract or any other agreement, written
or oral, of Borrower or any of its Restricted Subsidiaries involving monetary
liability of or to any such Person in an amount in excess of $500,000 per annum
and (b) any other contract or agreement, written or oral, of Borrower or any of
its Restricted Subsidiaries the failure to comply with which could reasonably be
expected to have a Material Adverse Effect; provided, however, that any contract
or agreement which is terminable by a party other than Borrower or any of its
Restricted Subsidiaries without cause upon notice of ninety (90) days or less
shall not be considered a Material Contract.
"Meretel Communications" means Meretel Communications Limited Partnership,
a Louisiana partnership in condendum, and its successors and assigns.
"Mortgages" means, collectively, the Mortgages, each dated as of even date
herewith, in form and content approved by Agents, executed by LA Unwired and
Unwired Telecom in favor of Administrative Agent, for the benefit of itself and
Lenders, encumbering all interests now owned or hereafter acquired by LA Unwired
or Unwired Telecom in real property situated in the States of Louisiana, Texas
and Arkansas, as amended and supplemented from time to time.
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"Negative Pledge Agreement" means the negative pledge agreement, dated as
of even date herewith, executed by William L. Henning, Sr., William L. Henning,
Jr., Thomas G. Henning and John A. Henning in favor of Administrative Agent, for
the benefit of itself and Lenders, in form and content approved by Agents,
pursuant to which such persons have agreed, as security for the Obligations, not
to create any pledges or liens on, or security interests in, or to otherwise
encumber, their respective equity interests in Borrower, except for liens,
pledges, security interests or encumbrances in favor of the Administrative
Agent, for the benefit of itself and Lenders, as such agreement may be amended
or supplemented from time to time.
"Net Proceeds" means cash proceeds received by Borrower or any of its
Restricted Subsidiaries from any Asset Disposition (including insurance
proceeds, awards of condemnation, and payments under notes or other debt
securities received in connection with any Asset Disposition), net of (i) the
costs of such sale, lease, transfer or other disposition (including taxes
attributable to such sale, lease or transfer) and (ii) amounts applied to
repayment of Indebtedness (other than the Obligations) secured by a Lien on the
asset or property disposed.
"Note" or "Notes" means one or more of the Revolving Notes and the Term
Notes.
"Obligations" means all obligations, liabilities and indebtedness of every
nature of Borrower from time to time owed to Administrative Agent or any Lender
under the Loan Documents including the principal amount of all debts, claims and
indebtedness, accrued and unpaid interest and all fees, costs and expenses,
whether primary, secondary, direct, contingent, fixed or otherwise, heretofore,
now and/or from time to time hereafter owing, due or payable whether before or
after the filing of a proceeding under the Bankruptcy Code by or against
Borrower, any of its Restricted Subsidiaries or Vendor Guarantor.
"Omnibus Agreement" means that certain Omnibus Agreement, dated as of
September 7, 1999, among Borrower, EATELCORP, Inc., Fort Bend Telephone Company,
XIT Leasing, Inc., Wireless Management Corporation, Meretel Communications
Limited Partnership and Meretel Wireless, Inc., relating to the formation of
Texas Unwired.
"Operating Cash Flow" means the sum of (i) pre-tax income or deficit, as
the case may be (excluding extraordinary gains and losses, the write up or down
of any asset and interest income), (ii) total interest expense (including non-
cash interest), (iii) depreciation and amortization expense and (iv) taxes,
federal or state, imposed upon income. For any period of calculation, Operating
Cash Flow shall be adjusted to give effect to any acquisition, sale or other
disposition of any operation or business (or any portion thereof) during the
period of calculation as if such acquisition, sale or other disposition occurred
on the first day of such period of calculation.
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"PCS System" shall mean any broadband personal communications services
telecommunications system operating on radio spectrum at 1800 MHZ or a License
to operate such a system.
"PCS" means personal communications services operations on radio spectrum
at 1800 MHZ.
"Permitted Encumbrances" means the following:
(1) Liens for taxes, assessments or other governmental charges not yet
due and payable unless the same are being diligently contested in good faith and
by appropriate proceedings and then only if and to the extent that adequate
reserves therefor are maintained in accordance with GAAP;
(2) statutory Liens of landlords, carriers, warehousemen, mechanics,
materialmen and other similar liens imposed by law, which are incurred in the
ordinary course of business for sums not more than sixty (60) days delinquent or
which are being contested in good faith; provided that a reserve or other
--------
appropriate provision shall have been made therefor and the aggregate amount of
liabilities secured by such Liens is less than $100,000;
(3) Liens incurred or deposits made in the ordinary course of business
in connection with workers' compensation, unemployment insurance and other types
of social security (other than any Lien imposed by the Employee Retirement
Income Security Act of 1974 or any rule or regulation promulgated thereunder),
or to secure the performance of tenders, statutory obligations, surety, stay,
customs and appeal bonds, bids, leases, government contracts, trade contracts,
performance and return of money bonds and other similar obligations (exclusive
of obligations for the payment of borrowed money);
(4) deposits, in an aggregate amount not to exceed $100,000, made in
the ordinary course of business to secure liability to insurance carriers;
(5) any attachment or judgment Lien not constituting an Event of
Default under Subsection 6.1(I);
(6) easements, rights of way, restrictions and other similar charges
or encumbrances not interfering in any material respect with the ordinary
conduct of the business of Borrower or any of its Subsidiaries;
(7) Liens in favor of Administrative Agent, for the benefit of
Administrative Agent and Lenders;
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(8) Liens in favor of CoBank as set forth in Subsection 2.7;
(9) Liens granted in connection with the Indebtedness permitted
pursuant to Subsection 3.1(C)(ii) to the extent such Liens attach only to the
building constructed or acquired with such Indebtedness and associated interests
in real estate, including assignments of or security interests in tenant leases;
(10) Liens in favor of LA Unwired granted by Texas Unwired in
connection with the Indebtedness permitted pursuant to Subsection 3.1(C)(iv);
and
(11) Liens in favor of the Trustee under the Subordinated Debt
Documents granted by LA Unwired in all of its rights in (i) partnership
interests of Texas Unwired that it now or may hereafter acquire, and (ii) the
Indebtedness permitted pursuant to Subsection 3.1(C)(ii) and the documents
evidencing the same such Lien to be fully subordinated to the Lien in favor of
the Administrative Agent, for the benefit of itself and Lenders, on terms and
conditions satisfactory to Administrative Agent.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, limited liability partnerships,
general partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof and their respective permitted successors and
assigns (or in the case of a governmental person, the successor functional
equivalent of such Person).
"Pledge Agreements" means, collectively, the Borrower Pledge Agreements,
the LA Unwired Pledge Agreement, the Unwired Telecom Pledge Agreement and the
Cameron Pledge Agreement.
"POP" means the total number of population equivalents covered by
Borrower's or the Restricted Subsidiary's PCS BTAs (including those BTA's served
pursuant to the Sprint Agreements), as of the Closing Date.
"Preferred Stock" means not less than $50,000,000 and not more than
$55,000,000 of Senior Redeemable Convertible Preferred Stock, Series A, to be
issued by Borrower pursuant to the Preferred Stock Documents.
"Preferred Stock Documents" means, collectively, the Securities Purchase
Agreement between Borrower and The 1818 Fund, L.P., and the related documents
executed in connection therewith, each of which shall be in substantially the
forms of the October 19, 1999 drafts thereof submitted to Agents, with only such
changes as shall be reasonably acceptable to the Agents.
81
<PAGE>
"Pro Forma Debt Service Coverage Ratio" means, as of the date of
calculation, the ratio derived by dividing (i) Annualized Operating Cash Flow by
(ii) the sum of: (a) all principal payments scheduled to be made on Indebtedness
(or scheduled reductions in commitments on lines of credit to the extent such
reductions would cause the repayment of principal amounts then outstanding under
such lines) during the next 12 month period plus (b) Pro Forma Interest Expense.
----
"Pro Forma Interest Expense" shall mean, as of the date of calculation, the
interest expense calculated to be due and payable on Indebtedness during the
succeeding 12 month period in accordance with the following formula:
(A+B)/2 x C, whereby:
A = Indebtedness.
B = A minus all principal payments scheduled (or scheduled
reductions in commitments on lines of credit to the
extent such reductions would cause the repayment of
principal amounts outstanding under such lines) to be
made on Indebtedness during the succeeding 12 months.
C = The LIBOR plus the applicable LIBOR Margin for an
----
Interest Period of 3 months, determined as of the date
of calculation.
"Pro Rata Share" means (i) with respect to matters relating to a particular
Loan Commitment, the percentage obtained by dividing (a) the commitment of a
Lender under such Loan Commitment by (b) all commitments of all Lenders under
such Loan Commitment and (ii) with respect to all other matters, including,
without limitation, for purposes of the definition of "Requisite Lenders," the
percentage obtained by dividing (a) the aggregate Total Lender Loan Commitments
of a Lender by (b) the aggregate Total Lender Loan Commitments of all Lenders,
in either case as such percentage may be adjusted by assignments permitted
pursuant to Subsection 8.1; provided, however, if any Loan Commitment is
terminated pursuant to the terms hereof, in lieu of commitments, the calculation
of clauses (i) and (ii) above, as they relate to or include such Loan
Commitment, shall be based on the aggregate amount of such Lender's outstanding
loans related to such Loan Commitment and the aggregate amount of all
outstanding loans related to such Loan Commitment.
"Projections" means, for Borrower and each of its Restricted Subsidiaries,
forecasted; (i) balance sheets; (ii) profit and loss statements; and (iii) cash
flow statements, all prepared on a consistent basis with Borrower's or such
Restricted Subsidiary's historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions. The
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<PAGE>
Projections represent and will represent as of the date thereof the good faith
estimate of Borrower and its senior management concerning the most probable
course of its business.
"PUC" means any state, provincial or other local regulatory agency or body
that exercises jurisdiction over the rates or services or the ownership,
construction or operation of any Wireless System or long distance
telecommunications systems or over Persons who own, construct or operate a
Wireless System or long distance telecommunications systems, in each case by
reason of the nature or type of the business subject to regulation and not
pursuant to laws and regulations of general applicability to Persons conducting
business in any such jurisdiction.
"Registration Rights Agreement" means the A/B Exchange Registration Rights
Agreement relating to the Subordinated Notes among Borrower, the Unrestricted
Subsidiaries and Donaldson Lufkin & Jenrette Securities Corporation, which shall
be in substantially the form of the October 19, 1999 draft thereof submitted to
Agents, with only such changes as shall be reasonably acceptable to Agents.
"Requisite Lenders" means at least two Lenders who have in the aggregate
Pro Rata Shares greater than fifty-one percent (51.0%).
"Restricted Junior Payment" means: (i) any dividend or other distribution,
direct or indirect, on account of any equity interest in Borrower or any of its
Subsidiaries, including any membership interest and any shares of any class of
stock of Borrower or any of its Subsidiaries now or hereafter outstanding,
except a dividend payable solely in shares of a class of stock to the holders of
that class; (ii) any redemption, conversion, exchange, retirement, sinking fund
or similar payment, purchase or other acquisition for value, direct or indirect,
of any equity interest in Borrower or any of its Subsidiaries, including any
membership interest and any shares of any class of stock of Borrower or any of
its Subsidiaries now or hereafter outstanding; (iii) any payment or prepayment
of interest on, principal of, premium, if any, redemption, conversion, exchange,
purchase, retirement, defeasance, sinking fund or similar payment with respect
to, any Indebtedness subject to subordination provisions for the benefit of
Administrative Agent and Lenders; and (iv) any payment made to retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to
acquire any equity interest in Borrower or any of its Subsidiaries, including
any membership interest and shares of any class of stock of Borrower or any of
its Subsidiaries now or hereafter outstanding; provided that the term
--------
"Restricted Junior Payment" shall not include (a) conversion of the Preferred
Stock in accordance with its terms, (b) adjustments to the Conversion Price (as
defined in the Preferred Stock Documents) pursuant to the terms of the Preferred
Stock, (c) payments of cash not to exceed, in the aggregate, $50,000, in lieu of
fractional shares upon conversion of the Preferred Stock in accordance with its
terms, and (d) issuance and exercise of the Warrants in accordance with the
terms of the Preferred Stock Documents and the Warrants.
83
<PAGE>
"Restricted Subsidiaries" means all Subsidiaries of Borrower except the
Unrestricted Subsidiary and Command Connect.
"Revenues per Subscriber" means, as of any date of calculation, total
revenues minus total equipment revenues, each as calculated for the then most
-----
recently completed six fiscal months, divided by the average number of
----------
Subscribers at each month-end during the most recently completed six fiscal
months.
"Revolving Loan" or "Revolving Loans" means an advance or advances under
the Revolving Loan Commitment.
"Revolving Loan Commitment" means, initially, $80,000,000, as such amount
is reduced from time to time as provided in this Agreement.
"Revolving Loan Facility" means, the revolving loan credit facility
extended to Borrower pursuant to Section 1.1(B).
"Revolving Note" or "Revolving Notes" means one or more of the notes of
Borrower substantially in the form of Exhibit 10.1(A), or any combination
---------------
thereof, and any replacements, restatements, renewals or extensions of any such
notes, in whole or in part.
"Security Agreements" means, collectively, the Security Agreements, each
dated as of even date herewith, in form and content approved by Agents, executed
by Borrower and each Subsidiary Guarantor in favor of Administrative Agent, for
the benefit of itself and Lenders, encumbering all of the personal property of
Borrower and each Subsidiary Guarantor, wherever situated, as amended and
supplemented from time to time.
"Security Documents" means, collectively, all instruments, documents and
agreements executed by or on behalf of Borrower to provide collateral security
with respect to the Obligations, including, without limitation, the Mortgages,
the Security Agreements, the Subsidiary Guaranties, the Pledge Agreements, the
Negative Pledge Agreement, the Vendor Guaranty, the Collateral Contract
Assignments and all instruments, documents and agreements executed pursuant to
the terms of the foregoing.
"Security Interest" shall mean all Liens in favor of Administrative Agent,
for the benefit of itself and Lenders, created hereunder or under any of the
Security Documents to secure the Obligations.
"Senior Indebtedness" means all Indebtedness of Borrower, including without
limitation the Obligations, but excluding the Subordinated Notes.
---------
84
<PAGE>
"Senior Leverage Ratio" means, for any period, the ratio determined by
dividing the outstanding amount of all Senior Indebtedness by Annualized
Operating Cash Flow, each as of the last day of such month.
"Service Areas" means the PCS business trading areas (BTAs) described on
Schedule 10.1(B)
- ----------------
"Sprint" means, collectively, Sprint Spectrum L.P., SprintCom, Inc. and
WirelessCo, L.P.
"Sprint Agreements" means, collectively, the two Sprint PCS Management
Agreements, one dated June 8, 1998 and one dated February 8, 1999, between LA
Unwired, and any similar agreement entered into between Texas Unwired and
Sprint, as heretofore amended and supplemented, and related services, trademark,
service mark, and other agreements, as any such agreement may be amended or
supplemented from time to time, and all other agreements entered into between or
among Sprint and LA Unwired or Texas Unwired in connection therewith as they may
be amended or supplemented from time to time.
"Sprint Consent and Agreement" means that certain Consent and Agreement
dated as of October 26, 1999, between Sprint and Administrative Agent and by
Borrower, LA Unwired, Texas Unwired and the other owners of LA Unwired and Texas
Unwired.
"Subordinated Debt Documents" means the Subordinated Note Indenture, the
Subordinated Notes, the Registration Rights Agreement, and any and all other
documents, instruments, certificates, opinions and proceedings related to the
terms, issuance, sale or remarketing of the Subordinated Notes.
"Subordinated Note Indenture" means Indenture among Borrower, the
Restricted Subsidiaries and State Street Bank & Trust Co., as Trustee, pursuant
to which the Subordinated Notes are issued, which shall be in substantially the
form of the October 28, 1999 draft thereof submitted to Agents, with only such
changes as shall be reasonably acceptable to Agents.
"Subordinated Notes" means the Series A Notes and Series B Notes described
in the Subordinated Note Indenture.
"Subscribers" means subscriber units in service in Borrower's or any
Restricted Subsidiary's market that (i) are active in both the switch and
billing subscriber data bases of Borrower or any Restricted Subsidiary, (ii) are
not suspended for any reason, (iii) do not have outstanding any amounts owed to
the Borrower or such Restricted Subsidiary that have been unpaid for more than
90 days after the billing date therefor and (iv) are not demo or employee
accounts.
85
<PAGE>
"Subsidiary" means, with respect to any Person, any corporation,
partnership, association or other business entity of which more than fifty
percent (50%) of the total voting power of shares of stock (or equivalent
ownership or controlling interest) 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 that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"Subsidiary Guaranties" means the continuing guaranties, dated as of even
date herewith, in form and content approved by Agents, executed by each
Subsidiary Guarantor in favor of Administrative Agent, for the benefit of itself
and Lenders, as amended and supplemented from time to time.
"Subsidiary Guarantor" means each of LA Unwired and Unwired Telecom.
"Syndication Agent" means First Union Capital Markets Corp., in its
capacity as Syndication Agent.
"Term Loan" or "Term Loans" means an advance or advances under the Term
Loan Commitment.
"Term Loan Availability Expiration Date" means the earlier of (i) the day
which is 364 days after the Closing Date; provided, however, that if such day is
-------- -------
not a Business Day, the Term Loan Availability Expiration Date pursuant to this
clause (i) shall be the Business Day immediately preceding such day, (ii) the
suspension (subject to reinstatement) of the Lenders' obligations to make Loans
pursuant to Subsection 6.2 or (iii) the acceleration of the Obligations pursuant
to Section 6.3.
"Term Loan Commitment" means, initially, $50,000,000, as such amount is
reduced from time to time as provided in this Agreement.
"Term Loan Facility" means, the term loan credit facility extended to
Borrower pursuant to Section 1.1(A).
"Term Note" or "Term Notes" means one or more of the notes of Borrower
substantially in the form of Exhibit 10.1(B), or any combination thereof, and
---------------
any replacements, restatements, renewals or extensions of any such notes, in
whole or in part.
"Texas Unwired" means Texas Unwired, a Louisiana general partnership in
which LA Unwired owns approximately 80% of the partnership interests as of the
date of this Agreement; provided, however, that in determining compliance with
any financial covenant, test or condition contained in this Agreement that is
based on combined or consolidated financial or operating
86
<PAGE>
information of Texas Unwired and the Borrower and/or one or more Restricted
Subsidiaries, only the pro rata portion of Texas Unwired's financial or
operating data that is allocable to LA Unwired in accordance with its percentage
ownership of Texas Unwired for the period of computation shall be included.
"Total Lender Loan Commitment" means the aggregate commitments of any
Lender with respect to the Revolving Loan Commitment and the Term Loan
Commitment.
"Total Leverage Ratio" means, for any period, the ratio derived by dividing
all Indebtedness by Annualized Operating Cash Flow, each as of the last day of
--
such month.
"Total Vendor Purchases" means, at the time of any requested advance, the
aggregate purchase price of all equipment and services purchased by Borrower or
any Restricted Subsidiary from Vendor through and including the date of such
advance, including any equipment or services to be paid with the proceeds of
such advance.
"Unrestricted Subsidiary" means LEC Unwired, Inc., a Louisiana corporation,
and its successors and assigns.
"Unwired Telecom" means Unwired Telecom Corp. (formerly known as US Unwired
Inc.), a Louisiana corporation, and its successors and assigns.
"Unwired Telecom Pledge Agreement" means the membership interest pledge
agreement, dated as of even date herewith, executed by Unwired Telecom in favor
of Administrative Agent, for the benefit of itself and Lenders, in form and
content approved by Agents, pursuant to which Unwired Telecom has pledged, as
security for the Obligations, on a first priority basis, all equity interests in
Command Connect it now owns or may hereafter acquire, as amended and
supplemented from time to time.
"Vendor" and "Vendor Guarantor" means Lucent Technologies, Inc.
"Vendor Guaranty" means the continuing guaranty, dated as of even date
herewith, in form and content approved by Agents, executed by Vendor in favor of
Administrative Agent, for the benefit of itself and Lenders, as amended and
supplemented from time to time.
"Warrants" means the Warrants to be issued by the Borrower pursuant to the
Preferred Stock Documents.
"Wireless System" means a cellular mobile radio telephone system, or a PCS
System, and shall include a microwave system or a paging system operated in
connection with (and in the same general service area as) any of the foregoing
systems.
87
<PAGE>
10.2 Other Definitional Provisions. References to "Sections,"
-----------------------------
"Subsections," "Exhibits" and "Schedules" shall be to Sections, Subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in Subsection 10.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. In this Agreement, "hereof," "herein," "hereto," "hereunder"
and the like mean and refer to this Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word appears;
words importing any gender include the other gender; references to "writing"
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation"; references to
agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but only to
the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document; references
to Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
88
<PAGE>
Witness the due execution hereof by the respective duly authorized officers
of the undersigned as of the date first written above.
US UNWIRED INC., as Borrower
By:__________________________________
Name:_____________________________
Title:____________________________
Attest:_______________________________
Name:__________________________
Title:_________________________
[Signatures Continued on Following Page]
<PAGE>
[Signatures Continued from Previous Page]
Commitment to make Term Loans: COBANK, ACB, as Administrative
$12,820,512.82 Agent and a Lender
Pro Rata Share of Term Loan
Commitment: 25.6410256% By: /s/ Rick L. Freeman
------------------------------
Name: Rick L. Freeman
Commitment to make Revolving Loans: Title: Vice President
$20,512,820.52
Pro Rata Share of Revolving Loan Address: CoBank, ACB
Commitment: 25.6410256% 200 Galleria Parkway, Suite 1900
Atlanta, Georgia 30339
Attention: Rural Utility Banking Group
Total Lender Loan Commitment: Fax: (770) 618-3202
$33,333,333.34
Pro Rata Share of Term Loan
Commitment and Revolving Loan
Commitment: 25.6410256%
[Signatures Continued on Following Page]
<PAGE>
[Signatures Continued from Previous Page]
FIRST UNION CAPITAL MARKETS CORP., as
Syndication Agent and a Co-Arranger
By:__________________________________
Name______________________________
Title:____________________________
Address: 301 South College Street,
5th Floor Charlotte, NC 28288-0735
Fax: (704) 374-4092
[Signatures Continued on Following Page]
<PAGE>
[Signatures Continued from Previous Page]
Commitment to make Term Loans: THE BANK OF NEW YORK, as Documentation
$12,820,512.82 Agent and a Lender
Pro Rata Share of Term Loan
Commitment: 25.6410256% By:__________________________________
Name:_____________________________
Commitment to make Revolving Title:____________________________
Loans: $20,512,820.51
Address: One Wall Street
Pro Rata Share of Revolving Loan Sixteenth Floor
Commitment: 25.6410256% New York, NY 10286
Fax: (212) 635-8593
Total Lender Loan Commitment: (212) 635-8595
$33,333,333.33
Pro Rata Share of Term Loan
Commitment and Revolving Loan
Commitment: 25.6410256%
[Signatures Continued on Following Page]
<PAGE>
[Signatures Continued from Previous Page]
BNY CAPITAL MARKETS, INC.,
as a Co-Arranger
By:__________________________________
Name:_____________________________
Title:____________________________
Address: One Wall Street
Eighteenth Floor
New York, NY 10286
Fax: (212) 635-8059
[Signatures Continued on Following Page]
<PAGE>
[Signatures Continued from Previous Page]
Commitment to make Term Loans: FIRST UNION NATIONAL BANK,
$12,820,512.82 as a Lender
Pro Rata Share of Term Loan
Commitment: 25.6410256% By:__________________________________
Name:_____________________________
Commitment to make Revolving Title:____________________________
Loans:$20,512,820.51
Address: First Union National Bank
Pro Rata Share of Revolving Loan 301 South College Street, 5th Floor
Commitment: 25.6410256% Charlotte, North Carolina 28288-0735
Fax: (704) 374-4092
Total Lender Loan Commitment:
$33,333,333.33
Pro Rata Share of Term Loan
Commitment and Revolving Loan
Commitment: 25.6410256%
[Signatures Continued on Following Page]
<PAGE>
[Signatures Continued from Previous Page]
Commitment to make Term Loans: THE CIT GROUP/EQUIPMENT
$5,769,230.77 FINANCING, INC., as a Lender
Pro Rata Share of Term Loan By:__________________________________
Commitment: 11.5384615% Name:_____________________________
Title:____________________________
Commitment to make Revolving Loans:
$9,230,769.23 Address:_____________________________
_____________________________________
Pro Rata Share of Revolving Loan Fax:
Commitment: 11.5384615%
Total Lender Loan Commitment:
$15,000,000.00
Pro Rata Share of Term Loan
Commitment and Revolving Loan
Commitment: 11.5384615%
[Signatures Continued on Following Page]
<PAGE>
[Signatures Continued from Previous Page]
Commitment to make Revolving: COAST BUSINESS CREDIT,
Loans: $6,153,846.15 a division of SOUTHERN PACIFIC
BANK, as a Lender
Pro Rata Share of Term Loan
Commitment: 7.6923077% By:__________________________________
Name:_____________________________
Commitment to make Term Loans: Title:____________________________
$3,846,153.85
Address:_____________________________
Pro Rata Share of Revolving Loan ______________________________________
Commitment: 7.6923077% Fax:_________________________________
Total Lender Loan Commitment:
$10,000,000.00
Pro Rata Share of Term Loan
Commitment and Revolving Loan
Commitment: 7.6923077%
[Signatures Continued on Following Page]
<PAGE>
[Signatures Continued from Previous Page]
Commitment to make Term Loans: CITY NATIONAL BANK (LSA),
$1,923,076.92 as a Lender
Pro Rata Share of Term Loan By:__________________________________
Commitment: 3.8461538% Name:_____________________________
Title:____________________________
Commitment to make Revolving
Loans:$3,076,923.08 Address:_____________________________
_____________________________________
Pro Rata Share of Revolving Loan Fax:__________________________________
Commitment: 3.8461538%
Total Lender Loan Commitment:
$5,000,000.00
Pro Rata Share of Term Loan
Commitment and Revolving Loan
Commitment: 3.8461538%
<PAGE>
Exhibit 12.1
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
Nine
Months
Year Ended December 31, Ended
--------------------------------- September
1994 1995 1996 1997 1998 30, 1999
----- ----- ------ ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Consolidated pretax income from
continuing operations........... 2,827 4,096 5,932 1,589 59,631 (22,543)
Share of pretax loss of 50%-or-
less-owned affiliate with
guaranteed debt................. 0 0 0 (3,353) (7,227) (866)
Interest......................... 790 3,401 6,539 8,580 6,157 5,691
Interest portion of rental
expense......................... 0 613 223 0 0 0
Net amortization of debt issuance
costs........................... 7 68 160 125 114 311
----- ----- ------ ------ ------ -------
Earnings........................ 3,624 8,178 12,854 6,941 58,675 (17,407)
===== ===== ====== ====== ====== =======
Interest......................... 790 3,401 6,539 8,580 6,157 5,691
Interest portion of rental
expense......................... 0 613 223 0 0 0
Net amortization of debt issuance
costs........................... 7 68 160 125 114 311
Interest expense relating to
guaranteed debt of 50%-or-less-
owned affiliate 0 0 0 231 370 277
----- ----- ------ ------ ------ -------
Fixed Charges................... 797 4,082 6,922 8,936 6,641 6,279
===== ===== ====== ====== ====== =======
Ratio of Earnings to Fixed
Charges(1)..................... 4.5 2.0 1.9 0.8 8.8 -2.8
</TABLE>
- --------
(1) Earnings were insufficient to cover fixed charges by approximately $2.0
million for the year ended December 31, 1997, and by approximately $23.7
million for the nine months ended September 30, 1999.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF US UNWIRED INC.
At December 31, 1998, US Unwired Inc. had investments in the following
unconsolidated affiliates:
PERCENTAGE
OWNERSHIP
-----------
Louisiana Unwired, LLC 50.00%
LEC Unwired, LLC 50.00%
Command Connect, LLC 50.00%
GTE Mobilnet of Texas RSA #21 Limited
Partnership 25.00%
Meretel Communications Limited Partnership 24.33%
At December 31, 1998, Louisiana Unwired, LLC had no investments in
unconsolidated affiliates. At December 31, 1998, Unwired Telecom Corp. did not
exist.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated April 9, 1999, except for Note 13 as to which the
date is November 8, 1999, with respect to the consolidated financial statements
of US Unwired Inc. and our report dated April 9, 1999, except for Note 6 as to
which the date is October 1, 1999, with respect to the financial statements of
Louisiana Unwired, LLC included in the Registration Statement (Form S-4) and
related Prospectus of US Unwired Inc.
ERNST & YOUNG LLP
Houston, Texas
December 6, 1999
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
US Unwired Inc.:
We consent to the use of our report dated March 10, 1997 related to the
consolidated financial statements of US Unwired Inc. for the year ended
December 31, 1996 included herein and to the reference to our firm under the
heading "Experts" in the prospectus.
KPMG LLP
New Orleans, Louisiana
December 6, 1999
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
US UNWIRED INC.
Offer to Exchange Its
13 3/8% Series B Senior Subordinated Discount Notes due 2009
(Registered Under The Securities Act of 1933)
For Any and All of Its Outstanding
13 3/8% Series A Senior Subordinated Discount Notes due 2009
Pursuant to the Prospectus
Dated , 2000
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW
YORK CITY TIME, ON , 2000, UNLESS THE OFFER IS EXTENDED.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
STATE STREET BANK AND TRUST COMPANY
<TABLE>
<S> <C>
By Registered or Certified Mail: By Overnight Delivery or Hand:
State Street Bank and Trust Company. State Street Bank and Trust Company.
Corporate Trust Department Corporate Trust Department
P. O. Box 778 2 Avenue de Lafayette
Boston, MA 02102-0078 Corporate Trust Window, Fifth Floor
Contact: Kellie Mullen Boston, MA 02111-1724
Contact: Kellie Mullen
</TABLE>
<TABLE>
<S> <C>
To Confirm by Telephone Facsimile Transmissions:
or for Information: (617) 662-1452
(617) 664-5587 Attention: Kellie Mullen
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A
NUMBER OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
Capitalized terms used but not defined herein shall have the same meaning
given them in the Prospectus (as defined below).
This Letter of Transmittal is to be completed by holders of Existing Notes
(as defined below) if Existing Notes are to be forwarded herewith. If tenders
of Existing Notes are to be made by book-entry transfer to an account
maintained by State Street Bank and Trust Company (the "Exchange Agent") at
The Depository Trust Company ("DTC") pursuant to the procedures set forth in
"The Exchange Offer--Book-Entry Transfer" in the Prospectus and in accordance
with the Automated
1
<PAGE>
Tender Offer Program ("ATOP") established by DTC, a tendering holder will
become bound by the terms and conditions hereof in accordance with the
procedures established under ATOP.
Holders of Existing Notes whose certificates (the "certificates") for such
Existing Notes are not immediately available or who cannot deliver their
certificates and all other required documents to the Exchange Agent on or prior
to the expiration date (as defined in the Prospectus) or who cannot complete
the procedures for book-entry transfer on a timely basis, must tender their
Existing Notes according to the guaranteed delivery procedures set forth in
"The Exchange Offer--Guaranteed Delivery Procedures" in the Prospectus. SEE
INSTRUCTION 1. DELIVERY OF DOCUMENTS TO DTC IN ACCORDANCE WITH ITS PROCEDURES
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
ALL TENDERING HOLDERS COMPLETE THIS BOX:
- --------------------------------------------------------------------------------
DESCRIPTION OF EXISTING NOTES TENDERED
- --------------------------------------------------------------------------------
Name(s) and address(es) of Registered Holder(s) Existing Notes Tendered
(Please fill in, if blank) (attach additional list if necessary)
- --------------------------------------------------------------------------------
Principal Amount
Certificate Number(s)* of Existing Notes**
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
------------------------------------------
Total Amount
Tendered
- --------------------------------------------------------------------------------
* Need not be completed by book-entry holders.
** Existing Notes may be tendered in whole or in part in denominations of
$1,000 and integral multiples thereof. All Existing Notes held shall be
deemed tendered unless a lesser number is specified in this column.
2
<PAGE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[_]CHECK HERE IF TENDERED EXISTING NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution ______________________________________________
DTC Account Number _________________________________________________________
Transaction Code Number ____________________________________________________
[_]CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED EXISTING NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING:
Name of Registered Holder(s) _______________________________________________
Window Ticket Number (if any) ______________________________________________
Date of Execution of Notice of Guaranteed Delivery _________________________
Name of Institution which Guaranteed _______________________________________
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution ______________________________________________
DTC Account Number _________________________________________________________
Transaction Code Number ____________________________________________________
[_]CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED EXISTING
NOTES ARE TO BE RETURNED BY CREDITING THE DTC ACCOUNT NUMBER SET FORTH
ABOVE.
[_]CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE EXISTING NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES (A
"PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10 ADDITIONAL COPIES OF
THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
3
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to US Unwired Inc., a Louisiana corporation
(the "Company"), the principal amount of the Company's 13 3/8% Series A Senior
Subordinated Discount Notes due 2009 (the "Existing Notes") specified above in
exchange for a like aggregate principal amount of the Company's 13 3/8% Series
B Senior Subordinated Discount Notes due 2009 (the "Exchange Notes"), upon the
terms and subject to the conditions set forth in the Prospectus dated ,
2000 (as the same may be amended or supplemented from time to time, the
"Prospectus"), receipt of which is acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitute the "Exchange
Offer"). The Exchange Offer has been registered under the Securities Act of
1933, as amended (the "Securities Act").
Subject to and effective upon the acceptance for exchange of all or any
portion of the Existing Notes tendered herewith in accordance with the terms
and conditions of the Exchange Offer (including, if the Exchange Offer is
extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to or upon the
order of the Company all right, title and interest in and to such Existing
Notes as are being tendered herewith. The undersigned hereby irrevocably
constitutes and appoints the Exchange Agent as its agent and attorney-in-fact
(with full knowledge that the Exchange Agent is also acting as agent of the
Company in connection with the Exchange Offer) with respect to the tendered
Existing Notes, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), subject only to
the right of withdrawal described in the Prospectus, to (i) deliver
certificates for Existing Notes to the Company together with all accompanying
evidences of transfer and authenticity to, or upon the order of, the Company,
upon receipt by the Exchange Agent, as the undersigned's agent, of the Exchange
Notes to be issued in exchange for such Existing Notes, (ii) present
certificates for such Existing Notes for transfer, and to transfer the Existing
Notes on the books of the Company, and (iii) receive for the account of the
Company all benefits and otherwise exercise all rights of beneficial ownership
of such Existing Notes, all in accordance with the terms and conditions of the
Exchange Offer.
THE UNDERSIGNED HEREBY REPRESENTS AND WARRANTS THAT THE UNDERSIGNED HAS FULL
POWER AND AUTHORITY TO TENDER, EXCHANGE, SELL, ASSIGN AND TRANSFER THE EXISTING
NOTES TENDERED HEREBY AND THAT, WHEN THE SAME ARE ACCEPTED FOR EXCHANGE, THE
COMPANY WILL ACQUIRE GOOD, MARKETABLE AND UNENCUMBERED TITLE THERETO, FREE AND
CLEAR OF ALL LIENS, RESTRICTIONS, CHARGES AND ENCUMBRANCES, AND THAT THE
EXISTING NOTES TENDERED HEREBY ARE NOT SUBJECT TO ANY ADVERSE CLAIMS OR
PROXIES. THE UNDERSIGNED WILL, UPON REQUEST, EXECUTE AND DELIVER ANY ADDITIONAL
DOCUMENTS DEEMED BY THE COMPANY OR THE EXCHANGE AGENT TO BE NECESSARY OR
DESIRABLE TO COMPLETE THE EXCHANGE, ASSIGNMENT AND TRANSFER OF THE EXISTING
NOTES TENDERED HEREBY, AND THE UNDERSIGNED WILL COMPLY WITH ITS OBLIGATIONS
UNDER THE REGISTRATION RIGHTS AGREEMENT. THE UNDERSIGNED HAS READ AND AGREES TO
ALL OF THE TERMS OF THE EXCHANGE OFFER.
4
<PAGE>
The name(s) and address(es) of the registered holder(s) of the Existing
Notes tendered hereby should be printed above, if they are not already set
forth above, as they appear on the certificates representing such Existing
Notes. The certificate number(s) and the Existing Notes that the undersigned
wishes to tender should be indicated in the appropriate boxes above.
If any tendered Existing Notes are not exchanged pursuant to the Exchange
Offer for any reason, or if certificates are submitted for more Existing Notes
than are tendered or accepted for exchange, certificates for such unaccepted or
nonexchanged Existing Notes will be returned (or, in the case of Existing Notes
tendered by book-entry transfer, such Existing Notes will be credited to an
account maintained at DTC), without expense to the tendering holder, promptly
following the expiration or termination of the Exchange Offer.
The undersigned understands that tenders of Existing Notes pursuant to any
one of the procedures described in "The Exchange Offer--Procedures for
Tendering Existing Notes" in the Prospectus and in the instructions hereto
will, upon the Company's acceptance for exchange of such tendered Existing
Notes, constitute a binding agreement between the undersigned and the Company
upon the terms and subject to the conditions of the Exchange Offer. In all
cases in which a Participant elects to accept the Exchange Offer by
transmitting an express acknowledgment in accordance with the established ATOP
procedures, such Participant shall be bound by all of the terms and conditions
of this Letter of Transmittal. The undersigned recognizes that, under certain
circumstances set forth in the Prospectus, the Company may not be required to
accept for exchange any of the Existing Notes tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, the undersigned hereby directs that the Exchange Notes be
issued in the name(s) of the undersigned or, in the case of a book-entry
transfer of Existing Notes, that such Exchange Notes be credited to the account
indicated above maintained at DTC. If applicable, substitute certificates
representing Existing Notes not exchanged or not accepted for exchange will be
issued to the undersigned or, in the case of a book-entry transfer of Existing
Notes, will be credited to the account indicated above maintained at DTC.
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please deliver Exchange Notes to the undersigned at the address shown below the
undersigned's signature.
By tendering Existing Notes and executing, or otherwise becoming bound by,
this letter of transmittal, the undersigned hereby represents and agrees that
(i) the undersigned is not an "affiliate" of the Company,
(ii) any Exchange Notes to be received by the undersigned are being
acquired in the ordinary course of its business, and
(iii) the undersigned has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the
Securities Act) of such Exchange Notes.
By tendering Existing Notes pursuant to the exchange offer and executing, or
otherwise becoming bound by, this letter of transmittal, a holder of Existing
Notes that is a broker-dealer represents and agrees, consistent with certain
interpretive letters issued by the staff of the Division of
5
<PAGE>
Corporation Finance of the Securities and Exchange Commission to third parties,
that (a) such Existing Notes held by the broker-dealer are held only as a
nominee, or (b)such Existing Notes were
acquired by such broker-dealer for its own account as a result of market-making
activities or other trading activities and it will deliver the prospectus (as
amended or supplemented from time to time) meeting the requirements of the
securities act in connection with any resale of such Exchange Notes (provided
that, by so acknowledging and by delivering a prospectus, such broker-dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the securities act).
The Company has agreed that, subject to the provisions of the Registration
Rights Agreement, the Prospectus, as it may be amended or supplemented from
time to time, may be used by a participating broker-dealer (as defined below)
in connection with resales of Exchange Notes received in exchange for Existing
Notes, where such Existing Notes were acquired by such participating broker-
dealer for its own account as a result of market-making activities or other
trading activities, for a period ending one year and 30 days after the
effective date of the registration statement of which the Prospectus is a part
or, if earlier, when all such Exchange Notes have been disposed of by such
participating broker-dealer. In that regard, each broker dealer who acquired
Existing Notes for its own account as a result of market-making or other
trading activities (a "participating broker-dealer"), by tendering such
Existing Notes and executing, or otherwise becoming bound by, this letter of
transmittal, agrees that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained in the prospectus untrue in any material respect or which causes the
prospectus to omit to state a material fact necessary in order to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading or of the occurrence of certain other events
specified in the Registration Rights Agreement, such participating broker-
dealer will suspend the sale of Exchange Notes pursuant to the prospectus until
the Company has amended or supplemented the prospectus to correct such
misstatement or omission and has furnished copies of the amended or
supplemented prospectus to the participating broker-dealer or the Company has
given notice that the sale of the Exchange Notes may be resumed, as the case
may be. If the Company gives such notice to suspend the sale of the Exchange
Notes, it shall extend the one year and 30 day period referred to above during
which participating broker-dealers are entitled to use the prospectus in
connection with the resale of Exchange Notes by the number of days during the
period from and including the date of the giving of such notice to and
including the date when participating broker-dealers shall have received copies
of the supplemented or amended prospectus necessary to permit resales of the
Exchange Notes or to and including the date on which the Company has given
notice that the sale of Exchange Notes may be resumed, as the case may be.
All authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
executors, administrators, personal representatives, trustees in bankruptcy,
legal representatives successors and assigns of the undersigned. Except as
stated in the Prospectus, this tender is irrevocable.
6
<PAGE>
HOLDER(S) SIGN HERE
(See Instructions 2, 5 and 6)
(NOTE: SIGNATURE(S) MUST BE GUARANTEED IF REQUIRED BY INSTRUCTION 2)
Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for the Existing Notes hereby tendered or on a security position
listing, or by any person(s) authorized to become the registered holder(s) by
endorsements and documents transmitted herewith. If signature is by an
attorney-in-fact, executor, administrator, trustee, guardian, officer of a
corporation or another acting in a fiduciary or representative capacity, please
set forth the signer's full title. See Instruction 5.
_____________________________________________________________________________
(Signature(s) of Holder(s))
Date ___________________________________________________________________, 2000
Name(s) ________________________________________________________________________
________________________________________________________________________________
(Please Print)
Capacity: ______________________________________________________________________
(Include Full Title)
Address ________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number _________________________________________________
________________________________________________________________________________
(Tax Identification or Social Security Number(s))
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 2 AND 5)
Authorized Signature ___________________________________________________________
Name ___________________________________________________________________________
________________________________________________________________________________
(Please Print)
Date _____________________________________________________________________, 2000
Capacity or Title ______________________________________________________________
Name of Firm ___________________________________________________________________
7
<PAGE>
Address ________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number _________________________________________________
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, AND 6)
(SEE INSTRUCTIONS 1, 5 AND 6)
To be completed ONLY if the To be completed ONLY if the Exchange
Exchange Notes are to be issued in Notes are to be sent to someone other
the name of someone other than the than the registered holder of the
registered holder of the Existing Existing Notes whose name(s) appear(s)
Notes whose name(s) appear(s) above. above, or to such registered holder(s)
at an address other than that shown
Issue Exchange Notes to: above.
Name ________________________________
Mail Exchange Notes To:
(Please Print)
_____________________________________ Name ___________________________________
(Please Print)
Address _____________________________
________________________________________
_____________________________________
Address ________________________________
_____________________________________
________________________________________
(Include Zip Code)
_____________________________________ ________________________________________
(Include Zip Code)
(Taxpayer Identification or Social
Security Number) ________________________________________
(Taxpayer Identification or Social
Security Number)
8
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES; GUARANTEED DELIVERY
PROCEDURES. This Letter of Transmittal is to be completed if certificates are
to be forwarded herewith. If tenders are to be made pursuant to the procedures
for tender by book-entry transfer set forth in "The Exchange Offer--Book-Entry
Transfer" in the Prospectus and in accordance with ATOP established by DTC, a
tendering holder will become bound by the terms and conditions hereof in
accordance with the procedures established under ATOP. Certificates, or timely
confirmation of a book-entry transfer of such Existing Notes into the Exchange
Agent's account at DTC, as well as this Letter of Transmittal (or facsimile
thereof), if required, properly completed and duly executed, with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent at one of its addresses
set forth herein on or prior to the expiration date. Existing Notes may be
tendered in whole or in part in the principal amount of $1,000 and integral
multiples of $1,000.
Holders who wish to tender their Existing Notes and (i) whose Existing
Notes are not immediately available or (ii) who cannot deliver their Existing
Notes, this Letter of Transmittal and all other required documents to the
Exchange Agent on or prior to the expiration date or (iii) who cannot complete
the procedures for delivery by book-entry transfer on a timely basis, may
tender their Existing Notes by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedures set
forth in "The Exchange Offer--Guaranteed Delivery Procedures" in the
Prospectus. Pursuant to such procedures: (i) such tender must be made by or
through an Eligible Institution (as defined below); (ii) a properly completed
and duly executed Letter of Transmittal (or facsimile) thereof and Notice of
Guaranteed Delivery, substantially in the form made available by the Company,
must be received by the Exchange Agent on or prior to the expiration date; and
(iii) the certificates (or a book-entry confirmation (as defined in the
Prospectus)) representing all tendered Existing Notes, in proper form for
transfer, together with any other documents required by this Letter of
Transmittal, must be received by the Exchange Agent within five New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in "The Exchange Offer--Guaranteed Delivery
Procedures" in the Prospectus.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile or mail to the Exchange Agent, and must include
a guarantee by an Eligible Institution in the form set forth in such Notice.
For Existing Notes to be properly tendered pursuant to the guaranteed delivery
procedure, the Exchange Agent must receive a Notice of Guaranteed Delivery on
or prior to the expiration date. As used herein and in the Prospectus,
"Eligible Institution" means a firm which is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office or
correspondent in the United States.
THE METHOD OF DELIVERY OF EXISTING NOTES, THIS LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING
HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL
WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, BE USED. IN
9
<PAGE>
ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO
LETTERS OF TRANSMITTAL OR EXISTING NOTES SHOULD BE SENT TO THE COMPANY.
The Company will not accept any alternative, conditional or contingent
tenders. Each tendering holder, by execution of a Letter of Transmittal (or
facsimile thereof), or any Agent's Message in lieu thereof, waives any right
to receive any notice of the acceptance of such tender.
Promptly upon receipt of this prospectus, State Street Bank and Trust
Company will deliver to registered holders, and bank-entry transfer facility
participants of Existing Notes a copy of this prospectus and the accompanying
documents, which include the Letter of Transmittal, the Notice of Guaranteed
Delivery, a Form of Instruction to Registered Holders and/or Bank-Entry
Transfer Facility Participants from Beneficial Owner and a Form of Letter from
Registered Owner and/or Book Entry Transfer Facility Participant to Beneficial
Owner. The registered owner or book-entry transfer facility participant should
then promptly seek instructions from the beneficial owner of Existing Notes
whether the beneficial owner would like the registered owner or book-entry
transfer participant to tender Existing Notes on behalf of the beneficial
owner. A Form of Letter to Beneficial Owner and a Form of Instruction to
Registered Holder/Book-Entry Transfer Facility Participant From Beneficial
Owner are attached to this Letter of Transmittal.
2. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required if:
(i) this Letter of Transmittal is signed by the registered holder(which
term, for purposes of this document, shall include any participant in DTC
whose name appears on a security position listing as the owner of the
Existing Notes) of Existing Notes tendered herewith, unless such holder(s)
has completed either the box entitled "Special Issuance Instructions" or
the box entitled "Special Delivery Instructions" above, or
(ii) such Existing Notes are tendered for the account of a firm that is
an Eligible Institution.
In all other cases, an Eligible Institution must guarantee the signature(s)
on this Letter of Transmittal. See Instruction 5.
3. INADEQUATE SPACE. If the space provided in the box captioned
"Description of Existing Notes" is inadequate, the certificate number(s)
and/or the principal amount of Existing Notes and any other required
information should be listed on a separate signed schedule which is attached
to this Letter of Transmittal.
4. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Existing Notes will be
accepted only in the principal amount of $1,000 and integral multiples
thereof. If less than all the Existing Notes evidenced by any certificate
submitted are to be tendered, fill in the principal amount of Existing Notes
which are to be tendered in the box entitled "Principal Amount of Existing
Notes Tendered (if less than all)." In such case, new certificate(s) for the
remainder of the Existing Notes that were evidenced by your old certificate(s)
will only be sent to the holder of the Existing Note, promptly after the
expiration date. All Existing Notes represented by certificates delivered to
the Exchange Agent will be deemed to have been tendered unless otherwise
indicated.
10
<PAGE>
Except as otherwise provided herein, tenders of Existing Notes may be
withdrawn at any time on or prior to the expiration date. In order for a
withdrawal to be effective on or prior to that time, a written notice of
withdrawal must be timely received by the Exchange Agent at one of its
addresses set forth above or in the Prospectus on or prior to the expiration
date. Any such notice of withdrawal must specify the name of the person who
tendered the Existing Notes to be withdrawn, identify the Existing Notes to be
withdrawn (including the principal amount of such Existing Notes) and (where
certificates for Existing Notes have been transmitted) specify the name in
which such Existing Notes are registered, if different from that of the
withdrawing holder. If certificates for the Existing Notes have been delivered
or otherwise identified to the Exchange Agent, then prior to the release of
such certificates, the withdrawing holder must submit the serial numbers of the
particular certificates for the Existing Notes to be withdrawn and a signed
notice of withdrawal with signatures guaranteed by an Eligible Institution,
unless such holder is an Eligible Institution. If Existing Notes have been
tendered pursuant to the procedures for book-entry transfer set forth in the
Prospectus under "The Exchange Offer--Book-Entry Transfer," any notice of
withdrawal must specify the name and number of the account at DTC to be
credited with the withdrawal of Existing Notes and otherwise
comply with the procedures of such facility. Existing Notes properly withdrawn
will not be deemed validly tendered for purposes of the Exchange Offer, but may
be retendered at any time on or prior to the expiration date by following one
of the procedures described in the Prospectus under "The Exchange Offer--
Procedures for Tendering Existing Notes."
All questions as to the validity, form and eligibility (including time of
receipt) of such withdrawal notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Existing Notes
which have been tendered for exchange but which are not exchanged for any
reason will be returned to the holder thereof without cost to such holder (or,
in the case of Existing Notes tendered by book-entry transfer into the Exchange
Agent's account at DTC pursuant to the book-entry procedures described in the
Prospectus under "The Exchange Offer--Book-Entry Transfer" such Existing Notes
will be credited to an account maintained with DTC for the Existing Notes) as
soon as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer.
5. SIGNATURES ON LETTER OF TRANSMITTAL, ASSIGNMENTS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the
Existing Notes tendered hereby, the signature(s) must correspond exactly with
the name(s) as written on the face of the certificate(s) without alteration,
enlargement or any change whatsoever.
If any of the Existing Notes tendered hereby are owned of record by two or
more joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Existing Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal (or facsimiles thereof) as there are different
registrations of certificates.
If this Letter of Transmittal or any certificates or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing and, unless waived by
the Company, proper evidence satisfactory to the Company of such persons'
authority to so act must be submitted.
11
<PAGE>
When this Letter of Transmittal is signed by the registered holder(s) of the
Existing Notes listed and transmitted hereby, no endorsement(s) of
certificate(s) or written instrument or instruments of transfer or exchange are
required unless Exchange Notes are to be issued in the name of a person other
than the registered holder(s). Signature(s) on such certificate(s) or written
instrument or instruments of transfer or exchange must be guaranteed by an
Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Existing Notes listed, the certificates must be
endorsed or accompanied by a written instrument or instruments of transfer or
exchange, in satisfactory form as determined by the Company in its sole
discretion and executed by the registered holder(s), in either case signed
exactly as the name or names of the registered holder(s) appear(s) on the
certificates. Signatures on such certificates or written instrument or
instruments of transfer or exchange must be guaranteed by an Eligible
Institution.
6. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If Exchange Notes are to be
issued in the name of a person other than the signer of this Letter of
Transmittal, or if Exchange Notes are to be sent to someone other than the
signer of this Letter of Transmittal or to an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
Certificates for Existing Notes not exchanged will be returned by mail or, if
tendered by book-entry transfer, by crediting the account indicated above
maintained at DTC. See Instruction 4.
7. IRREGULARITIES. The Company will determine, in its sole discretion, all
questions as to the form, validity, eligibility (including time of receipt) and
acceptance for exchange of any tender of Existing Notes, which determination
shall be final and binding. The Company reserves the absolute right to reject
any and all tenders of any particular Existing Notes not properly tendered or
to not accept any particular Existing Notes which acceptance might, in the
judgment of the Company or its counsel, be unlawful. The Company also reserves
the absolute right, in its sole discretion, to waive any defects or
irregularities or conditions of the Exchange Offer as to any particular
Existing Notes either before or after the expiration date (including the right
to waive the ineligibility of any holder who seeks to tender Existing Notes in
the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Existing Notes either before or after the
expiration date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with the tender of Existing
Notes for exchange must be cured within such reasonable period of time as the
Company shall determine. Neither the Company, the Exchange Agent nor any other
person shall be under any duty to give notification of any defect or
irregularity with respect to any tender of Existing Notes for exchange, nor
shall any of them incur any liability for failure to give such notification.
12
<PAGE>
8. Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
federal income tax laws, payments that may be made by the Company on account of
Exchange Notes issued pursuant to the Exchange Offer may be subject to backup
withholding at the rate of 31%. In order to avoid such backup withholding, each
tendering Holder should complete and sign the Substitute Form W-9 included in
this Letter of Transmittal and either (a) provide the correct taxpayer
identification number ("TIN") and certify, under penalties of perjury, that the
TIN provided is correct and that (i) the Holder has not been notified by the
Internal Revenue Service (the "IRS") that the Holder is subject to backup
withholding as a result of failure to report all interest or dividends or (ii)
the IRS has notified the Holder that the Holder is no longer subject to backup
withholding; or (b) provide an adequate basis for exemption. If the tendering
Holder has not been issued a TIN and has applied for one, or intends to apply
for one in the near future, such Holder should write "Applied For" in the space
provided for the TIN in Part I of the Substitute Form W-9, sign and date the
Substitute Form W-9 and sign the Certificate of Payee Awaiting Taxpayer
Identification Number. If "Applied For" is written in Part I, the Company (or
the Paying Agent under the indenture governing the Exchange Notes) shall retain
31% of payments made to the tendering Holder during the sixty-day period
following the date of the Substitute Form W-9. If the Holder furnishes the
Exchange Agent or the Company with its TIN within sixty days after the date of
the Substitute Form W-9, the Company (or the Paying Agent) shall remit such
amounts retained during the sixty-day period to the Holder and no further
amounts shall be retained or withheld from payments made to the Holder
thereafter. If, however, the Holder has not provided the Exchange Agent or the
Company with its TIN within such sixty-day period, the Company (or the Paying
Agent) shall remit such previously retained amounts to the IRS as backup
withholding. In general, if a Holder is an individual, the TIN is the Social
Security number of such individual. If the Exchange Agent or the Company are
not provided with the correct TIN, the Holder may be subject to a $50 penalty
imposed by the IRS. Certain Holders (including, among others, certain
corporations and certain foreign individuals) are not subject to these backup
withholding and reporting requirements. In order for a foreign individual to
qualify as an exempt recipient, such Holder must submit a statement (generally,
IRS Form W-8), signed under penalties of perjury, attesting to that
individual's exempt status. Such statements can be obtained from the Exchange
Agent. For further information concerning backup withholding and instructions
for completing the Substitute Form W-9 (including how to obtain a taxpayer
identification number if you do not have one and how to complete the Substitute
Form W-9 if Old Notes are registered in more than one name), consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
Failure to complete the Substitute Form W-9 will not, by itself, cause Old
Notes to be deemed invalidly tendered, but may require the Company (or the
Paying Agent) to withhold 31% of the amount of any payments made on account of
the Exchange Notes. Backup withholding is not an additional federal income tax.
Rather, the federal income tax liability of a person subject to backup
withholding will be reduced by the amount of tax withheld. If backup
withholding results in an overpayment of taxes, a refund may be obtained from
the IRS.
9. QUESTIONS, REQUESTS FOR ASSISTANCE AND ADDITIONAL COPIES. Questions and
requests for assistance may be directed to the Exchange Agent at its address
and telephone number set forth on the front of this Letter of Transmittal.
Additional copies of the
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Prospectus, the Notice of Guaranteed Delivery and the Letter of Transmittal may
be obtained from the Exchange Agent or from your broker, dealer, commercial
bank, trust company or other nominee.
10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Existing Notes have been lost, destroyed or stolen, the holder
should promptly notify the Exchange Agent. The holder will then be instructed
as to the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost, destroyed or stolen certificate(s) have been
followed.
11. SECURITY TRANSFER TAXES. Holders who tender their Existing Notes for
exchange will not be obligated to pay any transfer taxes in connection
therewith, except that holders who instruct the Company to register Exchange
Notes in the name of or request that Existing Notes not tendered or not
accepted in the Exchange Offer to be returned to, a person other than the
registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE THEREOF), OR AN AGENT'S
MESSAGE IN LIEU THEREOF, AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY
THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Old Notes are
accepted for payment is required to provide the Exchange Agent (as payer) with
such Holder's correct TIN on Substitute Form W-9 below or otherwise establish a
basis for exemption from backup withholding. If such Holder is an individual,
the TIN is his social security number. If the Exchange Agent is not provided
with the correct TIN, a $50 penalty may be imposed by the IRS, and payments
made pursuant to the Exchange Offer may be subject to backup withholding.
Certain Holders (including, among others, certain corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on Substitute
Form W-9. A foreign person may qualify as an exempt recipient by submitting to
the Exchange Agent a properly completed IRS Form W-8, signed under penalties of
perjury, attesting to that Holder's exempt status. A Form W-8 can be obtained
from the Exchange Agent. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional
instructions.
If backup withholding applies, the Exchange Agent is required to withhold
31% of any payments made to the Holder or other payee. Backup withholding is
not an additional federal income tax. Rather, the federal income tax liability
of persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the IRS.
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PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to the Exchange
Offer, the Holder is required to provide the Exchange Agent with either: (i)
the Holder's correct TIN by completing the Substitute Form W-9 below,
certifying that the TIN provided on Substitute Form W-9 is correct (or that
such Holder is awaiting a TIN) and that (A) the Holder has not been notified by
the IRS that the Holder is subject to backup withholding as a result of failure
to report all interest or dividends or (B) the IRS has notified the Holder that
the Holder is no longer subject to backup withholding or (ii) an adequate basis
for exemption.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered holder of
the Old Notes. If the Old Notes are held in more than one name or are held not
in the name of the actual owner, consult the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional guidance on which number to report.
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CERTIFICATION OF PAYEE AWAITING TAXPAYER INDEMNIFICATION NUMBER
I certify, under penalties of perjury, that a Taxpayer Identification Number
has not been issued to me, and that I mailed or delivered an application to
receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administration Office (or I intend to mail or
deliver an application in the near future). I understand that if I do not
provide a Taxpayer Identification Number to the payer, 31% of all payments made
to me on account of the Exchange Notes shall be retained until I provide a
Taxpayer Identification Number to the payer and that, if I do not provide my
Taxpayer Identification Number within sixty days, such retained amounts shall
be remitted to the Internal Revenue Service as backup withholding and 31% of
all reportable payments made to me thereafter will be withheld and remitted to
the Internal Revenue Service until I provide a Taxpayer Identification Number.
SIGNATURE___________________________ DATE_________________________________
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU ON ACCOUNT OF THE
EXCHANGE NOTES. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION
OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 8 HEREIN)
PAYER'S NAME: US UNWIRED INC.
SUBSTITUTE FORM W-9
REQUEST FOR TAXPAYER IDENTIFICATION NUMBER AND CERTIFICATION
PART I TAXPAYER IDENTIFICATION NUMBER (TIN)
Enter your tin in the appropriate box. For individuals, this is your social
security number (ssn). For sole proprietors, see the instructions in the
enclosed department of the treasury guidelines. For other entities, it is your
employer internal revenue service identification number (ein). If you do not
have a employer identification number, see how to get a tin in the enclosed
guidelines.
Note: If the account is in more than one name, see the chart on page 2 of the
enclosed guidelines for instructions on whose number to enter.
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- --------------------------------------------------------------------------------
PART II--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING
(See Part II instructions in the enclosed Guidelines.)
- --------------------------------------------------------------------------------
PART III--CERTIFICATION
Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding because: (a) I am exempt from backup
withholding, or (b) I have not been notified by the Internal Revenue
Service (IRS) that I am subject to backup withholding as a result of a
failure to report all interest or dividends, or (c) the IRS has notified me
that I am no longer subject to backup withholding.
Signature______________________________________________________________________
Date_____________________________ , 2000
- --------------------------------------------------------------------------------
CERTIFICATION INSTRUCTIONS.-You must cross out item 2 above if you have been
notified by the IRS that you are currently subject to backup withholding
because you have failed to report all interest or dividends on your tax return.
For real estate transactions, item 2 does not apply. For mortgage interest
paid, the acquisition or abandonment of secured property, cancellation of debt,
contributions to an individual retirement arrangement (IRA) and generally
payments other than interest and dividends, you are not required to sign the
Certification, but you must provide your correct TIN.
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EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
For Tender Of
13 3/8% Series A Senior Subordinated Discount Notes due 2009
of
US Unwired Inc.
This Notice of Guaranteed Delivery or one substantially equivalent hereto
must be used to accept the Exchange Offer (as defined below) if (i)
certificates for the Company's (as defined below) 13 3/8% Series A Senior
Subordinated Discount Notes due 2009 (the "Existing Notes") are not immediately
available, (ii) Existing Notes and any other documents required by the Letter
of Transmittal cannot be delivered to State Street Bank and Trust Company (the
"Exchange Agent") on or prior to the Expiration Date (as defined in the
Prospectus referred to below) or (iii) the procedures for book-entry transfer
cannot be completed on a timely basis. This Notice of Guaranteed Delivery may
be delivered by hand or sent by facsimile transmission, overnight courier,
telex, telegram or mail to the Exchange Agent. See "The Exchange Offer--
Guaranteed Delivery Procedures" in the Prospectus dated , 2000 (which,
together with the related Letter of Transmittal, constitutes the "Exchange
Offer") of US Unwired Inc., a Louisiana corporation (the "Company").
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
STATE STREET BANK AND TRUST COMPANY
By Hand or Overnight Delivery: By Registered or Certified Mail:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
2 Avenue de Lafayette P. O. Box 778
Corporate Trust Window, Fifth Floor Boston, MA 02102-0078
Boston, MA 02111-1724 Contact: Kellie Mullen
Contact: Kellie Mullen
Facsimile Transmissions:
(Eligible Institutions Only)
(617) 662-1452
Attention: Kellie Mullen
To Confirm by Telephone or
for Information Call:
(617) 664-5587
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF GUARANTEED DELIVERY VIA A
FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY.
This Notice Of Guaranteed Delivery Is Not To Be Used To Guarantee
Signatures. If A Signature On A Letter Of Transmittal Is Required To Be
Guaranteed By An "eligible Institution" Under The Instructions Thereto, Such
Signature Guarantee Must Appear In The Applicable Space Provided On The Letter
Of Transmittal.
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GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office or
correspondent in the United States, hereby guarantees to deliver to the
Exchange Agent, at one of its addresses set forth above, either the
certificates for all physically tendered Existing Notes, in proper form for
transfer, or confirmation of the book-entry transfer of such Existing Notes to
the Exchange Agent's account at The Depository Trust Company, pursuant to the
procedures for book-entry transfer set forth in the Prospectus, in either case
together with any other documents required by the Letter of Transmittal, within
five New York Stock Exchange trading days after the date of execution of this
Notice of Guaranteed Delivery.
The undersigned acknowledges that it must deliver the Existing Notes
tendered hereby to the Exchange Agent within the time period set forth above
and that failure to do so could result in a financial loss to the undersigned.
Name of Firm: _______________________
____________________________________
(Authorized Signature)
Address: ____________________________
_____________________________________ Name: _______________________________
(Zip Code) (Please type or print)
Title: ______________________________
Area Code and Telephone Number: _____
_____________________________________ Date: _______________________________
NOTE: DO NOT SEND EXISTING NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY.
ACTUAL SURRENDER OF EXISTING NOTES MUST BE MADE PURSUANT TO, AND BE
ACCOMPANIED BY, A PROPERLY COMPLETED AND FULLY EXECUTED LETTER OF
TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS.
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EXHIBIT 99.3
Offer to Exchange
13 3/8% Series B Senior Subordinated Discount Notes due 2009
(Registered Under The Securities Act of 1933)
for Any and All Outstanding
13 3/8% Series A Senior Subordinated Discount Notes due 2009
of
US UNWIRED INC.
To Our Clients:
Enclosed is a Prospectus, dated , 2000, of US Unwired Inc., a
Louisiana corporation (the "Company"), and a related Letter of Transmittal
(which together constitute the "Exchange Offer") relating to the offer by the
Company to exchange its 13 3/8% Series B Senior Subordinated Discount Notes due
2009 (the "Exchange Notes"), pursuant to an offering registered under the
Securities Act of 1933, as amended (the "Securities Act"), for a like principal
amount of its issued and outstanding 13 3/8% Series A Senior Subordinated
Discount Notes due 2009 (the "Existing Notes") upon the terms and subject to
the conditions set forth in the Exchange Offer.
Please note that the Exchange Offer will expire at 5:00 p.m., New York City
time, on , 2000, unless extended.
The Exchange Offer is not conditioned upon any minimum number of Existing
Notes being tendered.
We are the holder of record and/or participant in the book-entry transfer
facility of Existing Notes held by us for your account. A tender of such
Existing Notes can be made only by us as the record holder and/or participant
in the book-entry transfer facility and pursuant to your instructions. The
Letter of Transmittal is furnished to you for your information only and cannot
be used by you to tender Existing Notes held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Existing Notes held by us for your account pursuant to the terms and conditions
of the Exchange Offer. We also request that you confirm that we may on your
behalf make the representations contained in the Letter of Transmittal.
Pursuant to the Letter of Transmittal, each holder of Existing Notes will
represent to the Company that (i) the holder is not an "affiliate" of the
Company, (ii) any Exchange Notes to be received by it are being acquired in the
ordinary course of its business, and (iii) the holder has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Exchange Notes. If the tendering holder
is a broker-dealer that will receive Exchange Notes for its own account in
exchange for Existing Notes, you will represent on behalf of such broker-dealer
that the Existing Notes to be exchanged for the Exchange Notes were acquired by
it as a result of market-making activities or other trading activities, and
acknowledge on
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behalf of such broker-dealer that it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes. By acknowledging that it will deliver and by delivering a
prospectus meeting the requirements of the Securities Act in connection with
any resale of such Exchange Notes, such broker-dealer is not deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.
Very truly yours,
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EXHIBIT 99.4
Offer to Exchange
13 3/8% Series B Senior Subordinated Discount Notes due 2009
(Registered under the Securities Act of 1933)
for Any and All Outstanding
13 3/8% Series A Senior Subordinated Discount Notes due 2009
of
US UNWIRED INC.
To Registered Holders and
Book-Entry Transfer Facility Participants:
We are enclosing herewith the material listed below relating to the offer by
US Unwired Inc., a Louisiana corporation (the "Company"), to exchange its 13
3/8% Series B Senior Subordinated Discount Notes due 2009 (the "Exchange
Notes"), pursuant to an offering registered under the Securities Act of 1933,
as amended (the "Securities Act"), for a like principal amount of its issued
and outstanding 13 3/8% Series A Senior Subordinated Discount Notes due 2009
(the "Existing Notes") upon the terms and subject to the conditions set forth
in the Company's Prospectus, dated , 2000, and the related Letter of
Transmittal (which together constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated , 2000;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder and/or Book-Entry Transfer
Participant from Beneficial Owner; and
5. Letter which may be sent to your clients for whose account you hold
Existing Notes in your name or in the name of your nominee, to accompany
the instruction form referred to above, for obtaining such client's
instruction with regard to the Exchange Offer.
We urge you to contact your clients promptly. Please note that the Exchange
Offer will expire at 5:00 p.m., New York City time, on , 2000 unless
extended.
The Exchange Offer is not conditioned upon any minimum number of Existing
Notes being tendered.
Pursuant to the Letter of Transmittal, each holder of Existing Notes will
represent to the Company that (i) the holder is not an "affiliate" of the
Company, (ii) any Exchange Notes to be received by it are being acquired in the
ordinary course of its business, and (iii) the holder has no arrangement or
understanding with any person to participate in a distribution (within the
meaning of the Securities Act) of such Exchange Notes. If the tendering holder
is a broker-dealer that will receive Exchange Notes for its own account in
exchange for Existing Notes, you will represent on
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behalf of such broker-dealer that the Existing Notes to be exchanged for the
Exchange Notes were acquired by it as a result of market-making activities or
other trading activities, and acknowledge on behalf of such broker-dealer that
it will deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such Exchange Notes. By acknowledging that it
will deliver and by delivering a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Notes, such
broker-dealer is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
The enclosed Instruction to Registered Holder and/or Book-Entry Transfer
Participant from Beneficial Owner contains an authorization by the beneficial
owners of the Existing Notes for you to make the foregoing representations.
The Company will not pay any fee or commission to any broker or dealer or to
any other persons (other than the Exchange Agent) in connection with the
solicitation of tenders of Existing Notes pursuant to the Exchange Offer.
The Company will pay or cause to be paid any transfer taxes payable on the
transfer of Existing Notes to it, except as otherwise provided in Instruction
10 of the enclosed Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
STATE STREET BANK AND TRUST COMPANY
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF US UNWIRED INC. OR STATE STREET BANK AND TRUST COMPANY OR
AUTHORIZE YOU TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON THEIR BEHALF IN
CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH
AND THE STATEMENTS CONTAINED THEREIN.
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EXHIBIT 99.5
INSTRUCTION TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT FROM BENEFICIAL OWNER
OF
US UNWIRED INC.
13 3/8% Series A Senior Subordinated Discount Notes due
2009 (the "Existing Notes")
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus dated ,
2000 (the "Prospectus") of US Unwired Inc., a Louisiana corporation (the
"Company"), and the accompanying Letter of Transmittal (the "Letter of
Transmittal"), that together constitute the Company's offer (the "Exchange
Offer"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus or the Letter of Transmittal.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Existing Notes held by you for the account
of the undersigned.
The aggregate face amount of the Existing Notes held by you for the account
of the undersigned is (fill in amount):
$ of the 13 3/8% Series A Senior Subordinated Discount Notes due
2009
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[_] To TENDER the following Existing Notes held by you for the account
of the undersigned (insert principal amount of Existing Notes to be
tendered, if any):
$ of the 13 3/8% Series A Senior Subordinated Discount Notes due
2009
[_] NOT to TENDER any Existing Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Existing Notes held by you
for the account of the undersigned, it is understood that you are authorized
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representations and warranties contained in
the Letter of Transmittal that are to be made with respect to the undersigned
as a beneficial owner, including but not limited to the representations, that
(i) the holder is not an "affiliate" of the Company, (ii) any Exchange Notes
to be received by the holder are being acquired in the ordinary course of its
business, and (iii) the holder has no arrangement or understanding with any
person to participate in a distribution (within the meaning of the Securities
Act) of such Exchange Notes. If the undersigned is a broker-dealer that will
receive Exchange Notes for its own account in exchange for Existing Notes, it
represents that such Existing Notes were acquired as a
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result of market-making activities or other trading activities, and it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such Exchange Notes. By
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act in connection with any resale of such
Exchange Notes, such broker-dealer is not deemed to admit that it is an
"underwriter" within the meaning of the Securities Act of 1933, as amended.
2
