<PAGE>
REGISTRATION NO. 333-36253
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PRICE COMMUNICATIONS WIRELESS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4812 13-3956941
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
----------------
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
(212) 757-5600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT PRICE
PRICE COMMUNICATIONS WIRELESS, INC.
45 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10020
(212) 757-5600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
----------------
COPIES TO:
RICHARD D. TRUESDELL, JR.
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE 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: [_]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION, DATED NOVEMBER 7, 1997
PROSPECTUS
, 1997
$175,000,000
OFFER TO EXCHANGE
11 3/4% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
11 3/4% SENIOR SUBORDINATED NOTES DUE 2007
OF
PRICE COMMUNICATIONS WIRELESS, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED
Price Communications Wireless, Inc. (the "Company" or "PCW"), hereby offers,
upon the terms and subject to the conditions set forth in this Prospectus and
the accompanying Letter of Transmittal (which together constitute the
"Exchange Offer"), to exchange $1,000 principal amount of 11 3/4% Senior
Subordinated Exchange Notes due 2007 (the "New Notes") of the Company for each
$1,000 principal amount of the issued and outstanding 11 3/4% Senior
Subordinated Notes due 2007 (the "Old Notes" and, together with the New Notes,
the "Notes") of the Company. As of the date of this Prospectus there were
outstanding $175,000,000 principal amount of Old Notes. The terms of the New
Notes are identical in all material respects to the Old Notes, except that the
offer of the New Notes will have been registered under the Securities Act of
1933, as amended (the "Securities Act"), and therefore, the New Notes will not
be subject to certain transfer restrictions, registration rights and related
liquidated damage provisions applicable to the Old Notes.
The New Notes will bear interest from July 10, 1997. Holders of Old Notes
(each person in whose name a Note is registered, a "Holder") whose Old Notes
are accepted for exchange will be deemed to have waived the right to receive
any payment in respect of interest on the Old Notes accrued from July 10, 1997
to the date of the issuance of the New Notes. Interest on the New Notes is
payable semi-annually on January 15 and July 15 of each year, commencing
January 15, 1998, accruing from July 10, 1997 at a rate of 11 3/4% per annum.
The Notes will be redeemable, in whole or in part, at the option of the
Company, at any time on or after July 15, 2002 at the redemption prices set
forth herein plus accrued and unpaid interest, if any, to the date of
redemption. See "Description of Notes."
The Notes are general, unsecured obligations of the Company and are
subordinated in right of payment to all Senior Indebtedness (as defined
herein) of the Company, including indebtedness under the New Credit Facility
(as defined herein). The Notes rank pari passu with any future senior
subordinated indebtedness of the Company and rank senior to all subordinated
indebtedness of the Company. As of June 30, 1997, on a pro forma basis after
giving effect to the issuance and sale of the Old Notes ("the Offering") and
the financing of the Acquisition (as defined herein), the Company would have
had $445.0 million of outstanding Senior Indebtedness.
The New Notes are being offered hereunder in order to satisfy certain
obligations of the Company under the Registration Rights Agreement, dated July
10, 1997, among the Company and the other signatories thereto (the
"Registration Rights Agreement"). Based upon interpretations contained in
letters issued to third parties by the staff of the Securities and Exchange
Commissions (the "SEC"), including Exxon Capital Holdings Corporation, SEC No-
Action Letter (avail. May 13, 1988), Morgan Stanley & Co. Incorporated, SEC
No-Action Letter (avail. June 5, 1991) and Shearman & Sterling, SEC No-Action
Letter (avail. July 2, 1993) (collectively, the "Exchange Offer No-Action
Letters"), the Company believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by each Holder thereof (other than a broker-dealer, as
set forth below, and any such Holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) without compliance
with the registration and prospectus delivery provisions of the Securities
Act, provided that such New Notes are acquired in the ordinary course of such
Holder's business and such Holder has no arrangement or understanding with any
person to participate in the distribution of such New Notes. Eligible Holders
wishing to accept the Exchange Offer must represent to the Company in the
Letter of Transmittal that such conditions have been met. Each broker-dealer
that receives New Notes for its own account pursuant to the Exchange Offer
must acknowledge that it will deliver a prospectus in connection with any
resale of such New Notes. The Letter of Transmittal states that by so
acknowledging and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with resales of New
Notes received in exchange of Old Notes where such Old Notes were acquired by
such broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 90 days after the
Expiration Date (as defined herein), it will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company will pay all the expenses incident to the Exchange Offer. Tenders of
Old Notes pursuant to the Exchange Offer may be withdrawn at any time prior to
the Expiration Date. In the event the Company terminates the Exchange Offer
and does not accept for exchange any Old Notes, the Company will promptly
return tendered Old Notes to the Holders thereof. See "The Exchange Offer."
Prior to this Exchange Offer, there has been no public market for the Notes.
The Company does not currently intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system. There can be no assurance that an active public market for the New
Notes will develop.
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT SHOULD BE
CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD NOTES IN THE EXCHANGE
OFFER.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in
this Prospectus (this "Prospectus") in connection with the offer made hereby
and, if given or made, such information or representations must not be relied
upon as having been authorized by the Company or any other person. 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 the
affairs of the Company since the date hereof or that the information contained
or incorporated by reference herein is correct as of any time subsequent to
its date. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the securities offered hereby by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or solicitation.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information (including the financial statements and the notes thereto) included
elsewhere in this Prospectus. Each prospective investor is urged to read this
Prospectus in its entirety. Unless otherwise indicated, all references herein
to the "Company," "PCW" or "Palmer" include their respective subsidiaries and
predecessors. References herein to the "Acquisition" refer to the acquisition
by the Company of Palmer and the related sales of the Fort Myers and Georgia-1
systems of Palmer, as described below under "The Acquisition." EXCEPT FOR
HISTORICAL FINANCIAL INFORMATION AND UNLESS OTHERWISE INDICATED, ALL
INFORMATION PRESENTED BELOW RELATING TO THE COMPANY, INCLUDING POPS, NET POPS
AND THE COMPANY'S SYSTEMS, GIVES EFFECT TO THE CONSUMMATION OF THE ACQUISITION
(INCLUDING THE SALES OF THE FORT MYERS AND GEORGIA-1 SYSTEMS).
THE COMPANY
The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. At
June 30, 1997, after giving effect to the Acquisition, PCW provided cellular
telephone service to 286,131 subscribers in Georgia, Alabama, Florida and South
Carolina in a total of 16 licensed service areas composed of eight Metropolitan
Statistical Areas ("MSAs") and eight Rural Service Areas ("RSAs"), with an
aggregate estimated population of 3.5 million. PCW sells its cellular telephone
service as well as a full line of cellular products and accessories principally
through its network of retail stores. PCW markets all of its products and
services under the nationally recognized service mark CELLULAR ONE.
During the first six months of 1997, on a pro forma basis, after giving
effect to the Acquisition, the Company's subscriber base increased from 243,204
to 286,131 or 17.7%. On a pro forma basis for the first six months of 1997, the
Company's operating income before depreciation and amortization ("EBITDA") was
$31.7 million and the Company would have incurred net losses of $20.6 million.
See "Summary Historical and Unaudited Pro Forma Financial and Operating Data."
OPERATIONS
The Company has developed its business through the acquisition and
integration of cellular telephone systems, clustering multiple systems in order
to provide broad areas of uninterrupted service and achieve certain economies
of scale, including centralized marketing and administrative functions as well
as multi-system capital expenditures. The Company devotes considerable
attention to engineering, maintenance and improvement of its cellular telephone
systems in an effort to deliver high-quality service to its subscribers and to
implement new technologies as soon as economically practicable. Through its
participation in the North American Cellular Network ("NACN"), PCW is able to
offer seven-digit dialing access to its subscribers when they travel outside
the Company's service areas, providing them with convenient roaming access
throughout large areas of the United States, Canada, Mexico and Puerto Rico
served by other NACN participants. By marketing its products and services under
the CELLULAR ONE name, PCW also enjoys the benefits of association with a
nationally recognized service mark.
The Company's cellular telephone systems include 15 contiguous licensed
service areas in Georgia, Alabama and South Carolina, as well as a system in
Panama City, Florida. The following table sets forth as of July 18, 1997, after
giving effect to the Acquisition, with respect to each service area in which
PCW owns a cellular telephone system, the estimated population, PCW's
beneficial ownership percentage, the Net Pops and the date of initial operation
of such system by Palmer or a predecessor operator.
3
<PAGE>
<TABLE>
<CAPTION>
ESTIMATED OWNERSHIP DATE SYSTEM
SERVICE AREA(1) POPULATION(2) PERCENTAGE NET POPS OPERATIONAL
<S> <C> <C> <C> <C>
Albany, GA.................... 118,527 86.5% 102,526 4/88
Augusta, GA................... 439,116 100.0 439,116 4/87
Columbus, GA.................. 254,150 85.2 216,518 11/88
Macon, GA..................... 313,686 99.2 311,234 12/88
Savannah, GA.................. 283,878 98.5 279,578 3/88
Georgia-6 RSA................. 199,516 95.0 189,560 4/93
Georgia-7 RSA................. 134,376 100.0 134,376 10/91
Georgia-8 RSA................. 157,451 100.0 157,451 10/91
Georgia-9 RSA................. 119,410 100.0 119,410 9/92
Georgia-10 RSA................ 149,699 100.0 149,699 10/91
Georgia-12 RSA................ 211,799 100.0 211,799 10/91
Georgia-13 RSA................ 147,392 86.5 127,494 10/90
Dothan, AL.................... 136,160 94.6 128,807 2/89
Montgomery, AL................ 318,371 92.8 295,430 8/88
Alabama-8 RSA................. 173,993 100.0 171,993 7/93
--------- ---------
Subtotal.................... 3,155,524 3,034,991
--------- ---------
Panama City, FL............... 146,018 78.4 114,493 9/88
--------- ---------
Total....................... 3,301,542 3,149,484
========= =========
</TABLE>
- --------------------
(1) Does not include the Alabama-5 RSA, South Carolina-7 RSA and South
Carolina-8 RSA where PCW has interim operating authority ("IOA"). PCW has
no subscribers in the South Carolina-7 RSA and South Carolina-8 RSA, but
instead provides roaming access to its own subscribers and others when they
travel in these two service areas, utilizing its existing cell sites.
Construction permits were granted to third parties ("Permittees") for the
Alabama-5 RSA and South Carolina-8 RSA on May 20, 1997. The Permittees are
required to complete construction of their respective RSA within 18 months.
After completing construction, a Permittee may give the Company ten days
prior written notice, at which point the Company would be required to sell
its subscribers to the Permittee at cost. The application for a
construction permit for the South Carolina-7 RSA has been remanded by the
FCC to the Wireless Bureau for further review.
(2) Based on population estimates for 1996 from the 1996 Donnelley Market
Information Service.
COMPANY STRATEGY
The Company's four strategic objectives are to: (1) expand its revenue base
by increasing penetration in existing service areas and encouraging greater
usage among its existing customers, (2) provide high-quality customer service
to create and maintain customer loyalty, (3) enhance performance by
aggressively pursuing opportunities to increase operating efficiencies and (4)
expand its regional wireless communications presence by selectively acquiring
additional interests in cellular telephone systems (including minority
interests). Specifically, the Company strives to achieve these objectives
through implementation of the following:
Aggressive, Direct Marketing. The Company employs a two-tier direct sales
force. A retail sales force handles walk-in traffic at the Company's 32 retail
outlets, and a targeted sales staff solicits certain industries and government
subscribers. PCW's management believes that its internal sales force is more
likely than independent agents to successfully select and screen new
subscribers and select pricing plans that realistically match subscriber means
and needs. In addition, the Company motivates its direct sales force to sell
appropriate rate plans to subscribers, thereby reducing churn, by linking
payments of commissions to subscriber retention. By lowering commissions and
reducing churn, the Company's use of a direct sales force keeps its marketing
costs among the industry's lowest.
4
<PAGE>
Flexible, Value-Oriented Pricing Plans. PCW provides a range of pricing
plans, each of which includes a monthly access fee and a bundle of "free"
minutes. Additional home rate minutes are charged at rates ranging from $0.05
per minute to $0.30 per minute depending on usage plan and time of day. In
addition, the Company offers wide area home rate roaming in the Company's
systems and low flat rate roaming in a six state region in the Southeastern
United States.
PCW believes that an increase in its bundled minute offerings will encourage
greater customer usage. By increasing the number of minutes a customer can use
for one flat rate, subscribers perceive greater value in their cellular service
and become less usage sensitive, i.e., they can increase their cellular phone
usage without seeing large corresponding increases in their cellular bill.
These factors translate into more satisfied customers and lower churn among
existing subscribers and also increase the number of potential customers in the
marketplace.
Adopting State of the Art System Design. The Company's network, combined with
its use of the IS-136 protocol, allows the delivery of full personal
communications services ("PCS") functionality to its digital cellular
customers--primarily caller ID, short message paging and extended battery life.
In addition, the Company's network currently provides for the seamless handoff
from PCS (1900 MHZ) to digital cellular (800 MHZ). The Company believes this
innovation will allow the Company to be the roaming partner of choice for PCS
operators employing TDMA (Time Division Multiple Access) technology. The
Company has already reached an agreement with AT&T with respect to PCS roaming
and expects that other PCS operators may choose, like AT&T, to concentrate PCS
buildout in urban centers rather than the more rural areas in which the Company
concentrates.
Focusing on Customer Service. Customer service is an essential element of the
Company's marketing and operating philosophy. The Company is committed to
attracting new subscribers and retaining existing subscribers by providing
consistently high-quality customer service. In each of its cellular service
areas, the Company maintains a local staff, including a market manager,
customer service representatives, technical and engineering staff, sales
representatives and installation and repair facilities. Each cellular service
area handles its own customer-related functions such as credit evaluations,
customer evaluations, account adjustments and rate plan changes. In addition,
subscribers are able to report cellular telephone service or account problems
to the Company's headquarters 24 hours a day. To ensure high-quality service,
Cellular One Group authorizes a third-party marketing research firm to perform
customer satisfaction surveys of each of its licensees. Licensees must achieve
a minimum satisfaction level in order to continue using the Cellular One
service mark. The Company has repeatedly ranked number one in customer
satisfaction among all Cellular One operators (#1 MSA in 1996, 1995, 1993, and
1992; #1 RSA in 1995).
Aggressive Cost Control Efforts. The Company believes that its monthly
operating costs per subscriber rank among the lowest in the industry. The
Company's management attributes this competitive advantage to a variety of
factors, including the efficiencies associated with its direct sales force, the
Company's low churn experience, extensive use of in-house technical and
engineering staff, maintenance of aggressive fraud control procedures and in-
house billing capabilities, as well as general efforts to reduce corporate
general and administrative expenses. The Company has also realized substantial
savings on its interconnection charges from landline carriers by using its own
microwave and fiber optic network to connect cellular switching equipment to
cell sites without the use of landline carriers.
THE ACQUISITION
Prior to the Merger, Company had no assets, liabilities or operations. The
Company is a wholly owned indirect subsidiary of Price Communications
Corporation ("PCC"), which was incorporated in 1979, and also of Price
Communications Cellular, Inc., the original parent of PriCellular Corporation.
On May 23, 1997, PCC, the Company and Palmer entered into an Agreement and
Plan of Merger (the "Merger Agreement"). The Merger Agreement provided, among
other things, for the merger of the Company
5
<PAGE>
with and into Palmer with Palmer as the surviving corporation (the "Merger").
On October 6, 1997, the Merger was consummated and Palmer changed its name to
"Price Communications Wireless, Inc." Pursuant to the Merger Agreement, PCC
acquired each issued and outstanding share of common stock of Palmer for a
purchase price of $17.50 per share in cash and purchased outstanding options
and rights under employee and director stock purchase plans for an aggregate
price of $486.4 million. In addition, as a result of the Merger, the Company
assumed all outstanding indebtedness of Palmer of approximately $378.0 million
("Palmer Existing Indebtedness"). As a result, the aggregate purchase price for
Palmer (not including transaction fees and expenses) was $864.4 million. The
Company refinanced all of the Palmer Existing Indebtedness concurrently with
the consummation of the Merger.
PCW entered into an agreement (the "Fort Myers Sale Agreement") to sell
Palmer's Fort Myers, Florida MSA covering approximately 382,000 Pops for $168.0
million (the "Fort Myers Sale"). On October 6, 1997, the Fort Myers Sale was
consummated, and generated proceeds to the Company of approximately $166.0
million. The proceeds of the Fort Myers Sale were used to fund a portion of the
acquisition of Palmer.
On October 21, 1997, PCC and the Company entered into an Asset Purchase
Agreement with MJ Cellular Company, L.L.C. (the "Georgia Sale Agreement") which
provided for the sale by the Company, for $25 million, of substantially all of
the assets used or useful in the operation of the non-wireline cellular
telephone system serving the Georgia-1-Whitfield Rural Service Area (Market No.
0371-A) ("System"), including the FCC licenses to operate the System (the
"Georgia Sale"). The parties expect to consummate the sale of the assets of the
System by December 31, 1997. The proceeds from the Georgia Sale will be used to
retire a portion of the debt used to fund the acquisition of Palmer.
In order to fund the Acquisition and pay related fees and expenses, the
Company issued the Old Notes and entered into a syndicated senior loan facility
providing for term loan borrowings in the aggregate principal amount of
approximately $325.0 million and revolving loan borrowings of $200.0 million
(the "New Credit Facility"). On October 6, 1997, the Company borrowed all term
loans available thereunder and approximately $120.0 million of revolving loans.
DLJ Capital Funding, Inc. ("DLJ Capital Funding"), an affiliate of Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), the lead Initial Purchaser,
provided the New Credit Facility, which is syndicated by DLJ Capital Funding.
See "Description of New Credit Facility."
The acquisition of Palmer was funded in part through a $128.2 million equity
contribution from PCC (the "PCC Equity Contribution") which was in the form of
cash and common stock of Palmer. PCC raised $47.5 million of the purchase price
for the Acquisition through an offering by Price Communications Cellular
Holdings, Inc. ("Holdings"), a wholly owned indirect subsidiary of PCC and the
direct parent of the Company, of units consisting of 13 1/2% Senior Secured
Discount Notes due 2007 and warrants to purchase shares of common stock of PCC
(the "Holdings Offering").
6
<PAGE>
The following table sets forth the estimated sources and uses of funds for
the Acquisition and related fees and expenses:
<TABLE>
<CAPTION>
TOTAL SOURCES: (IN MILLIONS)
<S> <C>
New Credit Facility:
Term loan................................................ $325.0
Revolving credit facility................................ 120.0
Old Notes.................................................. 175.0
PCC Equity Contribution.................................... 128.2
Proceeds from Fort Myers Sale.............................. 166.0
------
Total sources.......................................... $914.2
======
TOTAL USES:
Cash consideration for Palmer common stock................. $486.4
Palmer Existing Indebtedness (as of June 30, 1997) ........ 378.0
Estimated transaction fees and expenses.................... 31.2
Excess cash................................................ 18.6
------
Total uses............................................. $914.2
======
</TABLE>
The foregoing table does not reflect any provision for any taxes payable in
connection with the Fort Myers Sale or the Georgia Sale. The Company has a tax
planning strategy which it believes will avoid the payment of the $50.9 million
tax which would otherwise be payable in connection with the Fort Myers Sale and
Georgia Sale. While there can be no assurances that the Company's position will
prevail if challenged, the Company has received a written opinion from a "big-
six" accounting firm (other than Arthur Andersen LLP) that, under existing
laws, it is more likely than not that the Company's position will prevail if
challenged. In order to effect this tax strategy, the partnership that owns the
Fort Myers system will need to incur approximately $169.0 million of
indebtedness. The partnership has no commitments for such financing and there
can be no assurance it will be successful in obtaining such financing.
The foregoing table also does not reflect $1.4 million which was paid to
William J. Ryan as a severance payment pursuant to his employment contract upon
consummation of the Acquisition and approximately $2.6 million of severance
payments which are payable over several years pursuant to existing employment
contracts between Palmer and its other executive officers. The Company has
entered into employment contracts with Mr. Ryan and M. Wayne Wisehart to
continue as officers of the Company. The Company also entered into employment
contracts with other key employees prior to the consummation of the
Acquisition. See "Management."
7
<PAGE>
THE EXCHANGE OFFER
Securities Offered.......... Up to $175,000,000 principal amount of 11 3/4%
Senior Subordinated Exchange Notes due 2007. The
terms of the New Notes and the Old Notes are
identical in all material respects, except that
the offer of the New Notes will have been
registered under the Securities Act and
therefore, the New Notes will not be subjected to
certain transfer restrictions, registration
rights and related liquidated damage provisions
applicable to the Old Notes.
The Exchange Offer.......... The Company is offering, upon the terms and
subject to the conditions of the Exchange Offer,
to exchange $1,000 principal amount of New Notes
for each $1,000 principal amount of Old Notes.
See "The Exchange Offer" for a description of the
procedures for tendering Old Notes. The Exchange
Offer is intended to satisfy obligations of the
Company under the Registration Rights Agreement,
dated July 10, 1997, between the Company and
Donaldson, Lufkin & Jenrette Securities
Corporation, Wasserstein Perella Securities,
Inc., NatWest Capital Markets Limited, Lehman
Brothers, Inc. and PaineWebber Incorporated
(collectively, the "Initial Purchasers").
Tenders, Expiration Date; The Exchange Offer will expire at 5:00 p.m., New
Withdrawal.................. York City time, on , 1997, or such later
date and time to which it is extended. The tender
of Old Notes pursuant to the Exchange Offer may
be withdrawn at any time prior to the Expiration
Date. Any Old Notes not accepted for exchange for
any reason will be returned without expense to
the tendering Holder thereof as promptly as
practicable after the expiration or termination
of the Exchange Offer.
Federal Income Tax
Consequences................ The exchange pursuant to the Exchange Offer will
not result in any income, gain or loss to the
Holders or the Company for federal income tax
purposes. See "United States Federal Income Tax
Consequences."
Use of Proceeds............. There will be no proceeds to the Company from the
issuance of the New Notes pursuant to the
Exchange Offer.
Exchange Agent.............. Bank of Montreal Trust Company is serving as
Exchange Agent in connection with the Exchange
Offer.
8
<PAGE>
CONSEQUENCE OF EXCHANGING OLD NOTES
PURSUANT TO THE EXCHANGE OFFER
Based upon interpretations contained in letters issued to third parties by
the staff of the SEC as set forth in the Exchange Offer No-Action Letters, the
Company believes that, generally, any Holder of Old Notes (other than a broker-
dealer, as set forth below, and any Holder who is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) who exchanges Old
Notes for New Notes pursuant to the Exchange Offer may offer such New Notes for
resale, resell such New Notes, or otherwise transfer such New Notes without
compliance with the registration and prospectus delivery provisions of the
Securities Act, provided such New Notes are acquired in the ordinary course of
the Holder's business and such Holder has no arrangement or understanding with
any person to participate in a distribution of such New Notes. Eligible Holders
wishing to accept the Exchange Offer must represent to the Company in the
Letter of Transmittal that such conditions have been met and must represent, if
such Holder is not a broker-dealer, or is a broker-dealer but will not receive
New Notes for its own account in exchange for Old Notes, that neither such
Holder nor the person receiving such New Notes, if other than the Holder, is
engaged in or intends to participate in the distribution of such New Notes.
Each broker-dealer that receives New Notes for its own account in exchange for
Old Notes must represent that the Old Notes tendered in exchange therefor were
acquired as a result of market-making activities or other trading activities
and must acknowledge that it will deliver a prospectus in connection with any
resale of such New Notes. See "Plan of Distribution." To comply with the
securities laws of certain jurisdictions, it may be necessary to qualify for
sale or register the New Notes prior to offering or selling such New Notes. The
Company does not currently intend to take any action to register or qualify the
New Notes for resale in any such jurisdictions. If a Holder of Old Notes does
not exchange such Old Notes for New Notes pursuant to the Exchange Offer, such
Old Notes will continue to be subject to the restrictions on transfer contained
in the legend thereon. In general, the Old Notes may not be offered or sold,
unless registered under the Securities Act, except pursuant to an exemption
from, or in a transaction not subject to, the Securities Act and applicable
state securities laws. Any Holder who tenders in the Exchange Offer with the
intention to participate, or for the purpose of participating, in a
distribution of New Notes could not rely on the position of the staff of the
SEC enunciated in Exxon Capital Holdings Corporation (available May 13, 1986)
or similar no-action letters and, in the absence of an exemption therefrom,
must comply with the registration and prospectus delivery requirements of the
Securities Act in connection with a secondary resale transaction. Failure to
comply with such requirements in such instance may result in such Holder
incurring liability under the Securities Act for which the Holder is not
indemnified by the Company. See "The Exchange Offer--Consequences of Failure to
Exchange" and "Description of Notes--Registration Rights; Liquidated Damages."
9
<PAGE>
SUMMARY DESCRIPTION OF THE NEW NOTES
The terms of the New Notes and the Old Notes are identical in all material
respects, except that the offer of the New Notes will have been registered
under the Securities Act and, therefore, the New Notes will not be subject to
certain transfer restrictions, registration rights and related provisions
applicable to the Old Notes.
Notes Offered............... Up to $175,000,000 aggregate principal amount of
11 3/4% Senior Subordinated Exchange Notes due
2007.
Interest.................... Payable semi-annually on each January 15 and July
15 commencing on January 15, 1998. The New Notes
will bear interest from July 10, 1997. Holders of
Old Notes whose Old Notes are accepted for
exchange will be deemed to have waived the right
to receive any payment in respect of interest on
such Old Notes accrued from July 10, 1997 to the
date of the issuance of the New Notes.
Consequently, Holders who exchange their Old
Notes for New Notes will receive the same
interest payment on January 15, 1998 (the first
interest payment date with respect to the Old
Notes and the New Notes) that they would have
received had they not accepted the Exchange
Offer.
Maturity Date............... July 15, 2007.
Optional Redemption......... The Notes are redeemable, in whole or in part, at
the option of the Company, at any time on or
after July 15, 2002 at the redemption prices set
forth herein, plus accrued and unpaid interest,
if any, to the date of redemption. See
"Description of Notes--Optional Redemption."
Ranking.....................
The Notes will be general unsecured obligations
of the Company and will be subordinated in right
of payment to all Senior Indebtedness of the
Company. As of June 30, 1997, on a pro forma
basis after giving effect to the Offering, the
application of the estimated net proceeds
therefrom and the Acquisition, the Company would
have had $445.0 million of outstanding Senior
Indebtedness.
Certain Covenants........... The Indenture imposes certain limitations on the
ability of the Company and its subsidiaries to,
among other things, incur Indebtedness (as
defined), make Restricted Payments (as defined),
effect certain Asset Sales (as defined), enter
into certain transactions with Related Persons
(as defined), merge or consolidate with any other
person or transfer all or substantially all of
their properties and assets. See "Description of
Notes--Certain Covenants."
Change of Control...........
Upon the occurrence of a Change of Control (as
defined), each Holder of Notes will have the
right to require the Company to repurchase such
Holder's Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest
thereon, if any, to the repurchase date. A
redemption upon a Change of Control would be an
Event of Default under the terms of the New
Credit Facility. The Company may not have
sufficient funds or financing available to
satisfy its obligations to repurchase the Notes
or meet other debt obligations that may come due
upon a Change of Control.
10
<PAGE>
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA
FINANCIAL AND OPERATING DATA
The following table sets forth summary historical data for Palmer and the
unaudited pro forma and financial data for the Company for the periods and as
of the dates indicated. The unaudited pro forma data is not designed to
represent and does not represent what the Company's financial position or
results of operations actually would have been had the transactions described
herein under "Unaudited Pro Forma Condensed Consolidated Financial Statements"
been completed as of the date or at the beginning of the periods indicated, or
to project the Company's financial position or results of operations at any
future date or for any future period. The following data should be read in
conjunction with "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
"Unaudited Pro Forma Condensed Consolidated Financial Statements" and the
consolidated financial statements and notes thereto of Palmer included
elsewhere herein.
The following table also sets forth certain summary operating data for Palmer
as of the dates and for the periods indicated.
<TABLE>
<CAPTION>
PRO FORMA
---------------------
SIX
YEAR MONTHS
YEAR ENDED SIX MONTHS ENDED ENDED
DECEMBER 31, ENDED JUNE 30, DECEMBER 31, JUNE 30,
-------------------------- ---------------- ------------ --------
1994(1) 1995(2) 1996(3) 1996 1997 1996 1997
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT
OF
OPERATIONS DATA:
Revenue:
Service................ $61,021 $96,686 $151,119 $72,741 $88,140 $127,334 $ 73,265
Equipment sales and
installation.......... 7,958 8,220 8,624 4,239 5,088 7,026 4,143
------- ------- -------- ------- ------- -------- --------
Total revenue........ 68,979 104,906 159,743 76,980 93,228 134,360 77,408
Engineering, technical
and other
direct expenses........ 12,776 18,184 28,717 14,939 15,554 22,999 11,778
Cost of equipment....... 11,546 14,146 17,944 8,397 11,057 15,179 9,279
Selling, general and
administrative
expenses............... 19,757 30,990 46,892 21,977 27,204 42,665 24,623
Depreciation and
amortization........... 9,817 15,004 25,013 11,872 15,129 35,151 19,793
------- ------- -------- ------- ------- -------- --------
Operating income........ 15,083 26,582 41,177 19,795 24,284 18,366 11,935
Other income (expense):
Interest, net.......... (12,715) (21,213) (31,462) (16,006) (16,113) (60,138) (30,147)
Other, net............. (70) (687) (429) (58) 162 (366) 162
------- ------- -------- ------- ------- -------- --------
Total other expense.. (12,785) (21,900) (31,891) (16,064) (15,951) (60,504) (29,985)
Minority interest share
of income.............. (636) (1,078) (1,880) (1,023) (782) (1,880) (782)
Income taxes (expense)
benefit................ 0 (2,650) (2,724) (948) (3,851) 1,504 (1,737)
------- ------- -------- ------- ------- -------- --------
Net income (loss)....... $ 1,662 $ 954 $ 4,682 $ 1,760 $ 3,700 $(42,514) $(20,567)
======= ======= ======== ======= ======= ======== ========
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA
----------------------
SIX
YEAR MONTHS
YEAR ENDED SIX MONTHS ENDED ENDED ENDED
DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30,
------------------------------- -------------------- ------------ ---------
1994(1) 1995(2) 1996(3) 1996 1997 1996 1997
(IN THOUSANDS, EXCEPT PERCENTAGES AND PER SUBSCRIBER DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Capital expenditures.... $ 22,541 $ 36,564 $41,445 $ 21,639 $ 31,700 -- --
Operating income before
depreciation and
amortization
("EBITDA")(4).......... $ 24,900 $ 41,586 $66,190 $ 31,667 $ 39,413 $ 53,517 $ 31,728
EBITDA margin on service
revenue................ 40.8% 43.0% 43.8% 43.5% 44.7% 42.0% 43.3%
Net cash provided by
operating activities... $ 7,238 $ 27,660 $30,130 $ 15,803 $ 25,572 $ 19,049 $ 16,921
Penetration(5).......... 4.58% 6.41% 7.45% 6.85% 8.29% 7.73% 8.58%
Subscribers at end of
period(6).............. 117,224 211,985 279,816 243,887 325,653 242,204 286,131
Cost to add a net
subscriber(7).......... $ 247 $ 276 $ 407 $ 375 $ 480 $ 445 $ 487
Average monthly service
revenue per
subscriber(8).......... $ 60.02 $ 56.68 $ 52.20 $ 54.05 $ 48.06 $ 50.23 $ 45.73
Average monthly
churn(9)............... 1.55% 1.55% 1.84% 1.63% 1.79% 1.89% 1.78%
Ratio of earnings to
fixed charges(11)...... 1.17(x) 1.21(x) 1.28(x) 1.22(x) 1.50(x)
CONSOLIDATED BALANCE
SHEET DATA:
Cash.................... $ 1,698 $ 1,740 $ 15,160
Working capital
(deficit).............. 296 2,290 (7,252)(10)
Property, plant and
equipment, net......... 132,438 157,596 142,250
Licenses and other
intangibles, net....... 387,067 409,193 809,861
Total assets............ 549,942 597,202 1,017,284
Total debt.............. 343,662 380,321 620,000
Stockholders' equity.... 164,930 168,630 128,155
</TABLE>
- --------
(1) Includes the Georgia Acquisition (as defined herein), which occurred on
October 31, 1994. For the two months ended December 31, 1994, the Georgia
Acquisition resulted in revenues to Palmer of $1,803 and operating loss of
$645.
(2) Includes the GTE Acquisition (as defined herein), which occurred on
December 1, 1995. For the one month ended December 31, 1995, the GTE
Acquisition resulted in additional revenues to Palmer of $2,126 and
additional operating income of $208.
(3) Includes the acquisition of the cellular telephone systems of USCOC (as
defined herein) (Georgia-1 RSA), which occurred on June 20, 1996, and
Horizon (as defined herein) (Georgia-6 RSA), which occurred on July 5,
1996. The acquisition of USCOC and Horizon resulted in revenues to Palmer
of $1,239 and $2,682, respectively, and operating income (loss) of $(278)
and $743, respectively, during such year.
(4) Operating income before depreciation and amortization should not be
considered in isolation or as an alternative to net income (loss),
operating income (loss) or any other measure of performance under
generally accepted accounting principles ("GAAP"). The Company believes
that operating income before depreciation and amortization is viewed as a
relevant supplemental measure of performance in the cellular telephone
industry.
(5) Determined by dividing the aggregate number of subscribers by the
estimated population.
(6) Each billable telephone number in service represents one subscriber.
(7) Determined for a period by dividing (i) all costs of sales and marketing,
including salaries, commissions and employee benefits and all expenses
incurred by sales and marketing personnel, agent commissions, credit
reference expenses, losses on cellular telephone sales, rental expenses
allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges, by (ii) the net subscribers
added during such period.
(8) 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.
(9) Determined for a period by dividing total subscribers discontinuing
service by the average number of subscribers for such period and dividing
that result by the number of months in such period.
(10) Working capital deficit includes a $50.9 million current tax payable
attributable to the Fort Myers Sale and Georgia Sale. See "Unaudited Pro
Forma Condensed Consolidated Financial Statements."
(11) The ratio of earnings to fixed charges is determined by dividing the sum
of earnings before extraordinary items and accounting changes, interest
expense, taxes and a portion of rent expense representative of interest by
the sum of interest expense and a portion of rent expense representative
of interest. The ratio of earnings to fixed charges is not meaningful for
periods that result in a deficit.
12
<PAGE>
RISK FACTORS
In addition to the other matters described in this Prospectus, Holders of
the Old Notes should carefully consider the following risk factors before
accepting the Exchange Offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon. In general,
the Old Notes may not be offered or sold, unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. The
Company does not intend to register the Old Notes under the Securities Act.
The Company believes that, based upon interpretations contained in letters
issued to third parties by the staff of the SEC as set forth in the Exchange
Offer No-Action Letters, New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold or otherwise
transferred by each Holder thereof (other than a broker-dealer, as set forth
below, and any such Holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such New Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement or understanding with any person
to participate in the distribution of such New Notes. Eligible Holders wishing
to accept the Exchange Offer must represent to the Company in the Letter of
Transmittal that such conditions have been met and must represent, if such
Holder is not a broker-dealer, or is a broker-dealer but will not receive New
Notes for its own account in exchange for Old Notes, that neither such Holder
nor the person receiving such New Notes, if other than the Holder, is engaged
in or intends to participate in the distribution of such New Notes. Each
broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must represent that the Old Notes tendered in exchange therefor
were acquired as a result of market-making activities or other trading
activities and must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a broker-dealer in connection with the resales of
New Notes received in exchange for Old Notes where such Old Notes were
acquired by such broker-dealer as a result of market-making activities or
other trading activities. The Company has agreed that, for a period of 90 days
after the Expiration Date (as defined herein), they will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution." However, to comply with the securities laws of certain
jurisdictions, if applicable, the New Notes may not be offered or sold unless
they have been registered or qualified for sale in such jurisdiction or an
exemption from registration or qualification is available and is complied
with. The Company does not currently intend to take any action to register or
qualify the New Notes for resale in any such jurisdictions. In addition, the
tender of Old Notes pursuant to the Exchange Offer will reduce the principal
amount of the Old Notes outstanding, which may have an adverse effect upon,
and increase the volatility of, the market price of the Old Notes due to a
reduction in liquidity.
EXCHANGE OFFER PROCEDURES
To participate in the Exchange Offer, and avoid the restrictions on Old
Notes, each Holder of Old Notes must transmit a properly completed Letter of
Transmittal, including all other documents required by such Letter of
Transmittal, to Bank of Montreal Trust Company (the "Exchange Agent") at the
address set forth below under "Exchange Agent" on or prior to the Expiration
Date. In addition, (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal, (ii) a timely
confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such
Old Notes, if such procedure is available, into the Exchange Agent's account
at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant
to the procedure for book-entry transfer described below, must be received by
the Exchange Agent prior to the Expiration Date or (iii) the Holder must
comply with the guaranteed delivery procedures described below. See "The
Exchange Offer."
13
<PAGE>
LEVERAGE, LIQUIDITY AND ABILITY TO MEET REQUIRED DEBT SERVICE
On a pro forma basis, after giving effect to the Offering and the financing
of the Acquisition, the Company's consolidated ratio of long-term debt to
stockholders' equity would have been 4.69 to 1.00 at June 30, 1997 and its
ratio of EBITDA to interest expense would have been 0.89 to 1.00 and 1.05 to
1.00 for the year ended December 31, 1996 and the six months ended June 30,
1997, respectively. The Company's high degree of leverage could limit
significantly its ability to make acquisitions, withstand competitive
pressures or adverse economic conditions, obtain necessary financing or take
advantage of business opportunities that may arise.
Following the Acquisition, the Company's only committed source of liquidity
is the New Credit Facility, under which $80 million of revolving loans remains
available. The Company expects to have sufficient availability under the New
Credit Facility to meet its liquidity needs for the next 18 months. The
Company intends to use the availability under the New Credit Facility for
general corporate purposes and, if the Company's tax planning strategy is
unsuccessful, to finance the $50.9 million tax payment due with respect to the
Fort Myers Sale and Georgia Sale. See "Unaudited Pro Forma Condensed
Consolidated Financial Statements." Borrowings under the New Credit Facility
are subject to significant conditions, including compliance with certain
financial ratios and the absence of any material adverse change. The Company's
ability to meet its working capital and operational needs and to provide funds
for debt service, capital expenditures and other cash requirements is
dependent upon the availability of financing under the New Credit Facility. In
addition, the Company intends to pursue opportunities to acquire additional
cellular telephone systems which, if successful, will require the Company to
obtain additional equity or debt financing to fund such acquisitions. There
can be no assurances as to the availability or terms of any such financing or
that the terms of the Notes or the New Credit Facility will not restrict or
prohibit any such debt financing. See "Description of New Credit Facility" and
"Description of Notes."
The Company's ability to borrow is also limited by the terms of PCC's
outstanding preferred stock, which limits the ability of PCC and its
restricted subsidiaries, including the Company and its subsidiaries, to incur
additional indebtedness and to make certain restricted payments, including
investments. These limitations are generally more restrictive than those
contained under the "Limitation on Incurrence of Additional Indebtedness" and
"Limitation on Restricted Payments" covenants contained in the Indenture.
There can be no assurances that such restrictions will not have an adverse
effect on the Company's financial condition or ability to implement its
business plan.
The Company's ability to meet its debt service requirements, including those
represented by the Notes, will require significant and sustained growth in the
Company's cash flow. In addition, the Company expects to fund its growth
strategy from cash from operations and borrowings under the New Credit
Facility. There can be no assurance that the Company will be successful in
improving its cash flow by a sufficient magnitude or in a timely manner or in
raising additional equity or debt financing to enable the Company to meet its
debt service requirements or to sustain its growth strategy. In addition, if
the Company is unable to avoid the $50.9 million tax payment due with respect
to the Fort Myers Sale and Georgia Sale, the Company may be required to obtain
additional equity or debt financing. There can be no assurances that the
Company would be successful in procuring any such financing.
NET LOSSES
On a pro forma basis after giving effect to the Offering and the financing
of the Acquisition, the Company would have incurred net losses of
approximately $42.5 million and $20.6 million, respectively, for the year
ended December 31, 1996 and the six months ended June 30, 1997. There can be
no assurance that the Company's future operations will generate sufficient
earnings to pay its obligations. The Company expects to incur net losses for
several years. See "Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
SUBORDINATION
The Notes are general unsecured obligations of the Company and are
subordinated in right of payment to all existing and future Senior
Indebtedness of the Company, including all indebtedness under the New Credit
Facility. As of June 30, 1997, on a pro forma basis after giving effect to the
Offering and the financing of the
14
<PAGE>
Acquisition, the Company would have had approximately $445.0 million of Senior
Indebtedness substantially all of which will be secured. By reason of such
subordination, in the event of the insolvency, liquidation, reorganization,
dissolution or other winding-up of the Company or upon a default in payment
with respect to, or the acceleration of, any Senior Indebtedness, the holders
of such Senior Indebtedness and any other creditors of subsidiaries, if any,
must be paid in full before the Holders of the Notes may be paid. If the
Company incurs any additional pari passu debt, the holders of such debt would
be entitled to share ratably with the Holders of the Notes in any proceeds
distributed in connection with any insolvency, liquidation, reorganization,
dissolution or other winding-up of the Company. This may have the effect of
reducing the amount of such proceeds paid to Holders of the Notes.
COMPETITION
Although current policies of the FCC authorize only two licensees to operate
cellular telephone systems in each cellular market, there is, and the Company
expects there will continue to be, significant competition from the other
licensee authorized to serve each cellular market in which the Company
operates, as well as from resellers of cellular service. Competition for
subscribers between cellular licensees is based principally upon the services
and enhancements offered, the technical quality of the cellular telephone
system, customer service, system coverage and capacity and price. The Company
competes with a wireline licensee in each of its cellular markets, some of
which are larger and have access to more substantial capital resources than the
Company.
The Company also faces competition from other existing communications
technologies such as conventional mobile telephone service, specialized mobile
radio ("SMR") and enhanced specialized mobile radio ("ESMR") systems and paging
services. ESMR is a "cellular-like" communications service supplied by
converting analog SMR services into an integrated, digital transmission system
providing for call hand-off, frequency reuse and wide call delivery networks.
The Company also faces limited competition from and may in the future face
increased competition from PCS. It is expected that broadband PCS will involve
a network of small, low-powered transceivers placed throughout a neighborhood,
business complex, community or metropolitan area to provide customers with
mobile and portable voice and data communications. PCS may be capable of
offering, and PCS operators claim they will offer, additional services not
offered by cellular providers. PCS subscribers could have dedicated personal
telephone numbers and would communicate using small digital radio handsets that
could be carried in a pocket or purse. There can be no assurances that the
Company will be able to provide nor that it will choose to pursue, depending on
the economics thereof, such services and features. The Company currently
believes that traditional tested cellular is economically proven unlike many of
these other technologies and therefore does not intend to pursue such other
technologies.
Although the Company believes that the technology, financing and engineering
of these other technologies is not as advanced as their publicity would
suggest, there can be no assurance that one or more of the technologies
currently utilized by the Company in its business will not become obsolete at
some time in the future. See "Business--Competition."
The Company also faces competition from "resellers." The FCC requires all
cellular licensees to provide service to resellers. A reseller provides
wireless service to customers but does not hold an FCC license or own
facilities. Instead, the reseller buys blocks of wireless telephone numbers and
capacity from a licensed carrier and resells service through its own
distribution network to the public.
POTENTIAL FOR REGULATORY CHANGES AND NEED FOR REGULATORY APPROVALS
The licensing, construction, operation, acquisition, assignment and transfer
of cellular telephone systems, as well as the number of licensees permitted in
each market, are regulated by the FCC. Changes in the regulation of cellular
activities could have a material adverse effect on the Company's operations. In
addition, all cellular licenses in the United States are granted for an initial
term of up to 10 years and are subject to renewal. The Company's cellular
licenses expire in the following years with respect to the following number of
service areas: 1997 (four); 1998 (three); 2000 (two); 2001 (four); 2002 (three)
and 2006 (one). On September 22, 1997, the Company filed License Renewal
Applications with the FCC for the Savannah, Georgia MSA; the Albany, Georgia
MSA; the Montgomery, Alabama MSA; and the Panama City, Florida MSA. Although
these four licenses have since expired, the Company is permitted to continue to
operate in these areas during the pendency of its renewal applications. While
the Company believes that each of these licenses will be renewed based upon FCC
rules establishing a renewal expectancy in favor of licensees that have
complied with their regulatory
15
<PAGE>
obligations during the initial license period, there can be no assurance that
all of the Company's licenses will be renewed in due course. In the event that
a license is not renewed, the Company would no longer have the right to
operate in the relevant service area. See "Business--Regulation."
FLUCTUATIONS IN MARKET VALUE OF LICENSES
A substantial portion of the Company's assets consists of its interests in
cellular licenses. The assignment of interests in such licenses is subject to
prior FCC approval and may also be subject to contractual restrictions, future
competition and the relative supply and demand for radio spectrum. The future
value of the Company's interests in its cellular licenses will depend
significantly upon the success of the Company's business. While there is a
current market for the Company's licenses, such market may not exist in the
future or the values obtainable may be significantly lower than at present. As
a consequence, in the event of the liquidation or sale of the Company's
assets, there can be no assurance that the proceeds would be sufficient to pay
the Company's obligations, and a significant reduction in the value of the
licenses could require a charge to the Company's results of operations.
RELIANCE ON USE OF THIRD-PARTY SERVICE MARK
The Company currently uses the registered service mark CELLULAR ONE to
market its services. The Company's use of this service mark is governed by
five-year contracts between the Company and Cellular One Group, the owner of
the service mark. If these agreements are not renewed upon expiration and the
Company therefore is no longer permitted to use the CELLULAR ONE service mark,
the Company's ability both to attract new subscribers and to retain existing
subscribers could be materially affected. In addition, if for some reason
beyond the Company's control, the name CELLULAR ONE were to suffer diminished
marketing appeal, the Company's ability both to attract new subscribers and
retain existing subscribers could be materially affected. AT&T Wireless
Services, Inc., which has been the single largest user of the CELLULAR ONE
service mark, has significantly reduced its use of the service mark as a
primary service mark. There can be no assurance that such reduction in use by
AT&T Wireless will not have an adverse effect on the marketing appeal of the
brand name.
DEPENDENCE ON KEY PERSONNEL
The Company's affairs are managed by a small number of key management and
operating personnel, the loss of whom could have an adverse impact on the
Company. Robert Price, the Director of the Company and of Holdings, and a
Director, the President, Chief Executive Officer and Treasurer of PCC, also
serves as a Director and Chairman of PriCellular Corporation ("PriCellular"),
another operator of cellular telephone systems. The Company believes that Mr.
Price's positions with the Company and PriCellular complement one another and
benefit both companies because the systems they operate are similar but do not
directly compete with one another. Mr. Price's employment agreement with
PriCellular provides that he may not be an employee of or have an ownership
interest in any company engaged in the operation of cellular telephone systems
in the United States other than PriCellular and that any such other company
may not acquire any additional cellular telephone system within the United
States, in each case, without the unanimous consent of the executive committee
of the Board of Directors of PriCellular. The executive committee of the Board
of Directors of PriCellular has approved the acquisition of Palmer by PCC.
Although the Company and PriCellular historically have not imposed
inconsistent demands on Mr. Price's availability, there can be no assurances
that such conflicts will not arise in the future. Should Mr. Price's
obligations to PriCellular preclude him from devoting time to the Company for
any period, the Company believes that the other members of its existing
management can successfully manage the business affairs of the Company.
The Company entered into employment contracts with William J. Ryan and M.
Wayne Wisehart to remain as officers of the Company and also entered into
employment contracts with other key employees prior to the consummation of the
Acquisition. The success of the Company's operations and expansion strategy
depends on its ability to retain and to expand its staff of qualified
personnel in the future.
16
<PAGE>
RADIO FREQUENCY EMISSION CONCERNS
Media reports have suggested that certain radio frequency ("RF") emissions
from portable cellular telephones may be linked to certain types of cancer. In
addition, recently a limited number of lawsuits have been brought, not
involving the Company, alleging a connection between cellular telephone use
and certain types of cancer. Concerns over RF emissions and interference may
have the effect of discouraging the use of cellular telephones, which could
have an adverse effect upon the Company's business. As required by the Telecom
Act, in August 1996, the FCC adopted new guidelines and methods for evaluating
RF emissions from radio equipment, including cellular telephones. While the
new guidelines impose more restrictive standards on RF emissions from low
power devices such as portable cellular telephones, the Company believes that
all cellular telephones currently marketed and in use comply with the new
standards.
The Company carries $4.0 million in General Liability insurance and $25
million in umbrella liability coverage. This insurance would cover any
liability suits with respect to human exposure to radio frequency emissions.
The Company believes that this coverage is adequate to cover potential
liabilities.
FRAUDULENT CONVEYANCE STATUTES
Various laws enacted for the protection of creditors may apply to the
Company's incurrence of indebtedness and other obligations in connection with
the Acquisition, including the issuance of the Notes. If a court were to find
in a lawsuit by an unpaid creditor or representative of creditors of the
Company that the Company did not receive fair consideration or reasonably
equivalent value for incurring such indebtedness or obligation and, at the
time of such incurrence, the Company (i) was insolvent; (ii) was rendered
insolvent by reason of such incurrence; (iii) was engaged in a business or
transaction for which the assets remaining in the Company constituted
unreasonably small capital; or (iv) intended to incur or believed it would
incur obligations beyond its ability to pay such obligations as they mature,
such court, subject to applicable statutes of limitation, could determine to
invalidate, in whole or in part, such indebtedness and obligations as
fraudulent conveyances or subordinate such indebtedness and obligations to
existing or future creditors of the Company.
The measure of insolvency for purposes of the foregoing will vary depending
on the law of the jurisdiction which is being applied. Generally, however, the
Company would be considered insolvent at a particular time if the sum of its
debts was then greater than all of its property at a fair valuation or if the
present fair saleable value of its assets was then less than the amount that
would be required to pay its probable liabilities on its existing debts as
they became absolute and matured. On the basis of its historical financial
information, its recent operating history as discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
other factors, the Company's management believes that, after giving effect to
indebtedness incurred in connection with the Acquisition and the other related
financings, the Company will not be rendered insolvent, it will have
sufficient capital for the businesses in which it will be engaged and it will
be able to pay its debts as they mature; however, management has not obtained
any independent opinion regarding such issues. There can be no assurance as to
what standard a court would apply in making such determinations.
EQUIPMENT FAILURE; NATURAL DISASTER
Although the Company carries "business interruption" insurance, a major
equipment failure or a natural disaster affecting any one of the Company's
central switching offices or certain of its cell sites could have a
significant adverse effect on the Company's operations.
LACK OF PUBLIC MARKET
The New Notes are being offered to the Holders of the Old Notes. The Old
Notes were issued on July 10, 1997 to a limited number of investors. The New
Notes are new securities for which there currently is no market. The Company
does not intend to apply for listing of the Notes on any securities exchange
or for quotation through the National Association of Securities Dealers
Automated Quotation System. There can be no assurance that an active trading
market for the New Notes will develop. If a trading market develops for the
New Notes, future trading prices of such securities will depend on many
factors, including prevailing interest rates, the Company's results of
operations and financial condition and the market for similar securities.
17
<PAGE>
THE ACQUISITION
Prior to the Merger, the Company had no assets, liabilities or operations.
The Company is a wholly owned indirect subsidiary of PCC, which was
incorporated in 1979, and also of Price Communications Cellular, Inc., the
original parent of PriCellular Corporation.
On May 23, 1997, PCC, the Company and Palmer entered into an Agreement and
Plan of Merger. The Merger Agreement provided, among other things, for the
merger of the Company with and into Palmer with Palmer as the surviving
corporation. On October 6, 1997, the Merger was consummated and Palmer changed
its name to "Price Communications Wireless, Inc." Pursuant to the Merger
Agreement, PCC acquired each issued and outstanding share of common stock of
Palmer for a purchase price of $17.50 per share in cash and purchased
outstanding options and rights under employee and director stock purchase
plans for an aggregate price of $486.4 million. In addition, as a result of
the Merger, the Company assumed the Palmer Existing Indebtedness of
approximately $378.0 million. As a result, the aggregate purchase price for
Palmer (not including transaction fees and expenses) was $864.4 million. The
Company refinanced all of the Palmer Existing Indebtedness concurrently with
the consummation of the Merger. PCW entered into the Fort Myers Sale Agreement
to sell Palmer's Fort Myers, Florida MSA covering approximately 382,000 Pops
for $168.0 million. On October 6, 1997, the Fort Myers Sale was consummated
and generated approximately $166.0 million of proceeds to the Company. The
proceeds of the Fort Myers Sale were used to fund a portion of the acquisition
of Palmer. On October 21, 1997, PCC and the Company entered into the Georgia
Sale Agreement to sell Palmer's Georgia-I RSA for $25 million. The parties
expect to consummate the Georgia Sale by December 31, 1997. The proceeds from
the Georgia Sale will be used to retire a portion of the debt used to fund the
acquisition of Palmer.
In order to fund the Acquisition and pay related fees and expenses, the
Company issued the Old Notes and entered into the New Credit Facility, which
provides for term loan borrowings in the aggregate principal amount of
approximately $325.0 million and revolving loan borrowings of $200.0 million.
On October 6, 1997, the Company borrowed all term loans available thereunder
and approximately $120.0 million of revolving loans. The remaining revolving
loans will, subject to a borrowing base and other significant conditions,
including the absence of any material adverse change, be available to fund the
working capital requirements of the Company. DLJ Capital Funding, an affiliate
of DLJ, the lead Initial Purchaser, provided the New Credit Facility, which is
syndicated by DLJ Capital Funding. See "Description of New Credit Facility."
The acquisition of Palmer was funded in part through the PCC Equity
Contribution which was in the form of cash and common stock of Palmer. PCC
raised $47.5 million of the purchase price for the Acquisition through an
offering by Holdings, a wholly owned indirect subsidiary of PCC and the direct
parent of the Company, of units consisting of 13 1/2% Senior Secured Discount
Notes due 2007 and warrants to purchase shares of common stock of PCC.
18
<PAGE>
The following table sets forth the estimated sources and uses of funds for
the Acquisition and related fees and expenses:
<TABLE>
<CAPTION>
TOTAL SOURCES: (IN MILLIONS)
<S> <C>
New Credit Facility:
Term loan....................................................... $ 325.0
Revolving credit facility....................................... 120.0
Old Notes......................................................... 175.0
PCC Equity Contribution........................................... 128.2
Proceeds from Fort Myers Sale..................................... 166.0
-------
Total sources................................................. $ 914.2
=======
TOTAL USES:
Cash consideration for Palmer common stock........................ $ 486.4
Palmer Existing Indebtedness (as of June 30, 1997)................ 378.0
Estimated transaction fees and expenses........................... 31.2
Excess cash....................................................... 18.6
-------
Total uses.................................................... $ 914.2
=======
</TABLE>
The foregoing table does not reflect any provision for any taxes payable in
connection with the Fort Myers Sale. The Company has a tax planning strategy
which it believes will avoid the payment of the $50.9 million tax which would
otherwise be payable in connection with the Fort Myers Sale and Georgia Sale.
While there can be no assurances that the Company's position will prevail if
challenged, the Company has received a written opinion from a "big-six"
accounting firm (other than Arthur Andersen LLP) that, under existing laws, it
is more likely than not that the Company's position will prevail if
challenged. In order to effect this tax strategy, the partnership that owns
the Fort Myers system will need to incur approximately $169.0 million of
indebtedness. The partnership has no commitments for such financing and there
can be no assurance it will be successful in obtaining such financing.
The foregoing table also does not reflect $1.4 million which was paid to
William J. Ryan as a severance payment pursuant to his employment contract
upon consummation of the Acquisition and approximately $2.6 million of
severance payments which are payable over several years pursuant to existing
employment contracts between Palmer and its other executive officers. The
Company has entered into employment contracts with Mr. Ryan and M. Wayne
Wisehart to continue as officers of the Company. The Company also entered into
employment contracts with other key employees prior to the consummation of the
Acquisition. See "Management."
19
<PAGE>
USE OF PROCEEDS
The Company will not receive any cash proceeds from the issuance of the New
Notes offered hereby. The net proceeds from the sale of the Old Notes, after
deducting expenses of the Offering, are approximately $168,600,000. The net
proceeds of the Offering, together with borrowings by the Company under the
New Credit Agreement, the PCC Equity Contribution and proceeds from the Fort
Myers Sale were used to finance the acquisition and related fees and expenses.
See "Description of Notes."
20
<PAGE>
CAPITALIZATION
The following table sets forth the unaudited consolidated capitalization of
the Company as of June 30, 1997 on (i) an actual basis and (ii) on a pro forma
basis after giving effect to the Acquisition, the Offering and the other
transactions described herein under "Unaudited Pro Forma Condensed
Consolidated Financial Statements." This table should be read in conjunction
with the consolidated financial statements of Palmer, including the notes
thereto, the "Unaudited Pro Forma Condensed Consolidated Financial Statements"
and notes thereto, included elsewhere herein, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "The
Acquisition."
<TABLE>
<CAPTION>
AS OF JUNE 30,
1997
-----------------
(IN THOUSANDS)
ACTUAL PRO FORMA
<S> <C> <C>
Current portion of long-term debt............................ $ -- $ --
Existing long-term debt...................................... -- --
New Credit Facility.......................................... -- 445,000
11 3/4% Senior Subordinated Notes due 2007................... -- 175,000
------- --------
Total long-term debt (including current portion of long-
term debt).............................................. -- 620,000
Stockholders' equity:
Common Stock, $0.01 par value per share, 100 shares
authorized, issued and outstanding........................ -- --
Additional paid-in capital................................... -- 128,155
Retained earnings............................................ -- --
------- --------
Total stockholders' equity............................... -- 128,155
------- --------
Total capitalization..................................... $ -- $748,155
======= ========
</TABLE>
21
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated balance sheet of
PCW as of June 30, 1997 gives effect to the following transactions as if they
occurred at that date and the related unaudited pro forma condensed
consolidated statements of operations for the year ended December 31, 1996 and
the six month period ended June 30, 1997 give effect to the following
transactions as if they occurred at the beginning of the relevant period:
(a) the acquisition of Palmer
(b) the Ft. Myers Sale (the proceeds of which were used to pay Palmer
Existing Indebtedness)
(c) the issuance and sale of the Old Notes in the Offering
(d) the financing under the New Credit Facility
(e) the PCC Equity Contribution
(f) the Georgia Sale
The Acquisition will be recorded pursuant to the purchase method of
accounting.
The unaudited pro forma condensed consolidated financial statements have
been prepared by PCW's management. The unaudited pro forma data is not
designed to represent and does not represent what PCW's results of operations
or financial position would have been had the above transactions been
completed on or as of the dates assumed, and are not intended to project PCW's
results of operations for any future period or as of any future date. The
unaudited pro forma condensed consolidated financial statements should be read
in conjunction with the audited and unaudited consolidated financial
statements and notes of PCC, the parent company of PCW, and the audited and
unaudited consolidated financial statements and notes of Palmer, included
elsewhere in this Prospectus.
While the Offering was consummated on July 10, 1997, the Acquisition was not
consummated until October 6, 1997. Accordingly, for the three month period
after the closing of the Offering, and prior to the consummation of the
Acquisition, the Company incurred interest expense on the Notes, but was not
entitled to any of the cash flows or earnings of Palmer.
The unaudited pro forma condensed consolidated financial statements do not
reflect this additional interest expense or the accrued liability related
thereto since the unaudited pro forma condensed consolidated statements of
operations assume that such transactions were consummated on January 1, 1996
and the unaudited pro forma condensed consolidated balance sheet assumes that
such transactions were consummated on June 30, 1997. In addition, the pro
forma condensed consolidated financial statements assume the repayment of the
$378.0 million of Palmer Existing Indebtedness and accrued interest on Palmer
Existing Indebtedness as of June 30, 1997. As a result of the Merger, the
Company assumed all Palmer Existing Indebtedness. The Company refinanced all
of the Palmer Existing Indebtedness concurrently with the consummation of the
Merger.
Although the unaudited pro forma condensed balance sheet reflects a $50.9
million current tax payable attributable to the Fort Myers Sale and Georgia
Sale, the Company has a tax planning strategy which it believes will avoid the
payment of such tax. While there can be no assurances that the Company's
position will prevail if challenged, the Company has received a written
opinion from a "big-six" accounting firm (other than Arthur Andersen LLP)
that, under existing laws, it is more likely than not that the Company's
position will prevail if challenged. In order to effect this tax strategy, the
partnership that owns the Fort Myers system will need to incur approximately
$169.0 million of indebtedness. The partnership has no commitments for such
financing and there can be no assurance it will be successful in obtaining
such financing.
22
<PAGE>
In addition, the unaudited pro forma condensed consolidated financial
statements do not reflect $1.4 million which was paid to William J. Ryan as a
severance payment pursuant to his employment contract upon consummation of the
Acquisition and approximately $2.6 million of severance payments which are
payable over several years pursuant to existing employment contracts between
Palmer and its other executive officers. The Company has entered into
employment contracts with Mr. Ryan and M. Wayne Wisehart to continue as
officers of the Company. The Company also entered into employment contracts
with other key employees prior to the consummation of the Acquisition.
23
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS FOR
FOR THE THE ACQUISITION
FT. MYERS SALE FT. MYERS SALE PALMER AS AND THE RELATED PRO FORMA
PALMER AND GEORGIA SALE AND GEORGIA SALE ADJUSTED PCW FINANCINGS PCW
-------- ---------------- ---------------- --------- --- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.. $ 1,740 $ 54 $166,028(a) $167,714 $ $(152,554)(d) $ 15,160
Accounts receivable, net... 22,718 2,494 20,224 20,224
Inventory.................. 3,181 1,002 2,179 2,179
Prepaid expenses and other
current assets............ 2,774 164 25,000 27,610 27,610
-------- ------- -------- -------- --- --------- ----------
Total current assets...... 30,413 3,714 191,028 217,727 (152,554) 65,173
Property, plant and
equipment, net............. 157,596 15,346 142,250 142,250
Cellular licenses, net...... 398,845 34,651 364,194 412,871 (k) 777,065
Deferred costs, net......... 8,621 8,621 22,532 (e) 31,153
Other ...................... 1,727 84 1,643 1,643
-------- ------- -------- -------- --- --------- ----------
Total assets.............. $597,202 $53,795 $191,028 $734,435 $ $ 282,849 $1,017,284
======== ======= ======== ======== === ========= ==========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and
accrued expenses ......... $ 9,032 $ 254 $ $ 8,778 $ $ $ 8,778
Notes payable.............. 2,321 2,321 (2,321)(d,i)
Current tax payable........ 50,900(b) 50,900 50,900
Other current liabilities.. 16,770 1,236 15,534 (2,787)(d,h) 12,747
-------- ------- -------- -------- --- --------- ----------
Total current liabilities.. 28,123 1,490 50,900 77,533 (5,108) 72,425
Long-term debt.............. 378,000 378,000 242,000 (f) 620,000
Deferred tax liability...... 15,326 15,326 169,277 (g) 184,603
Other long-term
liabilities................ 7,123 (4,978) 12,101 12,101
-------- ------- -------- -------- --- --------- ----------
Total liabilities......... 428,572 (3,488) 50,900 482,960 406,169 889,129
Stockholders' equity........ 168,630 57,283 140,128(c) 251,475 (123,320)(j) 128,155
-------- ------- -------- -------- --- --------- ----------
Total liabilities and
stockholders' equity...... $597,202 $53,795 $191,028 $734,435 $ $ 282,849 $1,017,284
======== ======= ======== ======== === ========= ==========
</TABLE>
24
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
For purposes of determining the pro forma effect of the transactions
described above on the PCW condensed consolidated balance sheet as of June 30,
1997, the following adjustments have been made:
<TABLE>
<C> <S> <C>
(A) CASH AND CASH EQUIVALENTS
Cash proceeds from the Ft. Myers Sale and Georgia Sale....... $ 191,028
=========
(B) CURRENT TAX PAYABLE
Tax payable resulting from net gain on Ft. Myers Sale and
Georgia Sale using a 39% effective tax rate (see the
discussion on page 24 of the Company's tax planning strategy
to avoid the payment of such tax)............................ $ 50,900
=========
(C) STOCKHOLDERS' EQUITY
Represents the proceeds on the Ft. Myers sale and Georgia
sale net of related tax payable on the net gain.............. $ 140,128
=========
(D) CASH AND CASH EQUIVALENTS
Proceeds from New Credit Facility............................ $ 445,000
Proceeds from the Offering................................... 175,000
Net equity contributed from PCC.............................. 128,155
Cash used to acquire Palmer outstanding stock and options.... (486,448)
Cash used to retire current portion of Palmer Notes Payable.. (2,321)
Cash used to pay interest accrued through June 30, 1997 on
Palmer Existing Indebtedness................................. (2,787)
Cash used to retire Palmer Existing Indebtedness............. (378,000)
Cash used to pay estimated transaction fees and expenses..... (31,153)
---------
$(152,554)
=========
(E) DEFERRED COSTS, NET
Estimated fees and expenses in connection with the
acquisition of Palmer and the Offering....................... $ 14,422
Estimated fees and expenses in connection with the debt
financings................................................... 16,731
To write off unamortized deferred financing costs at Palmer.. (8,621)
---------
$ 22,532
=========
(F) LONG-TERM DEBT
New Credit Facility.......................................... $ 445,000
The Old Notes................................................ 175,000
Repayment of Palmer Existing Indebtedness.................... (378,000)
---------
$ 242,000
=========
(G) DEFERRED TAX LIABILITY
To record the deferred tax liability arising from the
acquisition of FCC license using a 41% effective tax rate.... $ 169,277
=========
(H) OTHER CURRENT LIABILITIES
To record the repayment of accrued interest on Palmer
Existing Indebtedness........................................ $ (2,787)
=========
(I) NOTES PAYABLE
To record the repayment of Palmer Notes Payable.............. $ (2,321)
=========
</TABLE>
25
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<S> <C> <C>
(J) STOCKHOLDERS' EQUITY
To reflect PCC Equity Contribution................................................... $ 128,155
To eliminate the equity of adjusted Palmer in connection with the acquisition by PCW. (251,475)
---------
$(123,320)
=========
(K) CELLULAR LICENSES, NET
Represents the increase in cellular licenses due to the acquisition of Palmer........ $ 412,871
=========
</TABLE>
26
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS PRO FORMA
FT. MYERS FOR THE ADJUSTMENTS FOR
SALE AND FT. MYERS THE ACQUISITION
GEORGIA SALE AND PALMER AS AND THE RELATED PRO FORMA
PALMER SALE GEORGIA SALE ADJUSTED PCW FINANCINGS PCW
-------- --------- ------------ --------- ------ --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $159,743 $25,383 $ $134,360 $ $ $134,360
Cost and expenses:
Cost of cellular
service/operating
expenses ............. 28,717 5,718 22,999 22,999
Cost of equipment...... 17,944 2,765 15,179 15,179
Selling, general and
administrative........ 46,892 6,867 2,640 (l) 42,665 42,665
Depreciation and
amortization (loss)... 25,013 2,114 22,899 12,252 (m) 35,151
-------- ------- ------- -------- ------ -------- --------
Operating income (loss). 41,177 7,919 (2,640) 30,618 (12,252) 18,366
Other expense:
Interest expense, net.. (31,462) (300) (31,162) (28,976)(n) (60,138)
Other expense.......... (429) (63) (366) (366)
-------- ------- ------- -------- ------ -------- --------
Total other expense.. (31,891) (363) (31,528) (28,976) (60,504)
Minority interest share
of income.............. 1,880 1,880 1,880
-------- ------- ------- -------- ------ -------- --------
Income (loss) before
income tax expense..... 7,406 7,556 (2,640) (2,790) (41,228) (44,018)
Income tax expense
(benefit).............. 2,724 2,724 (4,228)(o) (1,504)
-------- ------- ------- -------- ------ -------- --------
Net income (loss)....... $ 4,682 $ 7,556 $(2,640) $ (5,514) $ $(37,000) $(42,514)
======== ======= ======= ======== ====== ======== ========
Deficiency of earnings
to fixed charges....... $ 44,018
</TABLE>
27
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED JUNE 30, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
PRO FORMA ADJUSTMENTS FOR
FT. MYERS ADJUSTMENTS PALMER THE ACQUISITION
SALE AND FOR THE AS AND THE RELATED PRO FORMA
PALMER GEORGIA SALE FT. MYERS ADJUSTED PCW FINANCINGS PCW
------- ------------ ----------- -------- ------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $93,228 $15,820 $ $77,408 $ $ $ 77,408
Cost and expenses:
Cost of cellular
service/operating
expenses.............. 15,554 3,776 11,778 11,778
Cost of equipment...... 11,057 1,778 9,279 9,278
Selling, general and
administrative........ 27,204 4,001 1,420 (l) 24,623 24,623
Depreciation and
amortization.......... 15,129 1,463 13,666 6,127 (m) 19,793
------- ------- ------- ------- ------- -------- --------
Operating income (loss). 24,284 4,802 (1,420) 18,062 (6,127) 11,935
Other income (expense):
Interest income
(expense)............. (16,113) 99 (16,212) (13,935)(n) (30,147)
Other, net............. 162 162 162
------- ------- ------- ------- ------- -------- --------
Total other income
(expense)........... (15,951) 99 (16,050) (13,935) (29,985)
Minority interest share
of income.............. 782 782 782
------- ------- ------- ------- ------- -------- --------
Income (loss) before
income tax expense..... 7,551 4,901 (1,420) 1,230 (20,062) (18,832)
Income tax expense
(benefit).............. 3,851 3,851 (2,116)(o) 1,735
------- ------- ------- ------- ------- -------- --------
Net income (loss)....... $ 3,700 $ 4,901 $(1,420) $(2,621) $ $(17,946) $(20,567)
======= ======= ======= ======= ======= ======== ========
Deficiency of earnings
to fixed charges....... $ 18,832
</TABLE>
28
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
For purposes of determining the pro forma effect of the transactions
described above on the PCW condensed consolidated statements of operations for
the six months ended June 30, 1997 and the year ended December 31, 1996, the
following adjustments have been made:
<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
(L) SELLING, GENERAL AND ADMINISTRATIVE
Represents a portion of the operating expenses
(including monthly management fees; property and
equipment acquisitions and expenses, central
billing expenses and central accounts payable
expenses) charged to Ft. Myers Sale and Georgia
Sale by Palmer which may not be eliminated upon
the Ft. Myers Sale and Georgia Sale............... $ 1,420 $ 2,640
======== ========
(M) DEPRECIATION AND AMORTIZATION
Represents amortization of the FCC license over 40
years............................................. $ 5,161 $ 10,322
Represents amortization of the acquisition of
Palmer and Offering costs
over 5 years...................................... 966 1,930
-------- --------
$ 6,127 $ 12,252
======== ========
(N) INTEREST EXPENSE, NET
Interest expense on $445 million of New Credit
Facility at an assumed interest rate of 8.5% per
annum*............................................ $ 18,913 $ 37,825
Interest expense on $175 million of the Notes at an
interest rate of 11.75% per annum................. 10,281 20,563
Represents current amortization expense related to
deferred debt financing costs..................... 875 1,750
Elimination of previously recorded interest (16,134) (31,162)
expense........................................... -------- --------
$ 13,935 $ 28,976
======== ========
--------
*An 1/8% change in the interest rate will increase
or decrease the interest expense per annum on the
bank debt by $533.
(O) INCOME TAX EXPENSE (BENEFIT)
To record deferred tax benefit resulting from the
amortization of the acquired FCC license.......... $ (2,116) $ (4,232)
======== ========
</TABLE>
29
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data for the periods and dates
indicated set forth below have been derived from the audited consolidated
financial statements and the unaudited condensed consolidated financial
statements of Palmer. The condensed consolidated results of operations of
Palmer for the six months ended June 30, 1996 and 1997 are unaudited and not
necessarily indicative of Palmer's results of operations for the full year.
The unaudited condensed consolidated financial data reflects all adjustments
(consisting of normal, recurring adjustments) which are, in the opinion of
management, necessary for a fair summary of Palmer's financial position,
results of operations and cash flows for and as of the end of the periods
presented.
The following data should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
Palmer's Consolidated Financial Statements and Notes thereto, included
elsewhere herein.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------------- ------------------
1992 1993 1994(1) 1995(2) 1996(3) 1996 1997
(IN THOUSANDS, EXCEPT PERCENTAGE AND PER SUBSCRIBER DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue:
Service................ $ 23,017 $ 35,173 $ 61,021 $ 96,686 $151,119 $ 72,741 $ 88,140
Equipment sales and
installation........... 4,284 6,285 7,958 8,220 8,624 4,239 5,088
--------- -------- -------- -------- -------- -------- --------
Total revenue...... 27,301 41,458 68,979 104,906 159,743 76,980 93,228
--------- -------- -------- -------- -------- -------- --------
Engineering, technical
and other direct
expenses............... 5,395 7,343 12,776 18,184 28,717 14,939 15,554
Cost of equipment....... 5,071 7,379 11,546 14,146 17,944 8,397 11,057
Selling, general and
administrative expenses. 9,458 13,886 19,757 30,990 46,892 21,977 27,204
Depreciation and
amortization............ 11,687 10,689 9,817 15,004 25,013 11,872 15,129
--------- -------- -------- -------- -------- -------- --------
Operating income (loss). (4,310) 2,161 15,083 26,582 41,177 19,795 24,284
--------- -------- -------- -------- -------- -------- --------
Other income (expense):
Interest, net.......... (8,290) (9,006) (12,715) (21,213) (31,462) (16,006) (16,113)
Other, net............. (5) (590) (70) (687) (429) (58) 162
--------- -------- -------- -------- -------- -------- --------
Total other
expense............ (8,295) (9,596) (12,785) (21,900) (31,891) (16,064) (15,951)
--------- -------- -------- -------- -------- -------- --------
Minority interest share
of (income) losses...... 377 83 (636) (1,078) (1,880) (1,023) (782)
Income taxes............ 0 0 0 (2,650) (2,724) (948) (3,851)
--------- -------- -------- -------- -------- -------- --------
Net income (loss)....... $ (12,228) $ (7,352) $ 1,662 $ 954 $ 4,682 $ 1,760 $ 3,700
========= ======== ======== ======== ======== ======== ========
OTHER DATA:
Capital expenditures.... $ 3,835 $ 13,304 $ 22,541 $ 36,564 $ 41,445 $ 21,639 $ 31,700
Operating income before
depreciation and
amortization
("EBITDA")(4).......... $ 7,377 $ 12,850 $ 24,900 $ 41,586 $ 66,190 $ 31,667 $ 39,413
EBITDA margin on service
revenue................ 32.1% 36.5% 40.8% 43.0% 43.8% 43.5% 44.7%
Net cash provided by
operating activities... $ 78 $ 9,108 $ 7,238 $ 27,660 $ 30,130 $ 15,803 $ 25,572
Penetration(5).......... 2.20% 3.48% 4.58% 6.41% 7.45% 6.85% 8.29%
Subscribers at end of
period(6).............. 37,209 65,761 117,224 211,985 279,816 243,887 325,653
Cost to add a net
subscriber(7)........... $ 283 $ 203 $ 247 $ 276 $ 407 $ 375 $ 480
Average monthly service
revenue per
subscriber(8).......... $ 68.30 $ 62.69 $ 60.02 $ 56.68 $ 52.20 $ 54.05 $ 48.06
Average monthly
churn(9)................ 1.69% 1.37% 1.55% 1.55% 1.84% 1.63% 1.79%
Ratio of earnings to
fixed charges(10)....... 1.17x 1.21x 1.28x 1.22x 1.50x
CONSOLIDATED BALANCE
SHEET DATA:
Cash.................... $ 443 $ 1,670 $ 2,998 $ 3,436 $ 1,698 $ 1,372 $ 1,740
Working capital
(deficit)............... (740) 799 2,490 (1,435) 296 (8,017) 2,290
Property, plant and
equipment, net......... 17,371 23,918 51,884 100,936 132,438 118,746 157,596
Licenses and other
intangibles, net....... 103,901 114,955 199,265 332,850 387,067 357,810 409,193
Total assets............ 127,867 150,054 273,020 462,871 549,942 501,190 597,202
Total debt.............. 106,811 131,361 245,609 350,441 343,662 292,252 380,321
Stockholders' equity.... 10,659 3,244 4,915 74,553 164,930 170,608 168,630
</TABLE>
30
<PAGE>
(Footnotes from previous page)
- --------
(1) Includes the Georgia Acquisition (as defined herein), which occurred on
October 31, 1994. For the two months ended December 31, 1994, the Georgia
Acquisition resulted in revenues to Palmer of $1,803 and operating loss
of $645.
(2) Includes the GTE Acquisition (as defined herein), which occurred on
December 1, 1995. For the one month ended December 31, 1995, the GTE
Acquisition resulted in revenues to Palmer of $2,126 and operating income
of $208.
(3) Includes the acquisition of the cellular telephone systems of USCOC (as
defined herein) (Georgia-1 RSA), which occurred on June 20, 1996, and
Horizon (as defined herein) (Georgia-6 RSA), which occurred on July 5,
1996. The acquisitions of USCOC and Horizon resulted in revenues to
Palmer of $1,239 and $2,682, respectively, and operating (loss) income of
$(278) and $743, respectively, during such year.
(4) EBITDA should not be considered in isolation or as an alternative to net
income (loss), operating income (loss) or any other measure of
performance under GAAP. The Company believes that operating income before
depreciation and amortization is viewed as a relevant supplemental
measure of performance in the cellular telephone industry.
(5) Determined by dividing the aggregate number of subscribers by the
estimated population.
(6) Each billable telephone number in service represents one subscriber.
(7) Determined for a period by dividing (i) costs of sales and marketing,
including salaries, commissions and employee benefits and all expenses
incurred by sales and marketing personnel, agent commissions, credit
reference expenses, losses on cellular telephone sales, rental expenses
allocated to retail operations, net installation expenses and other
miscellaneous sales and marketing charges for such period, by (ii) the
net subscribers added during such period.
(8) 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.
(9) Determined for a period by dividing total subscribers discontinuing
service by the average number of subscribers for such period, and
dividing that result by the number of months in such period.
(10) The ratio of earnings to fixed charges is determined by dividing the sum
of earnings before extraordinary items and accounting changes, interest
expense, taxes and a portion of rent expense representative of interest
by the sum of interest expense and a portion of rent expense
representative of interest. The ratio of earnings to fixed charges is not
meaningful for periods that result in a deficit. For the years ended
December 31, 1992 and 1993 the deficit of earnings to fixed charges was
$12,605 and $7,435, respectively.
31
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Prior to the Merger, the Company had no assets, liabilities or operations
and no recent historical results of operations. The following is a discussion
of Palmer's historical results of operations. Palmer's historical results of
operations are not directly indicative of future results of operations because
(i) they include results attributable to Palmer's Fort Myers, Florida business
unit, which was sold in connection with the acquisition of Palmer and (ii)
they reflect a significantly less leveraged capital structure than the Company
possesses after the Acquisition. Principally as a result of interest expense
related to the financing for the Acquisition, the Company expects to incur net
losses for several years. See "The Acquisition." This discussion should be
read in conjunction with "Selected Consolidated Financial Data," "Summary
Historical and Unaudited Pro Forma Financial and Operating Data," "Unaudited
Pro Forma Condensed Consolidated Financial Statements" and Palmer's
Consolidated Financial Statements and related notes thereto.
While the Offering was consummated on July 10, 1997, the Acquisition was not
consummated until October 6, 1997. Accordingly, for the three month period
after the closing of the Offering and prior to the consummation of the
Acquisition, the Company incurred interest expense on the Notes but was not
entitled to any of the cash flows or earnings of Palmer.
OVERVIEW OF PALMER
Palmer's revenues consist of service revenue and equipment sales and
installation. Service revenue includes access charges (generally a monthly
charge), usage charges (based upon per minute usage rates), roaming charges
(fees charged for providing services to subscribers of other cellular
telephone systems when such subscribers or "roamers" place or receive a phone
call within one of Palmer's service areas), long distance charges derived from
long distance calls placed by Palmer's subscribers and other charges,
including, among other things, connection charges for initial activation on
the cellular telephone system, and feature services such as voice mail, call
forwarding and call waiting.
GROWTH IN TOTAL REVENUES
(IN THOUSANDS)
<TABLE>
<S> <C>
1996............................ $159,743
1995............................ $104,906
1994............................ $ 68,979
1993............................ $ 41,458
1992............................ $ 27,301
</TABLE>
Palmer's revenues have grown primarily by increasing the number of its
subscribers, both by improving its penetration rate (determined by dividing
the aggregate number of subscribers by estimated population) in cellular
telephone systems owned by Palmer and by acquiring or constructing new
cellular telephone systems. Palmer's subscribers increased from 22,536 at the
beginning of 1992 to 325,653 as of June 30, 1997. During the same period,
Palmer's penetration rate in its cellular telephone systems increased from
1.45% at the beginning of 1992 to 8.3% as of June 30, 1997. Palmer also made
several acquisitions between 1992 and 1996, as later described.
On average, new subscribers use less airtime and generate less revenue per
subscriber than existing subscribers. Therefore, airtime usage and service
revenue generally do not increase proportionately with increases in numbers of
subscribers over the same period. As a result, although Palmer's total revenue
has increased each year, its average minutes of usage per subscriber and its
average monthly revenue per subscriber have decreased over time as new
subscribers have been added. The Company expects these trends to continue in
its existing cellular telephone systems as its penetration rate increases.
GROWTH IN POPULATION SERVED
(IN THOUSANDS)
<TABLE>
<S> <C>
1996............................... 3,755
1995............................... 3,307
1994............................... 2,561
1993............................... 1,890
1992............................... 1,692
</TABLE>
32
<PAGE>
The Company believes that its cost to add a net subscriber will continue to
be among the lowest in the cellular telephone industry, primarily because of
its in-house direct sales and marketing staff. Although much of the cellular
telephone industry markets through third-party agents, since 1992, Palmer has
sold its products and services almost exclusively through an internal sales
force that works principally out of retail stores in which Palmer offers a
full line of cellular telephone products and services. Palmer's shift to
nearly exclusive use of an internal sales force resulted in significant
decreases in its cost to add a net subscriber during 1992-1993. Starting in
1994, increased losses from Palmer's sales of cellular telephones caused this
downward trend in cost to add a net subscriber slowly to reverse itself. The
Company anticipates that its cost to add a net subscriber will continue to
increase but at a modest rate as savings associated with its nearly exclusive
use of an internal sales force are fully realized, while other components of
its calculation of cost to add a net subscriber continue to increase. In
addition to sales and marketing expenses, Palmer's computation of its cost to
add a net subscriber includes losses on cellular telephone sales, installation
services, credit reference services and an allocation of rental expenses
related to Palmer's retail stores.
Palmer currently has a microwave network in Alabama which connects the
Montgomery, Alabama MSA and the Alabama-8 RSA with the mobile telephone
switching office ("MTSO") in Dothan, Alabama. This microwave network connects
cellular switching equipment to cell sites without utilizing local landline
telephone carriers, thereby reducing or eliminating fees paid to landline
carriers. During 1995, Palmer spent $1.5 million to build additional microwave
connections between Dothan and Montgomery, Alabama, and between Brunswick and
Savannah, Georgia, as well as to complete a network in Fort Myers, Florida.
During 1996, Palmer spent $2.6 million to build a fiber optic network between
Dothan, Alabama and Panama City, Florida. The installation of this fiber optic
network resulted in significant savings to Palmer by the substantial reduction
or elimination of fees paid to landline carriers. In addition, this network
provides Palmer with excess capacity to lease to third parties or trade for
alternate fiber optic routes.
Prior to 1994, Palmer's customer billing was performed by a third-party
vendor. In January 1994, Palmer began performing billing functions in-house,
which significantly reduced customer service costs. The conversion to the in-
house customer billing system reduced annual billing costs per subscriber from
approximately $39 in 1993 to approximately $22 in 1994, $19 in 1995, and $19
in 1996. Since 1993, Palmer spent approximately $2.0 million in capital
expenditures for its in-house billing system. The software utilized for in-
house billing is leased from its previous third-party vendor. Therefore, no
change has occurred in billing function or operation.
In order to compete effectively in the wireless market, the Company plans to
pursue a strategy of increasing its bundled minute offerings. Because of the
relatively fixed cost of providing additional minutes of airtime on the
Company's cellular system, this bundling strategy, while decreasing the
revenue per minute of use, allows the Company to increase its customer base
and corresponding service revenue without negatively affecting its operating
margins.
33
<PAGE>
MARKET OWNERSHIP
The following is a summary of the Palmer ownership interest in the cellular
telephone system in each licensed service area to which the Palmer provided
service at December 31, 1996 and June 30, 1997.
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
CELLULAR SERVICE AREA 1996 1997
--------------------- ------------ --------
<S> <C> <C>
Albany, Georgia...................................... 82.7% 82.7%
Augusta, Georgia..................................... 100.0 100.0
Columbus, Georgia.................................... 84.9 85.2
Macon, Georgia....................................... 99.1 99.2
Savannah, Georgia.................................... 98.5 98.5
Dothan, Alabama...................................... 92.3 92.5
Montgomery, Alabama.................................. 91.9 92.8
Georgia 1 - RSA...................................... 100.0 100.0
Georgia 6 - RSA...................................... 94.8 95.0
Georgia 7 - RSA...................................... 100.0 100.0
Georgia 8 - RSA...................................... 100.0 100.0
Georgia 9 - RSA...................................... 100.0 100.0
Georgia 10 - RSA..................................... 100.0 100.0
Georgia 12 - RSA..................................... 100.0 100.0
Georgia 13 - RSA..................................... N/A 82.7
Alabama 8 - RSA...................................... 100.0 100.0
Fort Myers, Florida.................................. 99.0 99.0
Panama City, Florida................................. 77.9 78.4
</TABLE>
On February 1, 1997, one of Palmer's majority-owned subsidiaries acquired the
assets of and the license to operate the non-wireline cellular telephone system
serving Georgia Rural Service Area Market No. 383, otherwise known as Georgia-
13 RSA, for a total purchase price of $31.3 million.
PALMER HISTORICAL RESULTS OF OPERATIONS
The following table sets forth the percentage which certain amounts bear to
Palmer's total revenue.
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEARS ENDED DECEMBER 31, JUNE 30,
---------------------------------- ------------------
1992 1993 1994 1995 1996 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Service................ 84.3% 84.8% 88.5% 92.2% 94.6% 94.5% 94.5%
Equipment sales and
installation.......... 15.7 15.2 11.5 7.8 5.4 5.5 5.5
----- ----- ----- ----- ----- -------- --------
Total revenue...... 100.0 100.0 100.0 100.0 100.0 100.0 100.0
----- ----- ----- ----- ----- -------- --------
Operating Expenses:
Engineering, technical
and other direct:
Engineering and
technical (1)....... 10.3 8.8 8.1 7.6 7.9 8.2 8.2
Other direct costs of
services (2)........ 9.4 8.9 10.5 9.7 10.1 11.2 8.5
Cost of equipment (3).. 18.6 17.8 16.7 13.5 11.2 10.9 11.9
Selling, general and
administrative:
Sales and marketing
(4)................. 10.3 9.4 8.8 8.7 8.6 8.2 8.5
Customer service (5). 7.0 7.2 5.6 6.0 5.9 5.6 6.5
General and
administrative (6).. 17.4 16.9 14.2 14.9 14.9 14.8 14.2
Depreciation and
amortization.......... 42.8 25.8 14.2 14.3 15.7 15.4 16.2
----- ----- ----- ----- ----- -------- --------
Total operating
expenses.......... 115.8 94.8 78.1 74.7 74.3 74.3 74.0
----- ----- ----- ----- ----- -------- --------
Operating income (loss). (15.8)% 5.2% 21.9% 25.3% 25.7% 25.7% 26.0%
===== ===== ===== ===== ===== ======== ========
Operating income before
depreciation and
amortization (7)....... 27.0% 31.0% 36.1% 39.6% 41.4% 41.1% 42.2%
===== ===== ===== ===== ===== ======== ========
</TABLE>
34
<PAGE>
- ---------------------
(1) Consists of costs of operating cellular telephone network, including
inter-trunk costs, span-line costs, cell site repairs and maintenance,
cell site utilities, cell site rent, engineers' salaries and benefits and
other operational costs.
(2) Consists of net costs of roaming, costs of long distance, costs of
interconnection with wireline telephone companies and other costs of
services.
(3) Consists primarily of the costs of the cellular telephones and accessories
sold.
(4) Consists primarily of salaries and benefits of sales and marketing
personnel, employee and agent commissions and advertising and promotional
expenses.
(5) Consists primarily of salaries and benefits for customer service
personnel, costs of printing and mailing billings generated in-house in
1994, 1995, and 1996, and for the six months ended June 30, 1996 and 1997,
and fees paid to a third-party vendor of customer service billing prior to
1994.
(6) Includes salaries and benefits of general and administrative personnel and
other overhead expenses.
(7) Operating income before depreciation and amortization should not be
considered in isolation, or as an alternative to net income (loss),
operating income (loss) or any other measure of performance under
generally accepted accounting principles. Palmer believes that operating
income before depreciation and amortization is viewed as a relevant
supplemental measure of performance in the cellular telephone industry.
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Revenue. Service revenues totaled $88.1 million for the first half of 1997,
an increase of 21.2% over $72.7 million for the first half of 1996. This
increase was primarily due to a 36.2% increase in the average number of
subscribers to 305,638 for the first half of 1997 versus 224,333 for the first
half of 1996. The increase in subscribers is the result of internal growth,
which the Company attributes primarily to its strong sales and marketing
efforts, and recent acquisitions.
Average monthly revenue per subscriber decreased 11.1% to $48.06 for the
first half of 1997 from $54.04 for the first half of 1996. This is in part due
to the trend, common in the cellular telephone industry, where, on average,
new subscribers are using less airtime than existing subscribers. Therefore,
service revenues generally do not increase proportionately with the increase
in subscribers. In addition, the decline reflects more competitive rate plans
introduced into Palmer's markets.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased by 20.0% to $5.1 million for
the first half of 1997 compared to $4.2 million for the first half of 1996.
The increase is due to the 20.7% increase in gross subscriber activations in
the first half of 1997 compared to
1996. As a percentage of revenue, equipment sales and installation revenue
remained flat at 5.5% for the first half of 1997 and 1996.
Operating Expenses. Engineering and technical expenses increased by 21.4% to
$7.7 million for the first half of 1997 from $6.3 million in the first half of
1996, due primarily to the increase in subscribers and recent acquisitions. As
a percentage of revenue, engineering and technical expenses remained flat at
8.2% for the first half of 1997 and 1996, respectively. Palmer expects
engineering and technical expenses to decrease as a percentage of revenue due
to its large component of fixed costs. There can be no assurance, however,
that this forward-looking statement will not differ materially from actual
results due to unforeseen engineering and technical expenses.
Other direct costs of services decreased to $7.9 million for the first half
of 1997 from $8.6 million for the first half of 1996 reflecting the decrease
in interconnection costs as a result of Palmer's renegotiation of
interconnection agreements with the local exchange carriers ("LECs") in most
of the markets. As a percentage of revenue, these costs of service declined to
8.5% from 11.2%, reflecting improved interconnection agreements with LECs, as
well as efficiencies gained from the growing subscriber base.
The cost of equipment increased 31.7% to $11.0 million for the first half of
1997 from $8.4 million for the first half of 1996, due primarily to the
increase in gross subscriber activations for the same period. The equipment
sales margin decreased to (117.3%) for the first half of 1997 from (98.1%) for
the first half of 1996. In an effort to address market competition and improve
market share, Palmer sold more telephones below cost in the first half of
1997, on average, than in the same period of 1996.
35
<PAGE>
Sales and marketing costs increased 26.2% to $8.0 million for the first half
of 1997 from $6.3 million for the same period in 1996. This increase is
primarily due to the 20.7% increase in gross subscriber activations and the
resulting increase in commissions. As a percentage of total revenue, sales and
marketing costs increased to 8.5% from 8.2% for the first half of 1997 and
1996, respectively. Palmer's cost to add a net subscriber, including loss on
telephone sales, increased to $480 for the first half of 1997 from $375 for
the first half of 1996. This increase in cost to add a net subscriber was
caused primarily by increased losses from Palmer's sales of cellular
telephones and an increase in commissions and advertising costs.
Customer service costs increased 41.3% to $6.0 million for the first half of
1997 from $4.2 million for the first half of 1996. As a percentage of revenue,
customer service costs increased to 6.5% from 5.6% for the first half of 1997
and 1996, respectively. The increase was due primarily to higher costs for
billing support services.
General and administrative expenditures increased 15.8% to $13.2 million for
the first half of 1997 from $11.4 million for the first half of 1996, due
primarily to the increase in the costs associated with supporting recent
acquisitions. General and administrative expenses decreased as a percentage of
revenue to 14.2% in the first half of 1997 from 14.8% in the first half of
1996. As Palmer continues to add more subscribers, and generates associated
revenue, general and administrative expenses should decrease as a percentage
of total revenues. There can be no assurance, however, that this forward-
looking statement will not differ materially from actual results due to
unforseen general and administrative expenses and other factors.
Depreciation and amortization increased 27.4% to $15.1 million for the first
half of 1997 from $11.9 million for the first half of 1996. This increase was
primarily due to the depreciation and amortization associated with recent
acquisitions and additional capital expenditures. As a percentage of revenue,
depreciation and amortization increased to 16.2% from 15.4% for the first half
of 1997 and 1996, respectively.
Operating income increased 22.7% to $24.3 million in the first half of 1997,
from $19.8 million for the first half of 1996. This improvement in operating
results is attributable primarily to increases in revenue which exceeded
increases in operating expenses.
Net Interest Expense, Income Taxes and Net Income. Net interest expense
remained relatively flat at $16.1 million and $16.0 million for the first half
of 1997 and 1996, respectively.
Income tax expense was $3.9 million in the first half of 1997 and $0.9
million in the first half of 1996. This increase is due primarily to the
increase in income before income taxes in 1997 and the fact that all remaining
net operating loss carry forwards were recognized for financial statement
purposes in 1996.
Net income for the first half of 1997 was $3.7 million, or $0.13 per share,
compared to net income of $1.8 million, or $0.07 per share, for the first half
of 1996. The increase in net income is primarily attributable to increases in
revenue which exceeded increases in operating expenses and income tax expense.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Revenue. Service revenue totaled $151.1 million for 1996, an increase of
$54.4 million or 56.3% over $96.7 million for 1995. This increase was due
primarily to a 69.7% increase in the average number of subscribers to 241,255
in 1996 from 142,147 in 1995. The increase in subscribers is the result of
internal growth, which Palmer attributes primarily to its sales and marketing
efforts, and recent acquisitions. The GTE Acquisition (as defined herein)
accounted for 41,163 subscribers at December 31, 1996. Service revenue
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $24.6 million for 1996 as compared to $2.0 million for the one month
ended December 31, 1995.
Average monthly service revenue per subscriber decreased to $52.20 for 1996
from $56.68 for 1995. This decrease occurred because, on average, new
subscribers use less airtime and generate less revenue per subscriber than
existing subscribers as is customary in the cellular telephone industry.
Therefore, airtime usage and service
36
<PAGE>
revenue did not increase in proportion to the increase in subscribers. In
addition, Palmer entered into revised roaming agreements with certain of its
neighboring carriers. These agreements provide for reciprocal lower roaming
rates per minute of use. This resulted in lower roaming revenue for Palmer,
but also resulted in offsetting lower direct costs of services when Palmer's
subscribers were roaming on these neighboring systems.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $8.6 million for 1996 from
$8.2 million for 1995, a 4.9% increase, due primarily to the increase in gross
subscriber activations offset by lower cellular phone prices. While equipment
sales and installation revenue increased slightly for 1996 from 1995, it
decreased as a percentage of total cellular revenue to 5.4% for 1996 from 7.8%
for 1995, reflecting the increased annual revenue base as well as lower
cellular equipment prices charged to customers. Equipment sales and
installation revenue attributable to the cellular telephone systems acquired
in the GTE Acquisition totaled $ 1.0 million for 1996 as compared to $0.1
million for the one month ended December 31, 1995.
Operating Expenses. Engineering and technical expenses increased by 57.5% to
$12.6 million for 1996 from $8.0 million for 1995, due primarily to the
increase in the number of subscribers. As a percentage of revenue, engineering
and technical expenses increased to 7.9% for 1996 from 7.6% for 1995 due to
additional costs incurred for the recent acquisitions and recurring costs
associated with Palmer's system development and expansion. Such development is
done for the purpose of increasing capacity and improving coverage.
Engineering and technical expenses attributable to the cellular telephone
systems acquired in the GTE Acquisition totaled $2.8 million for 1996 as
compared to $0.2 million for the one month ended December 31, 1995.
Other direct costs of services increased 58.3% to $16.1 million for 1996
from $10.2 million for 1995. As a percentage of revenue, other direct costs of
services increased to 10.1% for 1996 from 9.7% for 1995. This increase in
other direct costs of services as a percentage of revenue was due primarily to
Palmer subsidizing more roaming costs for competitive reasons. Other direct
costs of service attributable to the cellular telephone systems acquired in
the GTE Acquisition totaled $1.6 million for 1996 as compared to $0.2 million
for the one month ended December 31, 1995.
Cost of equipment increased 26.8% to $17.9 million for 1996 from $14.1
million for 1995, due primarily to the increase in gross subscriber
activations for the same period. The equipment sales margin decreased to
(108.1%) for 1996 from (72.1%) for 1995. In an effort to address market
competition and improve market share, Palmer sold more telephones below cost
in 1996 than in 1995. The cost of equipment attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $3.1 million for
1996 as compared to $0.2 million for the one month ended December 31, 1995.
Sales and marketing costs increased 50.2% to $13.7 million for 1996 from
$9.1 million for 1995. This increase is primarily due to the 28.1% increase in
gross subscriber activations and the resulting increase in salaries and
commissions. Sales and marketing costs as a percentage of total revenue
remained relatively flat at 8.6% for 1996 and 8.7% for 1995. Palmer's cost to
add a net subscriber, including losses on cellular telephone sales, increased
to $407 for 1996 from $276 for 1995. This increase in cost to add a net
subscriber was caused primarily by additional advertising and fixed marketing
overhead associated with the systems acquired in the GTE Acquisition, which
are not yet generating the offsetting gains in net subscribers. In addition,
there were increased losses from Palmer's sales of cellular telephones. Sales
and marketing costs attributable to the cellular telephone systems acquired in
the GTE Acquisition totaled $2.8 million in 1996 as compared to $0.2 million
for the one month ended December 31, 1995.
MONTHLY CASH OPERATING COSTS PER SUBSCRIBER
<TABLE>
<S> <C>
1996................................. $29
1995................................. $32
1994................................. $36
1993................................. $40
1992................................. $48
</TABLE>
37
<PAGE>
Customer service costs increased 49.9% to $9.4 million for 1996 from $6.3
million for 1995. As a percentage of revenue, customer service costs remained
relatively flat at 5.9% and 6.0% for 1996 and 1995, respectively. Customer
service costs attributable to the cellular telephone systems acquired in the
GTE Acquisition totaled $1.9 million in 1996 as compared to $0.2 million for
the one month ended December 31, 1995.
General and administrative expenses increased 52.5% to $23.8 million for
1996 from $15.6 million for 1995 and remained flat as a percentage of revenue
at 14.9% for 1996 and 1995. As the Company continues to add more subscribers
and generate associated revenue, general and administrative expenses should
decrease as a percentage of total revenues. The general and administrative
costs attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $3.4 million for 1996 as compared to $0.4 million for the
one month ended December 31, 1995.
Depreciation and amortization increased 66.7% to $25.0 million for 1996 from
$15.0 million for 1995. This increase is primarily due to the depreciation and
amortization associated with the recent acquisitions and additional capital
expenditures. Depreciation and amortization attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $6.2 million for
1996 as compared to $0.5 million for the one month ended December 31, 1995.
Operating income for 1996 increased 54.9% to $41.2 million, an increase of
$14.6 million over operating income for 1995. This improvement in operating
results is attributed primarily to increases in revenue which exceeded
increases in operating expenses. Operating income attributable to the cellular
telephone systems acquired in the GTE Acquisition totaled $3.8 million for
1996 as compared to $0.2 million for the one month ended December 31, 1995.
EBITDA
(IN THOUSANDS)
<TABLE>
<S> <C>
1996............................. $66,190
1995............................. $41,586
1994............................. $24,900
1993............................. $12,850
1992............................. $ 7,377
</TABLE>
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Revenue. Service revenue totaled $96.7 million for 1995, an increase of
$35.7 million or 58.4% over $61.0 million for 1994. This increase was due
primarily to a 67.8% increase in the average number of subscribers to 142,147
in 1995 from 84,718 in 1994. The increase in subscribers was the result of
internal growth, which Palmer attributes primarily to its sales and marketing
efforts, the Georgia Acquisition (as defined herein) and the GTE Acquisition
(as defined herein). During 1995, Palmer added 13,098 net subscribers in the
Georgia Acquisition, bringing the total subscribers served by those systems to
25,238 at December 31, 1995. Service revenue attributable to the cellular
telephone systems acquired in the Georgia Acquisition totaled $12.3 million
for 1995 as compared to $1.6 million for the two months ended December 31,
1994. The GTE Acquisition increased Palmer's subscribers by 34,904 at December
31, 1995. Service revenue attributable to the cellular telephone systems
acquired in the GTE Acquisition totaled $2.0 million for the one month ended
December 31, 1995, and is included in Palmer's 1995 results of operations.
Average monthly service revenue per subscriber decreased to $56.68 for 1995
from $60.02 for 1994. This decrease occurred because, on average, new
subscribers use less airtime and generate less revenue per subscriber than
existing subscribers as is customary in the cellular telephone industry.
Therefore, airtime usage and service revenue did not increase in proportion to
the increase in subscribers.
Equipment sales and installation revenue, which consists primarily of
cellular subscriber equipment sales, increased to $8.2 million for 1995 from
$8.0 million for 1994, a 3.3% increase, due primarily to the increase in
subscriber activations offset by lower cellular phone prices. While equipment
sales and installation revenue increased slightly for 1995 from 1994, it
decreased as a percentage of total cellular revenue to 7.8% for 1995 from
11.5% for 1994, reflecting the increased recurring annual revenue base as well
as lower cellular equipment prices charged to customers. Equipment sales and
installation revenue attributable to the cellular telephone systems acquired
in the Georgia Acquisition totaled $1.1 million for 1995 as compared to $0.2
million for the
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two months ended December 31, 1994. Equipment sales and installation revenue
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $0.1 million for the one month ended December 31, 1995 and is included
in Palmer's results of operations for 1995.
Operating Expenses. Engineering and technical expenses increased by 43.2% to
$8.0 million for 1995 from $5.6 million for 1994, due primarily to the
increase in subscribers. As a percentage of revenue, engineering and technical
expenses decreased to 7.6% for 1995 from 8.1% for 1994. Engineering and
technical expenses attributable to the cellular telephone systems acquired in
the Georgia Acquisition totaled $2.4 million for 1995 as compared to $0.3
million for the two months ended December 31, 1994. Engineering and technical
expenses attributable to the cellular telephone systems acquired in the GTE
Acquisition totaled $0.2 million for the one month ended December 31, 1995 and
are included in Palmer's results of operations for 1995.
Other direct costs of services increased 41.7% to $10.2 million for 1995
from $7.2 million for 1994. As a percentage of revenue, other direct costs of
services decreased to 9.7% for 1995 from 10.5% for 1994. This decrease in
other direct costs of services as a percentage of revenue was due primarily to
Palmer improving its roaming agreements with neighboring cellular service
providers, spreading its fixed charges over a larger revenue base, and
bringing its intramarket roaming settlements in-house. Other direct costs of
service attributable to the cellular telephone systems acquired in the Georgia
Acquisition totaled $1.1 million for 1995 as compared to $0.2 million for the
two months ended December 31, 1994. Other direct costs of service attributable
to the cellular telephone systems acquired in the GTE Acquisition totaled $0.2
million for the one month ended December 31, 1995 and are included in Palmer's
results of operations for 1995.
Cost of equipment increased 22.5% to $14.1 million for 1995 from $11.5
million for 1994, due primarily to the increase in gross subscriber
activations for the same period. The equipment sales margin decreased to
(72.1%) for 1995 from (45.1%) for 1994. In an effort to address market
competition and improve market share, Palmer sold more telephones below cost
in 1995 than in 1994. The cost of equipment attributable to the cellular
telephone systems acquired in the Georgia Acquisition totaled $2.4 million for
1995 as compared to $0.3 million for the two months ended December 31, 1994.
The cost of equipment attributable to the cellular telephone systems acquired
in the GTE Acquisition totaled $0.2 million for the one month ended December
31, 1995 and is included in Palmer's results of operations for 1995.
Sales and marketing costs increased 51.5% to $9.1 million for 1995 from $6.0
million for 1994. This increase is primarily due to the 49.1% increase in
gross subscriber activations and the resulting increase in salaries and
commissions. Sales and marketing costs as a percentage of total revenue
remained relatively flat at 8.7% for 1995 and 8.8% for 1994. Palmer's cost to
add a net subscriber, including losses on cellular telephone sales, increased
to $276 for 1995 from $247 for 1994. This increase in cost to add a net
subscriber was caused primarily by increased losses from Palmer's sales of
cellular telephones. Sales and marketing costs attributable to the cellular
telephone systems acquired in the Georgia Acquisition totaled $1.7 million for
1995 as compared to $0.3 million for the two months ended December 31, 1994.
Sales and marketing costs attributable to the cellular telephone systems
acquired in the GTE Acquisition totaled $0.2 million for the one month ended
December 31, 1995 and are included in Palmer's results of operations for 1995.
Customer service costs increased 62.0% to $6.3 million for 1995 from $3.9
million for 1994 and increased as a percentage of total revenue to 6.0% for
1995 from 5.6% for 1994. This increase is primarily due to an increase in
subscribers, to operating costs associated with the newly established regional
customer service call centers in Montgomery, Alabama and Savannah, Georgia and
to non-recurring expenditures incurred in connection with the implementation
of new area codes in Palmer's Alabama and Fort Myers, Florida service areas.
Customer service costs attributable to the cellular telephone systems acquired
in the Georgia Acquisition totaled $0.9 million for 1995 as compared to $0.2
million for the two months ended December 31, 1994. Customer service costs
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $0.2 million for the one month ended December 31, 1995 and are
included in Palmer's results of operations for 1995.
General and administrative expenses increased 58.2% to $15.6 million for
1995 from $9.8 million for 1994 and increased as a percentage of total revenue
to 14.9% for 1995 from 14.2% for 1994 due primarily to the increase in the
number of subscribers, as well as the Georgia and GTE Acquisitions. Fixed
general and administrative costs attributable to the acquisitions are incurred
prior to the development of the subscriber base and the generation of
associated revenue. As the Company continues to add more subscribers and
generate
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associated revenue, general and administrative expenses should decrease as a
percentage of total revenues. The general and administrative costs
attributable to the cellular telephone systems acquired in the Georgia
Acquisition totaled $3.2 million for 1995 as compared to $0.4 million for the
two months ended December 31, 1994. The general and administrative costs
attributable to the cellular telephone systems acquired in the GTE Acquisition
totaled $0.4 million for the one month ended December 31, 1995 and are
included in Palmer's results of operations for 1995.
Depreciation and amortization increased 52.8% to $15.0 million for 1995 from
$9.8 million for 1994. This increase is primarily due to the depreciation and
amortization associated with the acquisitions and additional capital
expenditures. Depreciation and amortization attributable to the cellular
telephone systems acquired in the Georgia Acquisition totaled $3.6 million for
1995 as compared to the $0.7 million for the two months ended December 31,
1994. Depreciation and amortization attributable to the cellular telephone
systems acquired in the GTE Acquisition totaled $0.5 million for the one month
ended December 31, 1995 and are included in Palmer's results of operations for
1995.
Operating income for 1995 increased 76.2% to $26.6 million, an increase of
$11.5 million over operating income for 1994. This improvement in operating
results is attributed primarily to increases in revenue which exceeded
increases in operating expenses. Operating income (loss) attributable to the
cellular telephone systems acquired in the Georgia Acquisition totaled $(2.0)
million for 1995 as compared to $(0.6) million for the two months ended
December 31, 1994. Operating income attributable to the cellular telephone
systems acquired in the GTE Acquisition totaled $0.2 million for the one month
ended December 31, 1995 and is included in Palmer's results of operations for
1995.
NET INTEREST EXPENSE, OTHER EXPENSE, INCOME TAX EXPENSE, AND NET INCOME
Net interest expense increased 48.3% to $31.5 million for 1996 from $21.2
million for 1995 due primarily to debt incurred for the recent acquisitions
and the amortization of deferred financing fees related to Palmer's credit
facility. For 1995, net interest expense increased 66.8% to $21.2 million from
$12.7 million for 1994 due primarily to debt incurred for the Georgia
Acquisition and the GTE Acquisition, the amortization of deferred financing
fees related to Palmer's credit facility and increased interest rates.
Other expense was $0.4 million in 1996, $0.7 million in 1995 and $0.1
million in 1994. Other expense consists primarily of the disposal of certain
assets by Palmer and other non-operating expenses.
Income tax expense was $2.7 million for both 1996 and 1995 compared to none
in 1994. The $2.7 million income tax expense in 1995 was a non-recurring
deferred income tax charge related to the difference between the financial
statement and income tax return bases of certain assets and liabilities of
Palmer Cellular Partnership (the "Partnership"), predecessor of Palmer. In
connection with Palmer's initial public offering of securities in March, 1995,
all of the assets and liabilities of the Partnership were exchanged for stock
in Palmer. Due to the exchange, a deferred tax liability was recorded to
reflect the difference between the financial statement and income tax return
bases in these assets and liabilities. See notes 2 and 5 to Palmer's
consolidated financial statements.
Net income for 1996 was $4.7 million, or $0.18 per share of common stock,
compared to net income of $1.0 million, or $0.04 per share of common stock for
1995. The increase in net income is primarily attributable to increases in
revenue which exceeded increases in expenses. Net income for 1994 was $1.7
million, or $0.09 per share of common stock. The decrease in net income
between 1995 and 1994 is primarily attributable to interest expense on debt
incurred for the Georgia Acquisition and the GTE Acquisition, and income tax
expense.
LIQUIDITY AND CAPITAL RESOURCES
Following the Acquisition, the Company's principal sources of liquidity are
cash flow from operations and borrowings under the New Credit Facility. The
Company's principal uses of cash will be debt service requirements, capital
expenditures and working capital.
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The Company will incur substantial indebtedness in connection with the
Acquisition. On a pro forma basis, after giving effect to the Acquisition, the
Company would have had approximately $620 million of indebtedness outstanding
as of June 30, 1997 and its ratio of EBITDA to interest expense would have
been 0.89 to 1.00 and 1.05 to 1.00 for the year ended December 31, 1996 and
the six months ended June 30, 1997.
Palmer's long-term capital requirements consist of funds for capital
expenditures, acquisition and debt service. Historically, Palmer met its
capital requirements primarily through equity contributions, bank and
intercompany debt and, to a lesser extent, through operating cash flow. The
Company expects to meet its capital requirements following the Acquisition
from cash from operations and borrowings under the New Credit Facility.
Following the Acquisition, the Company's only committed source of liquidity is
the New Credit Facility, under which $80 million of revolving loans remains
available. The Company believes that these sources will provide the Company
with adequate capital to satisfy its projected funding requirements for the
next 18 months. The Company intends to use the availability under the New
Credit Facility for general corporate purposes and, if the Company's tax
planning strategy is unsuccessful, to finance the $50.9 million tax payment
due with respect to the Fort Myers Sale and Georgia Sale. However, borrowings
under the New Credit Facility are subject to significant conditions, including
compliance with certain financial ratios and the absence of any material
adverse change. For a description of the New Credit Facility, including a
description of the interest rates applicable to borrowings thereunder and
repayment schedule, see "Description of New Credit Facility."
In 1996, Palmer spent approximately $41.4 million for capital expenditures.
The Company expects to spend $50 million and $25 million to $30 million for
capital expenditures, including the construction of new stores and additional
cell sites, for the years ended December 31, 1997 and 1998, respectively. The
Company expects to use net cash provided by operating activities and
borrowings available under the New Credit Facility to fund such capital
expenditures.
Upon the occurrence of a Change of Control (as defined), each Holder of
Notes will have the right to require the Company to repurchase such Holder's
Notes at 101% of the principal amount thereof, plus accrued and unpaid
interest thereon, if any, to the repurchase date. A redemption upon a Change
of Control would be an Event of Default under the terms of the New Credit
Facility. The Company may not have sufficient funds or financing available to
satisfy its obligations to repurchase the Notes or meet other debt obligations
that may come due upon a Change of Control.
OTHER
Pursuant to the Merger Agreement, PCC acquired all issued and outstanding
shares of common stock of Palmer and outstanding options and rights under
employee and director stock purchase plans for a purchase price of $17.50 per
share in cash.
Following the Merger, the common stock of Palmer ceased to be authorized to
be quoted on the NASDAQ Stock Market and became eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934 (the "Exchange Act").
ACCOUNTING POLICIES
For financial reporting purposes, Palmer reports 100% of revenues and
expenses for the markets for which it provides cellular telephone service.
However, in several of its markets, Palmer holds less than 100% of the equity
ownership. The minority stockholders' and partners' shares of income or losses
in those markets are reflected in the consolidated financial statements as
"minority interest share of (income) losses," except for losses in excess of
their capital accounts and cash call provisions which are not eliminated in
consolidation. For financial reporting purposes, Palmer consolidates each
subsidiary and partnership in which it has a controlling interest (greater
than 50.0%). From 1992 through 1996, Palmer had controlling interests in each
of its subsidiaries and partnerships.
INFLATION
The Company believes that inflation affects its business no more than it
generally affects other similar businesses.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus
and in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange Old Notes which are
properly tendered on or prior to the Expiration Date and not withdrawn as
permitted below. As used herein, the term "Expiration Date" means 5:00 p.m.,
New York City time, on , 1997; provided, however, that if the Company,
in its sole discretion, has extended the period of time for which the Exchange
Offer is open, the term "Expiration Date" means the latest time and date to
which the Exchange Offer is extended.
As of the date of this Prospectus, $175,000,000 aggregate principal amount
of the Old Notes was outstanding. This Prospectus, together with the Letter of
Transmittal, is first being sent on or about the date set forth on the cover
page to all Holders of Old Notes at the addresses set forth in the security
register with respect to Old Notes maintained by the Trustee. The Company's
obligations to accept Old Notes for exchange pursuant to the Exchange Offer is
subject to certain conditions as set forth under "Certain Conditions to the
Exchange Offer" below.
The Company expressly reserves the right, at any time or from time to time,
to extend the period of time during which the Exchange Offer is open, and
thereby delay acceptance of any Old 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 Old Notes
previously tendered will remain subject to the Exchange Offer and may be
accepted for exchange by the Company. Any Old Notes not accepted for exchange
for any reason will be returned without expense to the tendering Holder
thereof as promptly as practicable after the expiration or termination of the
Exchange Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer, and not to accept for exchange any Old Notes not theretofore accepted
for exchange, upon the occurrence of any of the conditions of the Exchange
Offer specified below under "Certain Conditions to the Exchange Offer." The
Company will give oral or written notice of any extension, amendment, non-
acceptance or termination to the Holders of the Old Notes as promptly as
practicable, such notice in the case of any extension to be issued by means of
a press release or other public announcement no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled Expiration
Date.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of the State of Delaware or the Indenture in
connection with the Exchange Offer. The Company intends to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the SEC thereunder.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a Holder thereof as set forth
below and the acceptance thereof by the Company will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions set forth in this Prospectus and in the accompanying
Letter of Transmittal. Except as set forth below, a Holder who wishes to
tender Old Notes for exchange pursuant to the Exchange Offer must transmit a
properly completed and duly executed Letter of Transmittal, including all
other documents required by such Letter of Transmittal, to Bank of Montreal
Trust Company (the "Exchange Agent") at one of the addresses set forth below
under "Exchange Agent" on or prior to the Expiration Date. In addition, (i)
certificates for such Old Notes must be received by the Exchange Agent along
with the Letter of Transmittal, (ii) a timely confirmation of a book-entry
transfer (a "Book-Entry Confirmation") of such Old Notes, if such procedure is
available, into the Exchange Agent's account at The Depository Trust Company
(The "Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date or (iii) the Holder must comply with the guaranteed delivery
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procedures described below. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF
TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF
THE HOLDERS. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED
MAIL, PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF
TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered Holder of the Old Notes who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined below). In the event that signatures on a
Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trust
company having an office or correspondent in the United States (collectively,
"Eligible Institutions"). If Old Notes are registered in the name of a person
other than the person signing the Letter of Transmittal, the Old Notes
surrendered for exchange must be endorsed by, or be accompanied by a written
instrument or instruments of transfer or exchange, in satisfactory form as
determined by the Company in its sole discretion, duly executed by the
registered Holder with the signature thereon guaranteed by an Eligible
Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined
by the Company in its reasonable discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and
all tenders of any particular Old Notes not properly tendered or to not accept
any particular Old 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 Old Notes either before
or after the Expiration Date (including the right to waive the ineligibility
of any Holder who seeks to tender Old Notes in the Exchange Offer). The
interpretation of the terms and conditions of the Exchange Offer as to any
particular Old 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 tenders of Old Notes for exchange must be cured within
such reasonable period of time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to
give notification of any defect or irregularity with respect to any tender of
Old Notes for exchange, nor shall any of them incur any liability for failure
to give such notification.
If the Letter of Transmittal is signed by a person or persons other than the
registered Holder or Holders of Old Notes, such Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed exactly
as the name or names of the registered Holder or Holders that appear on the
Old Notes.
If the Letter of Transmittal or any Old Notes or powers of attorney are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers or corporations or others acting in a fiduciary or representative
capacity, such person should so indicate when signing and, unless waived by
the Company, proper evidence satisfactory to the Company of its authority to
so act must be submitted.
By tendering, each Holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
acquired in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the Holder, (ii) neither the Holder nor
any such other person has an arrangement or understanding with any person to
participate in the distribution of such New Notes, (iii) if the Holder is not
a broker-dealer, or is a broker-dealer but will not receive New Notes for its
own account in exchange for Old Notes, neither the Holder nor any such other
person is engaged in or intends to participate in the distribution of such New
Notes and (iv) neither the Holder nor any such other person is an "affiliate,"
as defined under Rule 405 of the Securities Act, of the Company. If the
tendering Holder is a broker-dealer that
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will receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making activities or other trading activities,
it will be required to acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of
the Old Notes. See "Certain Conditions to the Exchange Offer" below. For
purposes of the Exchange Offer, the Company shall be deemed to have accepted
properly tendered Old Notes for exchange when, as and if the Company has given
oral or written notice thereof to the Exchange Agent.
In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-
Entry Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility pursuant to the book-entry transfer procedures
described below, a properly completed and duly executed Letter of Transmittal
and all other required documents. If any tendered Old Notes are not accepted
for any reason set forth in the terms and conditions of the Exchange Offer or
if certificates representing Old Notes are submitted for a greater principal
amount than the Holder desires to exchange, such unaccepted or non-exchanged
Old Notes will be returned without expense to the tendering Holder thereof
(or, in the case of Old Notes tendered by book-entry transfer into the
Exchange Agent's account at the Book-Entry Transfer Facility pursuant to the
book-entry transfer procedures described below, such non-exchanged Old Notes
will be credited to an account maintained with such Book-Entry Transfer
Facility) as promptly as practicable after the expiration or termination of
the Exchange Offer.
INTEREST ON THE NEW NOTES
The New Notes will bear interest from July 10, 1997, payable semiannually on
January 15 and July 15 of each year, commencing on January 15, 1998, at the
rate of 11 3/4% per annum. Holders of Old Notes whose Old Notes are accepted
for exchange will be deemed to have waived the right to receive any payment in
respect of interest on the Old Notes accrued from July 10, 1997 until the date
of the issuance of the New Notes. Consequently, Holders who exchange their Old
Notes for New Notes will receive the same interest payment on January 15, 1998
(the first interest payment date with respect to the Old Notes and the New
Notes) that they would have received had they not accepted the Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer promptly after the date of this Prospectus. Any financial
institution that is a participant in the Book-Entry Transfer Facility's
systems may make book-entry delivery of Old Notes by causing the Book-Entry
Transfer Facility to transfer such Old Notes into the Exchange Agent's account
in accordance with the Book-Entry Transfer Facility's Automated Tender Offer
Program ("ATOP") procedures for transfer. However, the exchange for the Old
Notes so tendered will only be made after timely confirmation of such book-
entry transfer of Old Notes into the Exchange Agent's account, and timely
receipt by the Exchange Agent of an Agent's Message (as such term is 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 the
Book-Entry Transfer Facility and received by the Exchange Agent and forming a
part of a Book-Entry Confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgement from a participant tendering
Old 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 the Company may enforce such agreement against such
participant.
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GUARANTEED DELIVERY PROCEDURES
If a registered Holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
Holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is
made through an Eligible Institution, (ii) prior to the Expiration Date, the
Exchange Agent 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 the Company (by
telegram, telex, facsimile transmission, mail or hand delivery), setting forth
the name and address of the Holder of Old Notes and the amount of Old Notes
tendered, stating that the tender is being made thereby and guaranteeing that
within five New York Stock Exchange ("NYSE") trading days after the date of
execution of the Notice of Guaranteed Delivery, the certificates of all
physically tendered Old 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 the Eligible Institution with the
Exchange Agent, and (iii) the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and all other documents required by the Letter of Transmittal, are
received by the Exchange Agent within five NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn 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 set forth below under
"Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes
to be withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which
such Old Notes are registered, if different from that of the withdrawing
Holder. If certificates for Old Notes have been delivered or otherwise
identified to the Exchange Agent, then, prior to the release of such
certificates, the withdrawing Holder must also submit the serial numbers of
the particular certificates to be withdrawn and a signed notice of withdrawal
with signatures guaranteed by an Eligible Institution unless such Holder is an
Eligible Institution. If Old Notes have been tendered pursuant to the
procedure for book-entry transfer described above, any note of withdrawal must
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Old Notes and otherwise comply with the
procedures of such facility. All questions as to the validity, form and
eligibility (including time of receipt) of such notices will be determined by
the Company, whose determination shall be final and binding on all parties.
Any Old Notes so withdrawn will be deemed not to have been validly tendered
for exchange for purposes of the Exchange Offer. Any Old Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the Holder thereof without cost to such Holder (or, in the case of
Old Notes tendered by book-entry transfer into the Exchange Agent's account at
the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with such Book-Entry Transfer Facility for the Old Notes) as soon
as practicable after withdrawal, rejection of tender or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following
one of the procedures described under "Procedures for Tendering Old Notes"
above at any time on or prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in
exchange for, any Old Notes and may terminate or amend the Exchange Offer, if
at any time before the Expiration Date, such acceptance or issuance would
violate applicable law or any interpretation of the staff of the SEC.
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The foregoing condition is for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any
time to exercise the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes,
if at such time any stop order shall be threatened or in effect with respect
to the Registration Statement of which this Prospectus constitutes a part or
the qualification of the Indenture under the Trust Indenture Act of 1939, as
amended (the "TIA").
EXCHANGE AGENT
Bank of Montreal 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 the address set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent, addressed as follows:
Deliver To:
Bank of Montreal Trust Company, Exchange Agent
By Mail, by Overnight Courier or By Hand:
77 Water Street, 4th Floor
New York, New York 10005
Attention: Amy Roberts
Corporate Trust Department
By Facsimile:
(212) 701-7684
Confirm by Telephone:
(212) 701-7653
DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF
INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH 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 in person by officers and
regular employees of the Company and its affiliates. No additional
compensation will be paid to any such officers and employees who engage in
soliciting tenders. The Company will not make any payment to brokers, dealers,
or others soliciting acceptances of the Exchange Offer. The Company, however,
will pay the Exchange Agent reasonable and customary fees for its services and
will reimburse it for its reasonable out-of-pocket expenses in connection
therewith.
The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$200,000.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that Holders who instruct
the Company to register New Notes in the name of, or
46
<PAGE>
request that Old 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.
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon. In general,
the Old Notes may not be offered or sold, unless registered under the
Securities Act, except pursuant to an exemption from, or in a transaction not
subject to, the Securities Act and applicable state securities laws. The
Company does not intend to register the Old Notes under the Securities Act.
The Company believes that, based upon interpretations contained in letters
issued to third parties by the staff of the SEC as set forth in the Exchange
Offer No-Action Letters, New Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale, resold or otherwise
transferred by each Holder thereof (other than a broker-dealer, as set forth
below, and any such Holder which is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provisions of the Securities Act provided
that such New Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement or understanding with any person
to participate in the distribution of such New Notes. If any Holder has any
arrangement or understanding with respect to the distribution of the New Notes
to be acquired pursuant to the Exchange Offer, such Holder (i) could not rely
on the applicable interpretations of the staff of the SEC and (ii) must comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction. Each broker-dealer that
receives New Notes for its own account in exchange for Old Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
such New Notes. See "Plan of Distribution." In addition, to comply with the
securities laws of certain jurisdictions, if applicable, the New Notes may not
be offered or sold unless they have been registered or qualified for sale in
such jurisdiction or an exemption from registration or qualification is
available and is complied with. The Company does not currently intend to take
any action to register or qualify the New Notes for resale in any such
jurisdiction.
47
<PAGE>
BUSINESS
GENERAL
The Company is engaged in the construction, development, management and
operation of cellular telephone systems in the southeastern United States. At
June 30, 1997, after giving effect to the Acquisition, PCW provided cellular
telephone service to 286,131 subscribers in Georgia, Alabama, Florida and
South Carolina in a total of 16 licensed service areas composed of eight MSAs
and eight RSAs, with an aggregate estimated population of 3.3 million. PCW
sells its cellular telephone service as well as a full line of cellular
products and accessories principally through its network of retail stores. PCW
markets all of its products and services under the nationally recognized
service mark CELLULAR ONE. All information in this section gives effect to the
Acquisition.
MARKETS AND SYSTEMS
The Company's cellular telephone systems serve contiguous licensed service
areas in Georgia, Alabama and South Carolina. PCW also has cellular service
areas in Panama City, Florida. The following table sets forth on a pro forma
basis after giving effect to the Acquisition as of July 18, 1997, with respect
to each service area in which PCW owns a cellular telephone system, the
estimated population, PCW's beneficial ownership percentage, the Net Pops and
the date of initial operation of such system by Palmer or a predecessor
operator.
<TABLE>
<CAPTION>
ESTIMATED DATE SYSTEM
SERVICE AREA(1) POPULATION(2) PERCENTAGE NET POPS OPERATIONAL
<S> <C> <C> <C> <C>
Albany, GA.................... 118,527 86.5% 102,526 4/88
Augusta, GA................... 439,116 100.0 439,116 4/87
Columbus, GA.................. 254,150 85.2 216,518 11/88
Macon, GA..................... 313,686 99.2 311,234 12/88
Savannah, GA.................. 283,878 98.5 279,578 3/88
Georgia-6 RSA................. 199,516 95.0 189,560 4/93
Georgia-7 RSA................. 134,376 100.0 134,376 10/91
Georgia-8 RSA................. 157,451 100.0 157,451 10/91
Georgia-9 RSA................. 119,410 100.0 119,410 9/92
Georgia-10 RSA................ 149,699 100.0 149,699 10/91
Georgia-12 RSA................ 211,799 100.0 211,799 10/91
Georgia-13 RSA................ 147,392 86.5 127,494 10/90
Dothan, AL.................... 136,160 94.6 128,807 2/89
Montgomery, AL................ 318,371 92.8 295,430 8/88
Alabama-8 RSA................. 173,993 100.0 173,993 7/93
--------- ---------
Subtotal.................... 3,155,524 3,034,991
--------- ---------
Panama City, FL............... 146,018 78.4 114,493 9/88
--------- ---------
Total....................... 3,301,542 3,149,484
========= =========
</TABLE>
- --------
(1) Does not include the Alabama-5 RSA, South Carolina-7 RSA and South
Carolina-8 RSA where PCW has IOA. PCW has no subscribers in the South
Carolina-7 RSA and South Carolina-8 RSA, but instead provides roaming access
to its own subscribers and others when they travel in these two service
areas, utilizing its existing cell sites. Construction permits were granted
to Permittees for the Alabama-5 RSA and South Carolina-8 RSA on May 20,
1997. The Permittees are required to complete construction of their
respective RSA within 18 months. After completing construction, a Permittee
may give the Company ten days prior written notice, at which point the
Company would be required to sell its subscribers to the Permittee at cost.
The application for a construction permit for the South Carolina-7 RSA has
been remanded by the FCC to the Wireless Bureau for further review.
(2) Based on population estimates for 1996 from the 1996 Donnelley Market
Information Service.
48
<PAGE>
GEORGIA/ALABAMA
In 1988, PCW acquired controlling interests in the licenses to operate
cellular telephone systems in the four MSAs (Montgomery and Dothan, Alabama
and Columbus and Albany, Georgia) that make up the core of its Georgia/Alabama
cluster. The Company continued to increase its presence in this market by
acquiring additional cellular service areas in 1989 (Macon, Georgia MSA), 1992
(Georgia-9 RSA), 1993 (Alabama-8 RSA), 1994 (Georgia-7 RSA, Georgia-8 RSA,
Georgia-10 RSA and Georgia-12 RSA), 1995 (Savannah, Georgia MSA and Augusta,
Georgia MSA) and 1996 (Georgia-1 RSA and Georgia-6 RSA). The Augusta, Georgia
MSA includes Aiken County in South Carolina. In 1994, PCW also received
interim operating authority from the FCC to provide service in two counties
within the southern portion of the Alabama-5 RSA. In 1995, as a result of the
GTE Acquisition, PCW received interim operating authority from the FCC to
provide service to South Carolina-7 RSA and South Carolina-8 RSA. In the
aggregate, this market (excluding the Alabama-5 RSA, South Carolina-7 RSA and
South Carolina-8 RSA where PCW has only interim operating authority) now
covers a contiguous service area of approximately 38,000 square miles that
includes Montgomery, the state capital of Alabama, prominent resort
destinations in Jekyll Island, St. Simons Island and Sea Island, Georgia, and
over 710 miles of interstate highway, including most of I-95 from Savannah,
Georgia to Jacksonville, Florida. The Company collects substantial roaming
revenue from cellular telephone subscribers from other systems traveling in
this market from nearby population centers such as Atlanta and Birmingham, as
well as from vacation and business traffic in the southeastern United States.
Due in part to the favorable labor environment, moderate weather and
relatively low cost of land, during the last several years there has been an
influx of new manufacturing plants in this market. As of December 31, 1996,
PCW utilized 181 cell sites in this cluster (including three cell sites in
Alabama-5 RSA), 23 of which were constructed by PCW in 1995 and 43 of which
were placed in service in 1996.
PANAMA CITY
The Company acquired control of the non-wireline cellular license for the
Panama City, Florida market in 1991. PCW collects substantial roaming revenue
in this market from subscribers from other systems who visit Panama City, a
popular spring and summer vacation destination. As of December 31, 1996, PCW
utilized 11 cell sites in this market. In 1997, the Company plans to add two
additional cell sites in this market.
OPERATIONS
General
The Company has concentrated its efforts on creating an integrated network
of cellular telephone systems in the southeastern United States, principally
to date in Georgia, Alabama, Florida and South Carolina. At June 30, 1997,
after giving effect to the Acquisition, PCW provided cellular telephone
service to 287,665 subscribers in a total of 17 licensed service areas
composed of eight MSAs and nine RSAs. The Company also participates in the
NACN, a nationwide consortium of non-wireline cellular telephone companies,
with the goal of providing seamless regional and national cellular telephone
service to its subscribers. Participation in the NACN allows seven-digit
dialing access to PCW's subscribers when they travel outside PCW's service
areas, providing them with convenient call delivery throughout large areas of
the United States, Canada, Mexico and Puerto Rico served by other NACN
participants.
49
<PAGE>
The following table sets forth information, at the dates indicated after
giving effect to the Acquisition, regarding PCW's subscribers, penetration
rate, cost to add a net subscriber, average monthly churn rate and average
monthly service revenue per subscriber.
<TABLE>
<CAPTION>
SIX
MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
--------------------------------------------- --------
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Subscribers at end of period (1)... 29,869 54,382 99,626 187,870 245,396 286,131
Penetration at end of period (2)... 2.23% 3.57% 4.54% 6.41% 7.28% 8.58%
Cost to add a net subscriber (3)... $ 272 $ 198 $ 247 $ 275 $ 434 $ 487
Average monthly churn (4).......... 1.58% 1.32% 1.54% 1.51% 1.89% 1.78%
Average monthly service revenue per
subscriber (5).................... $ 59.65 $ 56.70 $ 56.54 $ 53.80 $ 50.37 $ 45.73
</TABLE>
- ---------------------
(1) Each billable telephone number in service represents one subscriber.
Amounts at December 31, 1992 and 1993 include 955 and 2,576 subscribers,
respectively, in the Alabama-7 RSA where the Company had interim operating
authority from June 1991 through July 1994.
(2) Determined by dividing the aggregate number of subscribers by the
estimated population.
(3) Determined for the periods, by dividing (i) all costs of sales and
marketing, including salaries, commissions and employee benefits and all
expenses incurred by sales and marketing personnel, agent commissions,
credit reference expenses, losses on cellular telephone sales, rental
expenses allocated to retail operations, net installation expenses and
other miscellaneous sales and marketing charges for such period including
fees paid for use of the CELLULAR ONE service mark, by (ii) the net
subscribers added during such period.
(4) Determined for the periods, by dividing total subscribers discontinuing
service by the average number of subscribers for such period , and divided
by the number of months in the relevant period.
(5) Determined for the periods by dividing the (i) 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 the relevant period.
SUBSCRIBERS AND SYSTEM USAGE
On a pro forma basis, after giving effect to the Acquisition, the Company's
subscribers have increased from 17,148 at January 1, 1992 to 286,131 at June
30, 1997. Reductions in the cost of cellular telephone services and equipment
at the retail level have led to an increase in cellular telephone usage by
general consumers for non-business purposes. As a result, the Company believes
that there is an opportunity for significant growth in each of its existing
service areas. The Company will continue to broaden its subscriber base for
basic cellular telephone services as well as to increase its offering of
customized services. The sale of custom calling features typically results in
increased usage of cellular telephones by subscribers, thereby further
enhancing revenues. In 1996, cellular telephone service revenues represented
94.8% of PCW's total revenues, with equipment sales and installation
representing the balance.
MARKETING
The Company's marketing strategy is designed to generate continued net
subscriber growth by focusing on subscribers who are likely to generate lower
than average deactivations and delinquent accounts, while simultaneously
maintaining a low cost of adding net subscribers. Management has implemented
its marketing strategy by training and compensating its sales force in a
manner designed to stress the importance of high penetration levels and
minimum costs per net subscriber addition. PCW's sales staff has a two-tier
structure. A retail sales force handles walk-in traffic, and a targeted sales
staff solicits certain industries and government subscribers. PCW's management
believes that its internal sales force is more likely than independent agents
successfully to select and screen new subscribers and select pricing plans
that realistically match subscriber
50
<PAGE>
means and needs. In addition, PCW motivates its direct sales force to sell
appropriate rate plans to subscribers, thereby reducing churn, by linking
payment of commissions to subscriber retention. PCW believes its use of an
internal sales force keeps marketing costs low, both because commissions are
lower and because subscriber retention is higher than if it used independent
agents. After giving effect to the Acquisition, for the six months ended June
30, 1997, the Company's cost to add a net subscriber was $477. The Company
believes its cost to add a net subscriber will continue to be among the lowest
in the cellular telephone industry, principally because of its in-house direct
sales and marketing staff.
The Company also maintains its low churn rate through an after-sale
telemarketing program implemented through its sales force and a telemarketing
service specializing in cellular customer services. This program not only
enhances customer loyalty, which reduces churn, but also increases add-on
sales and customer referrals. The telemarketing program allows the sales staff
to check customer satisfaction as well as to offer additional calling
features, such as voicemail, call waiting and call forwarding.
The Company's sales force works principally out of retail stores in which
PCW offers its cellular products and services. As of June 30, 1997, PCW
maintained 33 retail stores and 4 offices. Retail stores, which range in size
up to 11,000 square feet are fully equipped to handle customer service and the
sale of cellular services, telephones and accessories. Eight of the newer and
larger stores are promoted by PCW as "Superstores," seven of which are located
in PCW's Georgia/Alabama service areas, and one in the Panama City, Florida
service area. Each Superstore has an authorized warranty repair center and
provides cellular telephone installation and maintenance services. Most of
PCW's larger markets currently have at least one Superstore. In addition, to
enhance convenience for its customers, PCW has begun to open smaller stores in
locations such as shopping malls. In 1997, Palmer plans to open three more
stores in its Georgia/Alabama service areas. The Company's stores provide
subscriber-friendly retail environments--extended hours, a large selection of
phones and accessories, an expert sales staff, and convenient locations--which
make the sales process quick and easy for the subscriber.
The Company markets all of its products and services under the name CELLULAR
ONE. The national advertising campaign conducted by Cellular One Group
enhances PCW's advertising exposure at a fraction of what could be achieved by
PCW alone. The Company also obtains substantial marketing benefits from the
name recognition associated with this widely used service mark, both with
existing subscribers traveling outside PCW's service areas and with potential
new subscribers moving into PCW's service areas. In addition, travelers who
subscribe to CELLULAR ONE service in other markets may be more likely to use
PCW's service when they travel in PCW's service areas. Cellular telephones of
non-wireline subscribers are either programmed to select the non-wireline
carrier (such as PCW) when roaming, unless the non-wireline carrier in the
roaming area is not yet operational, or the subscriber dials a special code or
has a cellular telephone equipped with an "A/B" (wireline/non-wireline) switch
and selects the wireline carrier.
Through its membership in NACN and other special networking arrangements,
PCW provides extended regional and national service to its subscribers,
thereby allowing them to make and receive calls while in other cellular
service areas without dialing special access codes. This service distinguishes
PCW's call delivery features from those of many of its competitors.
PRODUCTS AND SERVICES
In addition to providing high-quality cellular telephone service in each of
its markets, PCW also offers various custom-calling features such as
voicemail, call forwarding, call waiting, three-way conference calling and no
answer and busy transfer. Several rate plans are presented to prospective
subscribers so that they may choose the plan that will best fit their expected
calling needs. Generally, these rate plans include a high user plan, a medium
user plan, a basic plan and an economy plan. Most rate plans combine a fixed
monthly access fee, per minute usage charges and additional charges for
custom-calling features in a package that offers value to
51
<PAGE>
the subscriber while enhancing airtime use and revenues for PCW. In general,
rate plans which include a higher monthly access fee typically include a lower
usage rate per minute. An ongoing review of equipment and service pricing is
maintained to ensure PCW's competitiveness. As appropriate, revisions to
pricing of service plans and equipment are made to meet the demands of the
local marketplace.
The following table sets forth a breakdown of PCW's revenues from the sale
of its services and equipment for the periods indicated.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Service revenue:
Access and usage (1)... $11,821 $20,324 $37,063 $61,607 $105,415 $50,424 $59,485
Roaming (2)............ 2,231 3,075 5,844 11,157 13,741 6,458 9,758
Long distance (3)...... 992 1,309 2,218 3,634 6,781 3,142 4,113
Other (4).............. 680 1,230 2,745 2,585 2,600 1,395 1,394
------- ------- ------- ------- -------- ------- -------
Total service
revenue............. $15,724 $25,938 $47,870 $78,983 $128,537 $61,419 $74,750
Equipment sales and
installation (5)....... 3,558 5,238 6,381 6,830 7,062 3,455 4,200
------- ------- ------- ------- -------- ------- -------
Total................ $19,282 $31,176 $54,251 $85,813 $135,599 $64,874 $78,950
======= ======= ======= ======= ======== ======= =======
</TABLE>
- ---------------------
(1) Access and usage revenues include monthly access fees for providing
service and usage fees based on per minute usage rates.
(2) Roaming revenues are fees charged for providing services to subscribers of
other systems when such subscribers or "roamers" place or receive a
telephone call within one of PCW's service areas.
(3) Long distance revenue is derived from long distance telephone calls placed
by PCW's subscribers.
(4) Other revenue includes, among other things, connect fees charged to
subscribers for initial activation on the cellular telephone system and fees
for feature services such as voicemail, call forwarding and call waiting.
(5) Equipment sales and installation revenue includes revenue derived from the
sale of cellular telephones and fees for the installation of such
telephones.
Reciprocal agreements between each of PCW's cellular telephone systems and
the cellular telephone systems of other operators allow their respective
subscribers to place calls in most cellular service areas throughout the
country. Roamers are charged usage fees which are generally higher than a
given cellular telephone system's regular usage fees, thereby resulting in a
higher profit margin on roaming revenue. Roaming revenue is a substantial
source of incremental revenue for PCW. For 1996, roaming revenues accounted
for 10.7% of the Company's service revenues and 10.1% of the Company's total
revenue. This level of roaming revenue is due in part to the fact that the
Company's market in Panama City, Florida is a regional shopping and vacation
destination and a number of the Company's cellular telephone systems in the
Georgia and Alabama market are located along major interstate travel
corridors.
In order to develop the market for cellular telephone service, PCW provides
retail distribution of cellular telephones and maintains inventories of
cellular telephones. PCW negotiates volume discounts for the purchase of
cellular telephones and, in many cases, passes such discounts on to its
customers. The Company believes that earning an operating profit on the sale
of cellular telephones is of secondary importance to offering cellular
telephones at competitive prices to potential subscribers. To respond to
competition and to enhance subscriber growth, Palmer has historically sold
cellular telephones below cost.
The Company is currently developing several new services which it believes
will provide additional revenue sources. Packet-switching technology will
allow data to be transmitted much more quickly and efficiently than the
current circuit-switching technology. Packet-switching uses the intervals
between voice traffic on cellular channels to send packets of data instead of
tying up dedicated cellular channels. The packets of information, which may be
transmitted using several different channels, are subsequently reassembled and
directed to the correct party at the receiving end. It is expected that the
development of this technology will make it possible for
52
<PAGE>
cellular carriers to offer a broad range of cost-effective wireless data
services, including facsimile and electronic mail transmissions, point-of-sale
credit authorizations, package tracking, remote meter reading, alarm
monitoring and communications between laptop computer units and local area
computer networks or other computer databases. During 1996 Palmer began to
implement the use of microcells. Microcells are low powered transmitters,
typically constructed on a pole or the roof of a building, which provide
reduced radius service within a specific area, such as large office buildings,
underground facilities or areas shielded by topographical obstructions.
Microcell service could be used, for instance, to provide wireless service
within an office environment that was also integrated with wireless service to
the home.
CUSTOMER SERVICE
The Company is committed to attracting new subscribers and retaining
existing subscribers by providing consistently high-quality customer service.
In each of its cellular service areas, PCW maintains a local staff, including
a store manager, customer service representatives, technical and engineering
staff, sales representatives and installation and repair facilities. Each
cellular service area handles its own customer-related functions such as
customer activations, account adjustments and rate plan changes. Local offices
and installation and repair facilities enable PCW to better service customers,
schedule installations and repairs and monitor the technical quality of the
cellular service areas.
In addition, subscribers are able to report cellular telephone service or
account problems to PCW 24 hours a day. Through the use of sophisticated
monitoring equipment, technicians at the Company's headquarters are able to
monitor the technical performance of its service areas.
To ensure high-quality customer service, the Cellular One Group authorizes a
third-party marketing research firm to perform customer satisfaction surveys
of each of its licensees. Licensees must achieve a minimum customer
satisfaction level in order to be permitted to continue using the CELLULAR ONE
service mark. In 1996, PCW was awarded the #1 MSA and #2 RSA rankings in
CELLULAR ONE's National Customer Satisfaction Survey. PCW has held number one
rankings in four out of the last five years. PCW believes it has achieved this
first place ranking through effective implementation of its direct sales and
customer service support strategy.
The Company has implemented a new software package to combat cellular
telephone service fraud. This new software system can detect counterfeit
cellular telephones while they are being operated and enables PCW to terminate
service to the fraudulent user of the counterfeit cellular telephone. The
Company also helps protect itself from fraud with pre-call customer validation
and subscriber profiles specifically designed to combat the fraudulent use of
subscriber accounts.
NETWORKS
The Company strives to provide its subscribers with virtually seamless
coverage throughout its cellular service market areas, thereby permitting
subscribers to travel freely within this region and have their calls and
custom calling features, such as voicemail, call waiting and call forwarding,
follow them automatically without having to notify callers of their location
or to rely on special access codes. The Company has been able to offer
virtually seamless coverage by implementing a switch interconnection plan to
mobile telephone switching offices ("MTSO") located in adjoining markets.
PCW's equipment is built by NORTEL, formerly Northern Telecom, Inc. ("NTI"),
and interconnection between MTSOs has been achieved using NTI's internal
software and hardware.
Through its participation in NACN since 1992 and other special networking
arrangements, PCW has pursued its goal of offering seamless regional and
national cellular service to its subscribers. NACN is the largest wireless
telephone network system in the world--linking non-wireline cellular operators
throughout the United States and Canada. Membership in NACN has aided PCW in
integrating its cellular telephone systems within its region and has permitted
PCW to offer cellular telephone service to its subscribers throughout a large
portion of
53
<PAGE>
the United States, Canada, Mexico and Puerto Rico. NACN has provided PCW with
a number of distinct advantages: (i) lower costs for roaming verification,
(ii) increased roaming revenue, (iii) more efficient roaming service and (iv)
integration of Palmer's markets with over 4,600 cities in more than 40 states
in the United States, Canada, Mexico and Puerto Rico.
SYSTEM DEVELOPMENT AND EXPANSION
The Company develops its service areas by adding channels to existing cell
sites and by building new cell sites. Such development is done for the purpose
of increasing capacity and improving coverage in direct response to projected
subscriber demand. Projected subscriber demand is calculated for each cellular
service area on a cell by cell basis. These projections involve a traffic
analysis of usage by existing subscribers and an estimation of the number of
additional subscribers in each such area. In calculating projected subscriber
demand, PCW builds into its design assumptions a maximum call "blockage" rate
of 2.0% (percentage of calls that are not connected on first attempt at peak
usage time during the day).
The following table sets forth, by market, at the dates indicated, the
number of PCW's operational cell sites.
<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
------------------------------------ -----------
1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
Georgia/Alabama............. 28(1) 39(1) 70(2) 121(3) 181(4) 199(5)
Panama City, FL............. 4 7 7 9 11 11
--- --- --- --- --- ---
Total..................... 32(1) 46(1) 77(2) 130(3) 192(4) 210(5)
=== === === === === ===
</TABLE>
- ---------------------
(1) Includes two cell sites in the Alabama-7 RSA where Palmer had IOA from
June 1991 through June 1994.
(2) Includes one cell site in the Alabama-5 RSA where Palmer has IOA for two
counties of such RSA and 17 existing cell sites that were purchased in the
Georgia Acquisition.
(3) Includes two existing cell sites in the Alabama-5 RSA where Palmer has IOA
for two counties of such RSA and 28 existing cell sites that were purchased
in the GTE Acquisition.
(4) Includes three existing cell sites in the Alabama-5 RSA where Palmer has
IOA for two counties of such RSA and 17 existing cell sites that were
purchased in the Horizon and USCOC acquisitions. See "--Acquisitions."
(5) Includes two existing cell sites in the Alabama-5 RSA where Palmer has
IOA.
The Company estimates that in 1996 the capacity of its existing cellular
telephone systems increased 42.0%. During 1996, PCW spent $38.5 million and,
based on projected growth in subscriber demand, expects to spend approximately
$35 million in 1997 in order to build out its cellular service areas, install
an additional microwave network and implement certain digital radio
technology. The Company has constructed 34 cell sites to date in 1997 and
plans to construct 7 additional cell sites with respect to its existing
cellular systems during 1997 to meet projected subscriber demand and improve
the quality of service. Cell site expansion is expected to enable the Company
to continue to add subscribers, enhance use of its cellular telephone systems
by existing subscribers, increase services used by subscribers of other
cellular telephone systems due to the larger geographic area covered by the
cellular telephone network and further enhance the overall efficiency of the
network. The Company believes that the increased cellular telephone coverage
will have a positive effect on market penetration and subscriber usage.
Microwave networks enable PCW to connect switching equipment and cell sites
without making use of local landline telephone carriers, thereby reducing or
eliminating fees paid to landline carriers. During 1996, PCW spent $1.0
million to build additional microwave connections. In addition, in 1996 PCW
spent $2.6 million to build a fiber optic network between Dothan, Alabama and
Panama City, Florida. The installation of this network resulted in savings to
PCW from a reduction in fees paid to telephone companies for landline charges,
as well as giving PCW the ability to lease out a significant portion of
capacity.
54
<PAGE>
DIGITAL CELLULAR TECHNOLOGY
Over the next decade, it is expected that cellular telephones will gradually
convert from analog to digital technology. This conversion is due in part to
capacity constraints in many of the largest cellular markets, such as Los
Angeles, New York and Chicago. As carriers reach limited capacity levels,
certain calls may be unable to be completed, especially during peak hours.
Digital technology increases system capacity and offers other advantages over
analog technology, including improved overall average signal quality, improved
call security, potentially lower incremental costs for additional subscribers
and the ability to provide data transmission services. The conversion from
analog to digital technology is expected to be an industry-wide process that
will take a number of years. The exact timing and overall costs of such
conversion are not yet known.
The Company began offering TDMA (Time Division Multiple Access) standard
digital service during 1997. This digital network allows PCW to offer advanced
cellular features and services such as caller-ID, short message paging and
extended battery life. Where cell sites are not yet at their maximum capacity
of radio channels, PCW is adding digital channels to the network incrementally
based on the relative demand for digital and analog channels. Where cell sites
are at full capacity, analog channels are being removed and redeployed to
expand capacity elsewhere within the network and replaced in such cell sites
by digital channels. The implementation of digital cellular technology over a
period of several years will involve modest incremental expenditures for
switch software and possible significant cost reductions as a result of
reduced purchases of radio channels and a reduced requirement to split
existing cells. However, as indicated above, the extent of any implementation
of digital radio channels and the amount of any cost savings ultimately to be
derived therefrom will depend primarily on subscriber demand. In the ordinary
course of business, equipment upgrades at the cell sites have involved
purchasing dual mode radios capable of using both analog and digital
technology.
The benefits of digital radio channels can only be achieved if subscribers
purchase cellular telephones that are capable of transmitting and receiving
digital signals. Currently, such telephones are more costly than analog
telephones. The widespread use of digital cellular telephones is likely to
occur only over a substantial period of time and there can be no assurance
that this technology will replace analog cellular telephones. In addition,
since most of PCW's existing subscribers currently have cellular telephones
that exclusively utilize analog technology, it will be necessary to continue
to support, and if necessary increase, the number of analog radio channels
within the network for many years.
ACQUISITIONS
The Company will continue to evaluate expansion through acquisitions of both
(i) contiguous cellular properties and other strategically located RSAs and
small to mid-sized MSAs and (ii) minority interests in its existing cellular
properties. In evaluating acquisition targets, the Company considers, among
other things, demographic factors, including population size and density,
geographic proximity to existing service areas, traffic patterns, cell site
coverage and required capital expenditures.
PCI entered the cellular telephone business in 1987, when it constructed a
cellular telephone system for the Fort Myers, Florida MSA. PCI acquired
control of this system in March 1988 and rapidly expanded its cellular
telephone holdings, acquiring control of the non-wireline cellular licenses
for the Columbus and Albany, Georgia and Dothan and Montgomery, Alabama MSAs
in 1988.
In 1991, Palmer acquired control of the non-wireline cellular license for
the Panama City, Florida MSA. In 1992 and 1993, Palmer acquired two non-
wireline cellular licenses for RSAs contiguous to Palmer's MSAs in Georgia and
Alabama: the Georgia-9 RSA in June 1992 and the Alabama-8 RSA in April 1993.
The Georgia-9 RSA acquisition added the geographic territory between the
Columbus, Macon and Albany, Georgia MSAs to Palmer's service area coverage.
The Alabama-8 RSA expanded Palmer's service areas around three MSAs served by
Palmer, covering a substantial portion of the geographic territory between the
Montgomery, Alabama,
55
<PAGE>
Columbus, Georgia and Dothan, Alabama MSAs and the Georgia-9 RSA. In 1993,
Palmer also increased its majority position in its MSAs in Albany, Georgia and
in Dothan and Montgomery, Alabama, through the purchase of certain minority
interests for an aggregate purchase price of $2.9 million.
During 1994, Palmer continued to acquire minority interests in six of its
MSAs for an aggregate purchase price of $3.1 million. Also, on October 31,
1994, Palmer acquired the cellular telephone systems of Southeast Georgia
Cellular Limited Partnership ("SGC") and Georgia 12 Cellular Limited
Partnership ("Georgia 12" and together with SGC, the "Georgia Partnerships")
for an aggregate purchase price of $91.7 million (the "Georgia Acquisition").
The assets acquired by Palmer from SGC included the non-wireline cellular
telephone systems for the Georgia-7 RSA, Georgia-8 RSA and Georgia-10 RSA. The
assets acquired by Palmer from Georgia 12 included the non-wireline cellular
telephone system located in the Georgia-12 RSA. The cellular telephone systems
in the acquired RSAs serve a geographic territory in southeast Georgia that is
adjacent to Palmer's Georgia-9 RSA and Macon, Georgia MSA.
In December 1995, Palmer acquired interests in cellular telephone systems by
purchasing Georgia Metronet, Inc. ("GMI") and Augusta Metronet, Inc. ("AMI"
and together with GMI, the "GTE Companies") for an aggregate purchase price of
$158.4 million (the "GTE Acquisition"). The assets acquired by Palmer in the
GTE Acquisition included the non-wireline cellular telephone system located in
the Savannah MSA and Augusta MSA, respectively. The cellular telephone systems
in the newly-acquired MSAs serve a geographic territory in eastern Georgia and
a portion of South Carolina that is adjacent to Palmer's existing markets in
the Georgia-8 RSA and Georgia-12 RSA. In addition, Palmer also acquired the
IOA to provide cellular service to the southern portions of the South
Carolina-7 RSA and South Carolina-8 RSA, respectively, which serve a
geographic territory that is adjacent to Palmer's existing markets in the
Georgia-8 RSA as well as the Savannah, and Augusta, Georgia MSAs. In addition,
during 1995, Palmer acquired additional minority interests in six of its MSAs
for an aggregate purchase price of $2.0 million.
On June 20, 1996, Palmer acquired the cellular telephone system of USCOC of
Georgia RSA #1, Inc. ("USCOC") for an aggregate purchase price of $31.6
million. The assets acquired by Palmer from USCOC included the cellular
telephone system in the Georgia-1 RSA. The cellular telephone system in the
acquired RSA serves a geographic territory of northwest Georgia between
Chattanooga and Atlanta.
On July 5, 1996, two of Palmer's majority-owned subsidiaries acquired the
cellular telephone system of Horizon Cellular Telephone Company of Spalding,
L.P. ("Horizon") for an aggregate purchase price of $36.0 million. The assets
acquired by Palmer from Horizon include the cellular telephone system in the
Georgia-6 RSA. The cellular telephone system in the acquired RSA serves a
geographic territory of west central Georgia adjacent to Palmer's Macon and
Columbus, Georgia MSAs.
On February 1, 1997, a majority-owned subsidiary of Palmer acquired the
cellular telephone system serving the Georgia-13 RSA from Mobile
Communications Systems L.P. for a total purchase price of $31.3 million. The
cellular telephone system in the acquired RSA serves a geographic territory of
southwest Georgia adjacent to Palmer's Albany, Georgia and Dothan, Alabama
MSAs.
On October 21, 1997, PCC and the Company entered into the Georgia Sale
Agreement which provided for the sale by the Company, for $25 million, of
substantially all of the assets used or useful in the operation of the non-
wireline cellular telephone system serving the Georgia-1-Whitfield Rural
Service Area (Market No. 0371-A) ("System"), including the FCC licenses to
operate the System. The parties expect to consummate the sale of the assets of
the System by December 31, 1997.
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<PAGE>
COMPETITION
The cellular telephone service industry in the United States is highly
competitive. Cellular telephone systems compete principally on the basis of
services and enhancements offered, the technical quality of the cellular
system, customer service, coverage capacity and price of service and equipment.
Currently, the Company's primary competition in each of its service areas is
the other cellular licensee--the wireline carrier. The table below lists the
wireline competitor in each of the Company's existing service areas:
<TABLE>
<CAPTION>
MARKET WIRELINE COMPETITOR
<S> <C>
Albany, GA................ ALLTEL
Augusta, GA............... ALLTEL
Columbus, GA.............. Public Service Cellular
Macon, GA................. BellSouth
Savannah, GA.............. ALLTEL
Georgia-6 RSA............. BellSouth and Intercel(1)
Georgia-7 RSA............. Cellular Plus and BellSouth(1)
Georgia-8 RSA............. ALLTEL
Georgia-9 RSA............. ALLTEL and Public Service Cellular(1)
Georgia-10 RSA............ Cellular Plus and ALLTEL(1)
Georgia-12 RSA............ ALLTEL
Georgia-13 RSA............ ALLTEL
Dothan, AL................ BellSouth
Montgomery, AL............ ALLTEL
Alabama-8 RSA............. ALLTEL
Panama City, FL........... 360(degrees) Communications Company (formerly
Sprint Cellular)
</TABLE>
- ---------------------
(1) The wireline service area has been subdivided into two service areas by the
purchasers of the authorization for the RSA.
The Company also faces limited competition from and may in the future face
increased competition from broadband PCS. Broadband PCS involves a network of
small, low-powered transceivers placed throughout a neighborhood, business
complex, community or metropolitan area to provide customers with mobile and
portable voice and data communications. PCS subscribers communicate using
digital radio handsets.
The FCC allocated 120 MHZ of spectrum for licensed broadband PCS. The
allocations for licensed PCS services are split into six blocks of frequencies-
- -blocks "A" and "B" being two 30 MHZ allocations for each of the 51 Major
Trading Areas ("MTAs") throughout the United States; block "C" being one 30 MHZ
allocation in each of 493 Basic Trading Areas ("BTAs") in the United States;
and blocks "D," "E" and "F" being three 10 MHZ allocations in each of the BTAs.
The FCC has concluded the auction of all broadband PCS frequency blocks.
The Company also faces competition from other existing communications
technologies such as conventional mobile telephone service, SMR and ESMR
systems and paging services.
In addition, the FCC has licensed operators to provide mobile satellite
service in which transmissions from mobile units to satellites would augment or
replace transmissions to land-based stations. Although such a system is
designed primarily to serve remote areas and is subject to transmission delays
inherent in satellite communications, a mobile satellite system could augment
or replace communications with segments of land-based cellular systems. Based
on current technologies, however, satellite transmission services are not
expected to be competitively priced with cellular telephone services.
In order to grow and compete effectively in the wireless market, PCW plans to
follow a strategy of increasing its bundled minute offerings. By increasing the
number of minutes a customer can use for one flat rate, subscribers perceive
greater value in their cellular service and become less usage sensitive, i.e.,
they can
57
<PAGE>
increase their cellular phone usage without seeing large corresponding
increases in their cellular bill. These factors translate into more satisfied
customers, greater customer usage and lower churn among existing subscribers.
The perceived greater value also increases the number of potential customers
in the marketplace. PCW believes that this strategy will enable it to increase
its share of the wireless market.
SERVICE MARKS
CELLULAR ONE is a registered service mark with the U.S. Patent and Trademark
Office. The service mark is owned by Cellular One Group, a Delaware general
partnership of Cellular One Marketing, Inc., a subsidiary of Southwestern Bell
Mobile Systems, Inc., together with Cellular One Development, Inc., a
subsidiary of AT&T and Vanguard Cellular Systems, Inc. The Company uses the
CELLULAR ONE service mark to identify and promote its cellular telephone
service pursuant to licensing agreements with Cellular One Group (the
"Licensor"). In 1996, PCW paid $219,000 in licensing and advertising fees
under these agreements. Licensing and advertising fees are determined based
upon the population of the licensed areas. The licensing agreements require
PCW to provide cellular telephone service to its customers, and to maintain a
certain minimum overall customer satisfaction rating in surveys commissioned
by the Licensor. PCW's customer satisfaction ratings have consistently far
exceeded this required minimum. The licensing agreements which PCW has entered
into are for five-year terms.
REGULATION
As a provider of cellular telephone services, PCW is subject to extensive
regulation by the federal government.
The licensing, construction, operation, acquisition and transfer of cellular
telephone systems in the United States are regulated by the FCC pursuant to
the Communications Act of 1934, as amended (the "Communications Act"). The FCC
has promulgated rules governing the construction and operation of cellular
telephone systems and licensing and technical standards for the provision of
cellular telephone service ("FCC Rules"). For cellular licensing purposes, the
United States is divided into MSAs and RSAs. In each market, the frequencies
allocated for cellular telephone use are divided into two equal blocks
designated as Block A and Block B. Block A licenses were initially reserved
for non-wireline companies, such as Palmer, while Block B licenses were
initially reserved for entities affiliated with a local wireline telephone
company. Under current FCC Rules, a Block A or Block B license may be
transferred with FCC approval without restriction as to wireline affiliation,
but generally, no entity may own any substantial interest in both systems in
any one MSA or RSA. The FCC may prohibit or impose conditions on sales or
transfers of licenses.
Initial operating licenses are generally granted for terms of up to 10
years, renewable upon application to the FCC. Licenses may be revoked and
license renewal applications denied for cause after appropriate notice and
hearing. Palmer's cellular licenses expire in the following years with respect
to the following number of service areas: 1997 (four); 1998 (three); 2000
(two); 2001 (four); 2002 (three) and 2006 (one). On September 22, 1997, the
Company filed License Renewal Applications with the FCC for the Savannah,
Georgia MSA; the Albany, Georgia MSA; the Montgomery, Alabama MSA; and the
Panama City, Florida MSA. Although these four licenses have since expired, the
Company is permitted to continue to operate in these areas during the pendency
of its renewal applications. The FCC has issued a decision confirming that
current licensees will be granted a renewal expectancy if they have complied
with their obligations under the Communications Act during their license terms
and provided substantial public service. A potential challenger will bear a
heavy burden to demonstrate that a license should not be renewed if the
licensee's performance merits a renewal expectancy. The Company believes that
the licenses controlled by the Company will be renewed in a timely manner.
However, in the event that a license is not renewed, the Company would no
longer have the right to operate in the relevant service area.
Under FCC rules, each cellular licensee was given the exclusive right to
construct one of two cellular telephone systems within the licensee's MSA or
RSA during the initial five-year period of its authorization. At
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<PAGE>
the end of such five-year period, other persons are permitted to apply to
serve areas within the licensed market that are not served by the licensee.
Current FCC Rules provide that competing "unserved area" applications are to
be resolved through the auction process. Palmer and PCW have no material
unserved areas in any of their cellular telephone systems that have been
licensed for more than five years.
The Company also regularly applies for FCC authority to use additional
frequencies, to modify the technical parameters of existing licenses, to
expand its service territory and to provide new services. The Communications
Act requires prior FCC approval for acquisitions by PCW of other cellular
telephone systems licensed by the FCC and transfers by Palmer of a controlling
interest in any of its licenses or construction permits, or any rights
thereunder. Although there can be no assurance that any future requests for
approval or applications filed by the Company will be approved or acted upon
in a timely manner by the FCC, based upon its experience to date, the Company
has no reason to believe such requests or applications would not be approved
or granted in due course.
The Communications Act prohibits the holding of a common carrier license
(such as PCW's cellular licenses) by a corporation of which more than 20% of
the capital stock is owned directly or beneficially by aliens. Where a
corporation such as PCW controls another entity that holds an FCC license,
such corporation may not have more than 25% of its capital stock owned
directly or beneficially by aliens, in each case, if the FCC finds that the
public interest would be served by such prohibitions. Failure to comply with
these requirements may result in the FCC issuing an order to Palmer requiring
divestiture of alien ownership to bring PCW into compliance with the
Communications Act. In addition, fines or a denial of renewal, or revocation
of the license are possible.
From time to time, legislation which could potentially affect the Company,
either beneficially or adversely, may be proposed by federal and state
legislators. On February 8, 1996, the Telecommunications Act of 1996 (the
"Telecom Act") was signed into law, revising the Communications Act to
eliminate unnecessary regulation and to increase competition among providers
of communications services. The Company cannot predict the future impact of
this or other legislation on its operations.
The major provisions of the Telecom Act potentially affecting Palmer are as
follows:
Interconnection. The Telecom Act requires state public utilities commissions
and/or the FCC to implement policies that mandate cost-based reciprocal
compensation between cellular carriers and local exchange carriers ("LEC") for
interconnection services.
On August 8, 1996, the FCC released its First Report and Order in the matter
of Implementation of the Local Competition Provisions in the
Telecommunications Act of 1996 ("FCC Order") establishing the rules for the
costing and provisioning of interconnection services and the offering of
unbundled network elements by incumbent local exchange carriers. The FCC Order
established procedures for Palmer's renegotiation of interconnection
agreements with the incumbent local exchange carrier in each of Palmer's
markets. LECs and state regulators filed appeals of the FCC Order, which have
been consolidated in the US Court of Appeals for the Eighth Circuit. The Court
has temporarily stayed the effective date of the pricing rules until more
permanent relief can be fashioned.
The Company is currently negotiating with the incumbent local exchange
carriers and has already renegotiated certain interconnection agreements with
LECs in most of the Company's markets. These negotiations have resulted in a
substantial decrease in interconnection expenses incurred by PCW.
Facilities siting for personal wireless services. The siting and
construction of cellular transmitter towers, antennas and equipment shelters
are often subject to state or local zoning, land use and other regulation.
Such regulation may require zoning, environmental and building permit
approvals or other state or local certification. The Telecom Act provides that
state and local authority over the placement, construction and modification of
personal wireless services (including cellular and other commercial mobile
radio services and unlicensed wireless services) shall not prohibit or have
the effect of prohibiting personal wireless services or unreasonably
59
<PAGE>
discriminate among providers of functionally equivalent services. In addition,
local authorities must act on requests made for siting in a reasonable period
of time and any decision to deny must be in writing and supported by
substantial evidence. Appeals of zoning decisions that fail to comply with the
provisions of the Telecom Act can be made on an expedited basis to a court of
competent jurisdiction, which can be either federal district or state court.
PCW anticipates that, as a result the Telecom Act, it will more readily
receive local zoning approval for proposed cellular base stations. In
addition, the Telecom Act codified the Presidential memorandum on the use of
federal lands for siting wireless facilities by requiring the President or his
designee to establish procedures whereby federal agencies will make available
their properties, rights of ways and other easements at a fair and reasonable
price for service dependent upon federal spectrum.
Environmental effect of radio frequency emissions. The Telecom Act provides
that state and local authorities cannot regulate personal wireless facilities
based on the environmental effects of radio frequency emissions if those
facilities comply with the federal standard.
Universal service. The Telecom Act also provides that all communications
carriers providing interstate communications services, including cellular
carriers, must contribute to the federal universal service support mechanisms
that the FCC will establish. The FCC implemented this provision of the Telecom
Act in a "Report and Order" released May 8, 1997 in the matter of "Federal-
State Joint Board on Universal Service," which also provides that any cellular
carrier is potentially eligible to receive universal service support.
The Communications Act preempts state and local regulation of the entry of,
or the rates charged by, any provider of cellular service.
EMPLOYEES
At June 30, 1997 Palmer had 565 full-time employees (excluding Fort Myers
and Georgia), none of whom is represented by a labor organization. Management
considers its relations with employees to be good.
PROPERTIES
For each market served by the Company's operations, the Company maintains at
least one sales or administrative office and operates a number of cell
transmitter and antenna sites. As of June 30, 1997, the Company had
approximately 32 leases for retail stores used in conjunction with its
operations and 3 leases for administrative offices. PCW also had approximately
130 leases to accommodate cell transmitters and antennas as of July 8, 1997.
LEGAL PROCEEDINGS
Neither the Company nor Palmer is currently involved in any pending legal
proceedings likely to have a material adverse impact on the Company.
60
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE OFFICE
---- --- ------
<S> <C> <C>
William J. Ryan.... 65 President and Chief Executive Officer
M. Wayne Wisehart.. 50 Vice President, Treasurer, Chief Financial Officer
K. Patrick Meehan.. 39 Vice President--General Counsel and Secretary
Robert Price....... 64 Director
</TABLE>
EXECUTIVE OFFICERS
The following is a biographical summary of the experience of the executive
officers of Palmer continue as executive officers of the Company. The Company
has entered into employment contracts with William J. Ryan and M. Wayne
Wisehart to remain as officers of the Company and has entered into employment
contracts with other key employees prior to the consummation of the
Acquisition.
WILLIAM J. RYAN, President and Chief Executive Officer. Mr. Ryan served as
Chief Executive Officer and President of PCI from 1984 until July 1995. Mr.
Ryan was Chief Operating Officer and President of PCI from 1982 to 1984. Mr.
Ryan has over 40 years of communications and telecommunications experience. He
joined PCI in 1970 following that company's acquisition of certain radio and
cable properties which Mr. Ryan had partially owned and operated since 1955.
In his capacity as Chief Executive Officer, Mr. Ryan has successfully led the
Company through 18 acquisitions of cellular telephone systems. Mr. Ryan is a
director of the Cellular Telecommunications Industry Association, the founding
chairman of Cable Television Advertising Bureau, Inc. and a former president
of the Florida Cable Association, the Florida Broadcasters Association and the
Southern Cable Association.
M. WAYNE WISEHART, Vice President, Treasurer and Chief Financial Officer.
Mr. Wisehart served as Chief Financial Officer of PCI from 1982 until July
1995. He was promoted to Treasurer of PCI in 1983 and to Vice President in
1987. Mr. Wisehart has over 15 years of communications and telecommunications
experience. In his capacity as Chief Financial Officer of PCI, he was
instrumental in the financial management and direction of the Company. Prior
to joining PCI, Mr. Wisehart served as Treasurer of the Des Moines Register &
Tribune Company of Des Moines, Iowa, for approximately five years. He began
his career in 1972 with Peat, Marwick, Mitchell & Co. in St. Louis, Missouri,
where he became a Certified Public Accountant. Mr. Wisehart then served as a
tax specialist for three years with General Dynamics Corporation in St. Louis,
Missouri.
K. PATRICK MEEHAN, Vice President-General Counsel and Secretary. Mr. Meehan
served as Vice President/General Counsel and Assistant Secretary of PCI from
1991 until July 1995. As an attorney with the law firm of Leibowitz & Spencer
in Miami, Florida, from 1985 to May 1991, Mr. Meehan represented clients
before the FCC and handled corporate transactions involving broadcast, paging
and cellular telephone companies. He is a 1985 graduate of the Columbus School
of Law and The Institute for Communications Law Studies at The Catholic
University of America in Washington, D.C. Mr. Meehan is a member of the
Florida Bar, the District of Columbia Bar and the American Bar Association.
DIRECTOR
ROBERT PRICE has been a Director of the Company and Holdings since 1997. Mr.
Price has served concurrently as a Director and the Chief Executive Officer,
President and Treasurer of PCC since 1979. Mr. Price has been a Director of
PriCellular since 1990. Mr. Price was the President and Assistant Treasurer of
PriCellular from 1990 until May 1997 and has served as Chairman of PriCellular
since May 1997. In 1992 PCC filed for protection from creditors pursuant to
Chapter 11 of the United States Bankruptcy Code. The Company's
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<PAGE>
Amended Plan of Reorganization was confirmed on June 11, 1992 and became
effective on December 30, 1992. Mr. Price, an attorney, is a former General
Partner of Lazard Freres & Co. He has served as an Assistant United States
Attorney, practiced law in New York and served as Deputy Mayor of New York
City. In the early sixties, Mr. Price served as President and Director of
Atlantic States Industries, a corporation owning weekly newspapers and four
radio stations. After leaving public office, Mr. Price became Executive Vice
President of The Dreyfus Corporation and an Investment Officer of The Dreyfus
Fund. In 1972 he joined Lazard Freres & Co. Mr. Price has served as a Director
of Holly Sugar Corporation, Atlantic States Industries, The Dreyfus
Corporation, Graphic Scanning Corp. and Lane Bryant, Inc., and is currently a
member of The Council on Foreign Relations. Mr. Price serves as the
Representative of the Majority Leader and President Pro Tem of the New York
Senate on the Board of Directors of the Municipal Assistance Corporation for
the City of New York and as a Member of the Board of Trustees of the City
University of New York. Mr. Price is also a Director and president of TLM
Corporation.
DIRECTOR COMPENSATION
Directors are not paid fees.
EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning the
compensation paid to the executive officers of Palmer for the year ended
December 31, 1996.
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------------ ------------------
NAME AND PRINCIPAL SECURITIES ALL OTHER
POSITION YEAR SALARY($) BONUS($) UNDERLYING OPTIONS COMPENSATION
------------------ ---- --------- -------- ------------------ ------------
<S> <C> <C> <C> <C> <C>
William J. Ryan, Presi-
dent and 1996 $339,731 $ 34,000 $31,422(1)
Chief Executive Officer 1995 $331,651 $119,880 130,000 $55,356
Robert G. Engelhardt,
Executive 1996 $251,538 $ 25,200 $18,726(2)
Vice President and Sec-
retary 1995 $239,019 $ 57,600 120,000 $26,073
M. Wayne Wisehart, Vice
President, 1996 $152,211 $ 15,250 $23,559(3)
Treasurer and Chief Fi-
nancial Officer 1995 $145,256 $ 34,800 75,000 $33,417
Leon J. Hensen, Senior
Vice 1996 $173,173 $ 13,880 $16,798(4)
President-General Man-
ager 1995 $163,862 $ 39,188 75,000 $22,764
K. Patrick Meehan, Vice
President- 1996 $124,423 $ 12,500 $19,386(5)
General Counsel and As-
sistant Secretary 1995 $109,936 $ 26,400 65,000 $15,108
</TABLE>
- --------
(1) Includes the following: PCI 401(k) Profit Sharing Plan and Trust ("401(k)
Plan") contributions of $9,500, auto allowance of $7,415 (including
insurance and license), tax services of $5,228, club dues of $5,535 and
medical reimbursements of $3,744.
(2) Includes the following: 401(k) Plan contributions of $9,500, auto
allowance of $6,744 (including insurance and license), tax services of
$850, club dues of $1,051 and medical reimbursements of $581.
(3) Includes the following: 401(k) Plan contributions of $9,500, auto
allowance of $6,798 (including insurance and license), tax services of $0,
club dues of $7,261 and medical reimbursements of $0.
(4) Includes the following: 401(k) Plan contributions of $9,078, auto
allowance of $6,501 (including insurance and license), tax services of $0,
club dues of $1,219 and medical reimbursements of $0.
(5) Includes the following: 401(k) Plan contributions of $9,500, auto
allowance of $6,975 (including insurance and license), tax services of
$275, club dues of $1,218 and medical reimbursements of $1,418.
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<PAGE>
STOCK OPTIONS
During 1996, no stock options were granted to or exercised by the executive
officers of Palmer. The following table provides information regarding the
value of all unexercised options held at December 31, 1996 by the executive
officers of Palmer.
<TABLE>
<CAPTION>
NUMBER OF
SECURITIES UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996 DECEMBER 31, 1996(1)
------------------------- -------------------------
NAME UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
---- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C>
William J. Ryan............. 86,666 43,334 $ 0 $ 0
Robert G. Engelhardt........ 80,000 40,000 $ 0 $ 0
M. Wayne Wisehart........... 50,000 25,000 $ 0 $ 0
Leon J. Hensen.............. 50,000 25,000 $ 0 $ 0
K. Patrick Meehan........... 43,333 21,667 $ 0 $ 0
</TABLE>
- --------
(1) Based on a per share price of $10.375 on February 18, 1997.
EMPLOYMENT AGREEMENTS
In 1995, the Company entered into employment agreements (the "Palmer
Agreements") with each of Messrs. Ryan and Engelhardt, for an initial term of
three years, and Wisehart, Hensen and Meehan, for an initial term of two
years. Each Palmer Agreement had an automatic one-year renewal on each
anniversary date thereof. Base salaries under the Palmer Agreements for 1996
were $340,000, $252,000, $152,500, $173,500 and $125,000, respectively. Each
Palmer Agreement specified that if the executive officer is terminated by the
Company without cause (as defined therein), or if the executive officer
terminates the agreement for good reason (as defined therein, including if the
employment of the executive officer is terminated within one year of a change
in control of the Company), the Company will pay to the executive officer the
full base salary and benefits which would otherwise have been paid to such
officer during a fixed term (three years for Messrs. Ryan and Engelhardt; two
years for Messrs. Wisehart, Hensen and Meehan) (to be paid at the time such
payments are due). The Compensation Committee of the Board of Directors
approved 1997 base salaries under the Palmer Agreements as follows: $340,000
for Mr. Ryan; $178,500 for Mr. Hensen; $160,000 for Mr. Wisehart; and $140,000
for Mr. Meehan.
Pursuant to the change of control provision described above, approximately
$4.0 million of payments became payable under such contracts at the time of
the Merger. Approximately $1.4 million was paid on the effective date of the
Merger to Mr. Ryan as a severance payment pursuant to his existing employment
contract and approximately $2.6 million of severance payments are payable over
several years pursuant to existing employment contracts between Palmer and its
other executive officers. The Company has entered into employment contracts
with Mr. Ryan and Mr. Wisehart to continue as officers of the Company and has
entered into employment contracts with other key employees prior to the
consummation of the Acquisition (the "Price Agreements").
In 1997, the Company entered into an employment agreement with Mr. Ryan (the
"Ryan Agreement") for a term ending on December 31, 1999. The Ryan Agreement
contains an option to engage Mr. Ryan as a consultant for a period of one year
after December 31, 1999 at an annual salary equal to 50% of his base salary.
The base salary under the Ryan Agreement for 1997 is $500,000, plus an annual
bonus based upon the Company's financial performance. The Ryan Agreement
specifies that if Mr. Ryan is terminated by the Company other than for Cause
(as defined therein), disability or death or if Mr. Ryan terminates the
agreement for Good Reason (as defined therein), the Company will pay to Mr.
Ryan the full base salary and benefits which would otherwise have been paid to
Mr. Ryan, as well as a pro-rated bonus, through December 31, 1999 (to be paid
at the time such payments are due).
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<PAGE>
In 1997, the Company entered into an employment agreement with Mr. Wisehart
(the "Wisehart Agreement") for an initial term ending on December 31, 1999.
The Wisehart Agreement has an automatic one-year renewal on each anniversary
date thereof. The base salary under the Wisehart Agreement for 1997 is
$300,000, plus an annual bonus based upon the Company's financial performance.
The Wisehart Agreement specifies that if Mr. Wisehart is terminated by the
Company other than for Cause (as defined therein), disability or death or if
Mr. Wisehart terminates the agreement for Good Reason (as defined therein),
the Company will pay to Mr. Wisehart the full base salary and benefits which
would otherwise have been paid to Mr. Wisehart, as well as a pro-rated bonus,
until two years after the date of termination (to be paid at the time such
payments are due).
The Wisehart and Ryan Agreements each contain a confidentiality provision
and provide that the executive officer may not during employment or for a
period of one year following termination of employment induce or attempt to
induce any employee of the Company to render services for any other person,
firm or corporation.
In 1997, the Company entered into an employment agreement with Mr. Meehan
(the "Meehan Agreement") for an initial term ending on December 31, 1998. The
Meehan Agreement has an automatic one-year renewal on each anniversary date
thereof. The base salary under the Meehan Agreement for 1997 is $180,000. The
Meehan Agreement specifies that if Mr. Meehan is terminated by the Company
other than for Cause (as defined therein), disability or death or if Mr.
Meehan terminates the agreement for Good Reason (as defined therein), the
Company will pay to Mr. Meehan the full base salary and benefits which would
otherwise have been paid to Mr. Meehan until one year after the date of
termination (to be paid at the time such payments are due).
The Price Agreements provide that for one year following termination of
employment, the executive officer will not, in any state in which the Company
is engaged or plans to engage in business, (i) compete with the Company on
behalf of the executive officer or any third party, (ii) participate as a
director, agent, representative, stockholder or partner or have any direct or
indirect financial interest in any enterprise which engages in the business in
which the Company is engaged, or (iii) participate as an employee or officer
in any enterprise in which such officer's responsibilities relate to the
cellular business or any other business in which the Company is engaged;
provided, however, that ownership by such officer of less than 5% of the
outstanding stock of any corporation listed on a national securities exchange
conducting any such business will not be deemed a violation of such non-
competition provision.
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<PAGE>
PRINCIPAL STOCKHOLDERS
All of the Company's issued and outstanding capital stock is owned by
Holdings which is an indirect wholly owned subsidiary of PCC. The following
table sets forth certain information with respect to the beneficial ownership
of the common stock of PCC as of August 8, 1997 by (i) each person or group
known to the Company who beneficially owns more than five percent of PCC
common stock and (ii) all directors and executive officers of the Company as a
group:
<TABLE>
<CAPTION>
CLASS OF NUMBER OF PERCENTAGE
STOCK SHARES (1) OF CLASS
NAME OF BENEFICIAL OWNER -------- ---------- ----------
<S> <C> <C> <C>
Robert Price.............. Common Stock 866,758 17.3%
Series A Preferred Stock(2) 728,133 100%
Series B Preferred Stock(3) 364,066 100%
William J. Ryan........... -- -- --
M. Wayne Wisehart......... -- -- --
K. Patrick Meehan......... -- -- --
NatWest Capital Markets
Limited.................. PIK Preferred Stock(4) 1,129,000 100%
All directors and officers
as a
group (5 persons)........ Common Stock 866,758 17.3%
Series A Preferred Stock 728,133 100%
Series B Preferred Stock 364,066 100%
</TABLE>
- ---------------------
(1) Under the applicable rules of the Securities and Exchange Commission, each
person or entity is deemed to be a beneficial owner with the power to vote
and direct the disposition of these shares.
(2) The Series A Preferred Stock votes with the Common Stock on a share for
share basis.
(3) The Series B Preferred Stock votes with the Common Stock and is entitled
to one-half vote per share.
(4) The PIK Preferred Stock does not have voting rights (other than as
required by law).
DESCRIPTION OF NEW CREDIT FACILITY
The New Credit Facility is provided by a syndicate of banks, financial
institutions and other "accredited investors" (as defined in Regulation D
under the Securities Act; each such bank, financial institution and accredited
investor being a "Lender" and, collectively, the "Lenders") led by Donaldson,
Lufkin & Jenrette Securities Corporation, as arranger and DLJ Capital Funding,
as syndication agent. The New Credit Facility includes a $325.0 million term
loan facility and a $200.0 million revolving credit facility, which provides
for loans and under which letters of credit may be issued and a portion of
which will be made available as a swingline facility. The term loan facility
is comprised of tranche A term loans of up to $100.0 million, which have a
maturity of eight years, and tranche B term loans of up to $225.0 million,
which have a maturity of nine years. The revolving credit facility will
terminate eight years after the closing date of the New Credit Facility
(October 6, 1997, the "Closing Date").
The New Credit Facility bears interest, at the Company's option, at the
alternate base rate or the reserve adjusted Euro-Dollar rate plus, in each
case, applicable margins of (i) in the case of tranche A term loans and
revolving loans (x) 2.50% for Euro-Dollar rate loans and (y) 1.50% for base
rate loans and (ii) in the case of tranche B term loans (x) 2.75% for Euro-
Dollar rate loans and (y) 1.75% for base rate loans. After the occurrence and
during the continuation of an event of default under the New Credit Agreement,
interest shall accrue at the rate for loans bearing interest at the rate
determined by reference to the base rate plus an additional 2.00% per annum
and shall be payable on demand.
The Company will pay commitment fees in an amount equal to 0.50% per annum
on the daily average unused portion of the revolving credit facility. Such
fees shall be payable quarterly in arrears and upon the maturity or
termination of the revolving credit facility.
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<PAGE>
Beginning six months after the Closing Date, the applicable margins for the
tranche A term loans and revolving loans will be determined based on the ratio
of consolidated total debt to consolidated EBITDA of the Company and its
subsidiaries (as defined in the New Credit Facility).
The Company will pay a letter of credit fee calculated at a rate per annum
equal to the applicable margin for Euro-Dollar rate loans under the revolving
credit facility, which shall be shared by all Lenders, and an additional 0.25%
per annum, which shall be retained by the Lender issuing the letter of credit,
which percentage shall be multiplied by the amount available from time to time
for drawing under such letter of credit.
The New Credit Facility is subject to the following amortization schedule:
<TABLE>
<CAPTION>
REVOLVING
TRANCHE A TRANCHE B CREDIT
YEAR TERM LOANS TERM LOANS FACILITY
(%) (%) (%)
<S> <C> <C> <C>
1...................................... 0.0 1.0 0.0
2...................................... 0.0 1.0 0.0
3...................................... 10.0 1.0 10.0
4...................................... 12.5 1.0 12.5
5...................................... 15.0 1.0 15.0
6...................................... 17.5 1.0 17.5
7...................................... 20.0 1.0 20.0
8...................................... 25.0 1.0 25.0
9...................................... 92.0
----- ----- -----
100.0 100.0 100.0
</TABLE>
The New Credit Facility is subject to mandatory prepayment: (i) with the net
after-tax cash proceeds of the sale or other disposition of any property or
assets of the Company or any of its subsidiaries in excess of $5 million per
year, subject to certain exceptions, (ii) with 50% of the net cash proceeds
received from the issuance of equity securities of Holdings, or any of its
subsidiaries, (iii) with the net cash proceeds received from certain issuances
of debt securities by Holdings or any of its subsidiaries, (iv) with 50% of
excess cash flow (as defined in the New Credit Facility) for each fiscal year,
payable within 90 days after the end of the applicable fiscal year. All
mandatory prepayment amounts shall be applied first to the prepayment of the
term loan facility and thereafter to the prepayment of the revolving credit
facility.
Holdings and all existing or future subsidiaries of the Company are
guarantors of the New Credit Facility. The Company's obligations under the New
Credit Facility are secured by: (i) all existing and after-acquired personal
property of the Company and the subsidiary guarantors, including a pledge of
all of the stock of all existing or future subsidiaries of the Company, (ii)
first-priority perfected liens on all existing and after-acquired real
property fee and leasehold interests of the Company and the subsidiary
guarantors, subject to customary permitted liens (as defined in the New Credit
Facility), (iii) a pledge by Holdings of the stock of the Company and (iv) a
negative pledge on all assets of the Company and its subsidiaries.
The New Credit Facility contains customary covenants and restrictions on the
Company's ability to engage in certain activities, including, but not limited
to: (i) limitations on other indebtedness, liens, investments and guarantees,
(ii) restrictions on dividends and redemptions and payments on subordinated
debt and (iii) restrictions on mergers and acquisitions, sales of assets and
leases.
The New Credit Facility also contains financial covenants requiring the
Company to maintain a minimum total debt service coverage test, a minimum
EBITDA test, a minimum interest coverage test, a minimum fixed charge coverage
test and a maximum leverage test.
Borrowing under the New Credit Facility is subject to significant
conditions, including compliance with certain financial ratios and the absence
of any material adverse change. See "Risk Factors--Leverage, Liquidity and
Ability to Meet Required Debt Service."
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<PAGE>
DESCRIPTION OF NOTES
GENERAL
The New Notes will be issued under the Indenture, dated as of July 10, 1997,
by and among the Company and Bank of Montreal Trust Company, as trustee (the
"Trustee"), which has been filed as an exhibit to the Registration Statement
of which this Prospectus constitutes a part. The terms of the Notes include
those stated in the Indenture and those made part of the Indenture by
reference to the TIA. The following summaries of certain provisions of the
Indenture are summaries only, do not purport to be complete and are qualified
in their entirety by reference to all of the provisions of the Indenture.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Indenture. Wherever particular provisions of
the Indenture are referred to in this summary, such provisions are
incorporated by reference as a part of the statements made and such statements
are qualified in their entirety by such reference.
The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except for certain transfer restrictions and
registration rights relating to the Old Notes and except that, if the Exchange
Offer is not consummated by January 6, 1998, Holders that have complied with
their obligations under the Registration Rights Agreement will be entitled,
subject to certain exceptions, to liquidated damages in an amount equal to
$0.05 per week per $1,000 principal amount of Old Notes held by such Holder
until April 6, 1998 and up to $0.25 per week per $1,000 principal amount of
Old Notes thereafter until the consummation of the Exchange Offer.
The Notes are general obligations of the Company and are subordinated in
right of payment to all Senior Indebtedness. As of June 30, 1997, on a pro
forma basis after giving effect to the Offering, the application of the
estimated net proceeds therefrom and the Acquisition described herein under
"Unaudited Pro Forma Condensed Consolidated Financial Statements," the Company
would have had $426.0 million aggregate principal amount of Senior
Indebtedness outstanding and no other Indebtedness other than the Notes. The
Company conducts significant operations through its subsidiaries and,
therefore, the Notes are effectively subordinated to all liabilities
(including trade payables) of the Company's subsidiaries. The Notes are issued
only in fully registered form, without coupons, in denominations of $1,000 and
integral multiples thereof.
The Notes will mature on July 15, 2007. The Notes bear interest at the rate
of 11 3/4% per annum from July 10, 1997 or from the most recent Interest
Payment Date to which interest has been paid or provided for, payable semi-
annually on January 15 and July 15 of each year, commencing January 15, 1998
to the Persons in whose names such Notes are registered at the close of
business on the January 1 or July 1 preceding such Interest Payment Date.
The Indenture does not contain provisions which would afford Holders of the
Notes protection in the event of a decline in the Company's credit quality
resulting from highly leveraged or other similar transactions involving the
Company.
Principal of, premium, liquidated damages, if any, and interest on the Notes
is payable, and, subject to the following provisions, the Notes may be
presented for registration of transfer or exchange, at the office or agency of
the Company maintained for such purpose, which office or agency shall be
maintained in the Borough of Manhattan of The City of New York. At the option
of the Company, payment of interest may be made by check mailed to the Holders
of the Notes at the addresses set forth upon the registry books of the
Company. No service charge will be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Until otherwise designated by the Company, the Company's office or agency will
be the corporate trust office of the Trustee presently located at 77 Water
Street, 4th Floor, New York, New York 10005, c/o Corporate Trust Department.
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<PAGE>
SUBORDINATION
The Indenture provides that no payment may be made by or on behalf of the
Company on account of the principal of, premium, if any, or interest on the
Notes (including any repurchase of any Notes) or on account of any other
monetary obligation for the payment of money due on the Notes, including the
redemption provisions of the Notes, for cash or property (other than Junior
Securities issued in connection with a reorganization pursuant to the
bankruptcy laws of any jurisdiction), (i) upon the maturity of any Senior
Indebtedness by lapse of time, acceleration (unless waived) or otherwise,
unless and until all principal of, premium, if any, and interest (and with
respect to the Credit Agreement, any other obligations) on such Senior
Indebtedness are first paid in full in cash or Cash Equivalents (or, with
respect to Senior Indebtedness other than the Credit Agreement, such payment
is duly provided for), or otherwise to the extent such holders expressly
acknowledge satisfaction of amounts due by settlement other than in cash or
Cash Equivalents, or (ii) in the event of default in the payment of any
principal of, premium, if any, or interest on Senior Indebtedness of the
Company when it becomes due and payable, whether at maturity, a scheduled
payment date, or at a date prepayment is required or by declaration or
otherwise (a "Payment Default"), unless and until such Payment Default has
been cured or waived or otherwise has ceased to exist.
Upon (i) the happening of an event of default (other than a Payment Default)
that permits the holders of Senior Indebtedness (or a trustee or agent on
behalf of such holders) to declare such Senior Indebtedness to be due and
payable and (ii) written notice of such event of default given to the Trustee
by the holders (or a trustee, agent or other representative of such holders)
of an aggregate of at least $25.0 million principal amount outstanding of any
Designated Senior Indebtedness (a "Payment Notice"), then, unless and until
such event of default has been cured or waived or otherwise has ceased to
exist, no payment may be made by or on behalf of the Company on account of the
principal of, premium, if any, or interest on the Notes, or to repurchase any
of the Notes, or on account of any other obligation for the payment of money
in respect of the Notes, including the redemption provisions of the Notes, in
any such case (other than payments made with Junior Securities issued in
connection with a reorganization pursuant to the bankruptcy laws of any
jurisdiction). Notwithstanding the foregoing, unless the Senior Indebtedness
in respect of which such event of default exists has been declared due and
payable in its entirety within 179 days after the Payment Notice is delivered
as set forth above (the "Payment Blockage Period") and such declaration has
not been rescinded or waived, at the end of the Payment Blockage Period, the
Company shall be required, unless the provisions described in the immediately
preceding paragraph are then applicable, to pay all sums not paid to the
Holders of the Notes during the Payment Blockage Period, due to the foregoing
prohibitions and to resume all other payments as and when due on the Notes.
Any number of Payment Notices may be given; provided, however, that (i) not
more than one Payment Notice shall be given within a period of any 360
consecutive days, and (ii) no default that existed upon the date of such
Payment Notice or the commencement of such Payment Blockage Period (whether or
not such event of default relates to the same issue of Senior Indebtedness)
shall be made the basis for the commencement of any other Payment Blockage
Period (it being acknowledged that any subsequent action, or any breach of any
financial covenant for a period commencing after the expiration of such
Payment Blockage Period that, in either case, would give rise to a new event
of default, even though it is a breach pursuant to any provision under which a
prior event of default previously existed, shall constitute a new event of
default for this purpose).
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company (other than Junior Securities issued in
connection with a reorganization pursuant to the bankruptcy laws of any
jurisdiction) shall be received by the Trustee or the Holders at a time when
such payment or distribution is prohibited by the foregoing provisions, such
payment or distribution shall be held in trust for the benefit of the holders
of such Senior Indebtedness, and shall be paid or delivered by the Trustee or
such Holders, as the case may be, to the holders of such Senior Indebtedness
remaining unpaid (or, with respect to Senior Indebtedness other than the
Credit Agreement, unprovided for) or to their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate principal amounts remaining unpaid
on account of such Senior Indebtedness held or represented by each, for
application to the payment of all such Senior Indebtedness remaining unpaid,
to the extent necessary to pay (or, with respect to Senior Indebtedness other
than the Credit
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<PAGE>
Agreement to provide for the payment) of all such Senior Indebtedness in full,
or otherwise to the extent holders expressly acknowledge satisfaction of
amounts due after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness.
Upon any distribution of assets of the Company upon any dissolution, winding
up, total or partial liquidation or reorganization of the Company, whether
voluntary or involuntary, in bankruptcy, insolvency, receivership or a similar
proceeding or upon assignment for the benefit of creditors or any marshalling
of assets or liabilities, (i) the holders of all Senior Indebtedness of the
Company will first be entitled to receive payment in full in cash or Cash
Equivalents (or, with respect to Senior Indebtedness other than the Credit
Agreement to have such payment duly provided for), or, with respect to any
holder, otherwise to the extent such holder(s) expressly acknowledge
satisfaction of amounts due in settlement other than in cash or Cash
Equivalents (it being acknowledged that approval of a plan of reorganization
in a bankruptcy proceeding shall not constitute satisfaction of amounts due in
settlement), before the Holders are entitled to receive any payment on account
of the principal of, premium, if any, and interest on the Notes (other than
Junior Securities issued in connection with a reorganization pursuant to the
bankruptcy laws of any jurisdiction) and (ii) any payment or distribution of
assets of the Company of any kind or character from any source, whether in
cash, property or securities (other than with Junior Securities issued in
connection with a reorganization pursuant to the bankruptcy laws of any
jurisdiction) to which the Holders or the Trustee on behalf of the Holders
would be entitled, except for the subordination provisions contained in the
Indenture, will be paid by the liquidating trustee or agent or other Person
making such a payment or distribution directly to the holders of such Senior
Indebtedness or their representative to the extent necessary to make payment
in full on all such Senior Indebtedness remaining unpaid, after giving effect
to any concurrent payment or distribution to the holders of such Senior
Indebtedness.
No provision contained in the Indenture or the Notes affects the obligation
of the Company, which is absolute and unconditional, to pay, when due,
principal of, premium, if any, and interest on the Notes. The Subordination
provisions of the Indenture and the Notes do not prevent the occurrence of any
Default or Event of Default under the Indenture or limit the rights of the
Trustee or any Holder to pursue any other rights or remedies with respect to
the Notes.
As a result of the foregoing subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or any assignment for the benefit of the creditors of the Company
or a marshalling of assets or liabilities of the Company, Holders of the Notes
may receive ratably less than other such creditors.
The Company conducts significant portions of its operations through its
subsidiaries. Accordingly, the Company's ability to meet its cash obligations
is dependent upon the ability of its subsidiaries to make cash distributions
to the Company. Furthermore, any right of the Company to receive the assets of
any of its subsidiaries upon any such subsidiary's liquidation (and the
consequent right of the Holders of the Notes to participate in the
distribution of the proceeds of those assets) effectively will be subordinated
by operation of law to the claims of such subsidiary's creditors (including
trade creditors) and holders of its preferred stock, except to the extent that
the Company is itself recognized as a creditor or preferred stockholder of
such subsidiary, in which case the claims of the Company would still be
subordinate to any indebtedness or preferred stock of such subsidiary senior
in right of payment to that held by the Company. As a result of the
subordination provisions described above, in the event of the liquidation,
bankruptcy, reorganization, insolvency, receivership or similar proceeding or
any assignment for the benefit of the creditors of the Company or a
marshalling of assets or liabilities of the Company, Holders of the Notes may
receive ratably less than other such creditors or interest holders.
OPTIONAL REDEMPTION
The Company will not have the right to redeem any Notes prior to July 15,
2002. On or after July 15, 2002, the Company will have the right to redeem all
or any part of the Notes in cash at the redemption prices (expressed as a
percentage of the aggregate principal amount thereof) set forth below, in each
case including accrued and
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<PAGE>
unpaid interest, if any, to the applicable Redemption Date (subject to the
right of Holders of record on the relevant Regular Record Date to receive
interest due on an Interest Payment Date that is on or prior to the Redemption
Date) if redeemed during the 12-month period beginning July 15 of the years
indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2002........................................................... 105.875%
2003........................................................... 104.406%
2004........................................................... 102.938%
2005........................................................... 101.469%
2006 and thereafter............................................ 100.000%
</TABLE>
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis or in such other manner as
it deems appropriate and fair. The Notes may be redeemed in part in multiples
of $1,000 only.
The Notes will not have the benefit of a sinking fund.
Subject to the following, notice of any redemption will be sent, by first-
class mail, at least 30 days and not more than 60 days prior to the date fixed
for redemption to the Holder of each Note to be redeemed to such Holder's last
address as then shown upon the books of the Registrar. Any notice which
relates to a Note to be redeemed in part only must state the portion of the
principal amount to be redeemed and must state that on and after the date
fixed for redemption, upon surrender of such Note, a new Note or Notes in a
principal amount equal to the unredeemed portion thereof will be issued. On
and after the date fixed for redemption, interest will cease to accrue on the
portions of the Notes called for redemption.
Notwithstanding the Optional Redemption provisions above, prior to July 10,
2002, in the event that the Company or Parent consummates one or more
offerings of their Qualified Capital Stock on or before the third anniversary
of the date of issuance of the Notes, the Company may at its option, use all
or a portion of the cash contributed to it from such offerings to redeem up to
35% of the original aggregate principal amount of the Notes at a cash
redemption price equal to 111.75% of the principal amount of the Notes plus
accrued and unpaid interest thereon, if any, to the redemption date; provided
that at least 65% of the original aggregate principal amount of the Notes
remains outstanding thereafter.
CERTAIN COVENANTS
Transactions not Subject to Covenants. Notwithstanding anything to the
contrary in the Indenture, the following transactions shall not be prohibited
by the Indenture (regardless of the form or substance of the transaction or
series of transactions effecting the same):
(i) the Merger, including, without limitation, (A) payments made by the
Company to fund (x) the cash consideration payable in the Merger
(including, whether or not required by the Merger Agreement, pursuant to
statutory appraisal rights and any settlement thereof) to security holders
of Palmer and (y) fees and expenses incurred in connection with the Merger,
(B) the Incurrence, as a result of the Merger, of any Indebtedness of
Palmer or any subsidiary of Palmer, which Indebtedness was in existence
immediately prior to the Merger and not incurred in contemplation thereof,
(C) the assumption or the suffering to exist of any consensual encumbrance
or restriction on the ability of Palmer or any Subsidiary thereof to pay
dividends or make other distributions on the Capital Stock of any
Subsidiary or to pay or satisfy any obligation to Palmer or any of its
Subsidiaries or to otherwise transfer assets or make or pay loans or
advances to Palmer or any of its Subsidiaries, which encumbrance or
restriction was contained in an instrument that was in effect immediately
prior to the Merger and not put into place in contemplation thereof and (D)
the Incurrence or the suffering to exist of any Lien upon any of the
property or assets of Palmer or any of its
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<PAGE>
Subsidiaries which Liens were in existence immediately prior to the
effectiveness of the Merger and not imposed in contemplation thereof; and
(ii) any transaction involving FMT Ltd. (the partnership that holds the
system serving Ft. Myers) or any subsidiary of FMT Ltd. or any of their
assets or the Company's partnership interest in FMT Ltd. (each "FMT-Related
Assets") provided that, in the case of this clause (ii), no such
transaction shall (a) in and of itself cause or result in an increase in
the consolidated Indebtedness of the Company and its Restricted
Subsidiaries on and after the 45th day after the Merger Date from that
existing immediately prior to such transaction, (b) cause or result in the
sale of any asset of the Company other than FMT-Related Assets, (c) cause
or result in the imposition of any Lien on any property or assets of the
Company or any of its Restricted Subsidiaries other than solely upon an
FMT-Related Asset, (d) cause or result in the imposition of any encumbrance
or restriction on the ability of any Restricted Subsidiary of the Company
(other than FMT Ltd. or any subsidiary thereof) to pay dividends or make
other distributions on the Capital Stock of any Restricted Subsidiary of
the Company or pay or satisfy any obligation to the Company or any of its
Restricted Subsidiaries or otherwise transfer assets or make or pay loans
or advances to the Company or any of its Restricted Subsidiaries, (e) cause
or result in any dividend or distribution by the Company or any Investment
in any Person except a Restricted Subsidiary or a Subsidiary of FMT Ltd. or
(f) cause or result in the Incurrence of any Indebtedness of the Company
ranking senior to the Notes but junior to any Senior Indebtedness;
provided, however, that prior to the 45th day after the Merger Date the
Company's consolidated Indebtedness may increase as a result of such
transaction by no more than $169 million (plus accrued interest thereon).
Notwithstanding the foregoing provisions of this covenant, neither the
Company nor any of its Restricted Subsidiaries (other than FMT Ltd. or any
of its Subsidiaries) shall make any Investment in FMT Ltd. or any of its
Subsidiaries.
In addition, the Merger shall not constitute a Change of Control and no
transaction described in clause (ii), above, shall be taken into account in
any calculation under "--Limitation on Restricted Payments."
Repurchase of Notes at the Option of the Holder Upon a Change of Control
The Indenture provides that in the event that a Change of Control has
occurred, each Holder of Notes will have the right, at such Holder's option,
pursuant to an irrevocable and unconditional offer by the Company (the "Change
of Control Offer"), to require the Company to repurchase all or any part
(equal to $1,000 principal amount or an integral multiple thereof) of such
Holder's Notes, on a date (the "Change of Control Purchase Date") that is no
later than 45 Business Days after the occurrence of such Change of Control at
a cash price (the "Change of Control Purchase Price") equal to 101% of the
aggregate principal amount thereof, together with any accrued and unpaid
interest to the Change of Control Purchase Date. The Indenture provides that,
prior to the commencement of a Change of Control Offer, but in any event
within 30 days following any Change of Control, the Company covenants to, if
at such time the terms of the Credit Agreement require repayment upon a Change
of Control, (i) repay in full and terminate all commitments and Indebtedness
under the Credit Agreement or, (ii)(A) offer to repay in full and terminate
all commitments and all Indebtedness under the Credit Agreement and (B) repay
the Indebtedness owed to each such lender that has accepted such offer or
(iii) obtain the requisite consents under the Credit Agreement to waive the
provisions of this sentence. The Company's failure to comply with the
preceding sentence shall constitute an Event of Default described in clause
(iii) and not in clause (ii) under "Events of Default," below. The Change of
Control Offer shall be made within 20 Business Days following a Change of
Control and shall remain open for 20 Business Days following its commencement
(the "Change of Control Offer Period"). Upon expiration of the Change of
Control Offer Period, the Company shall purchase all Notes properly tendered
in response to the Change of Control Offer.
On or before the Change of Control Purchase Date, the Company will (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient to
pay the Change of Control Purchase Price (together with accrued and unpaid
interest) of all Notes so tendered and (iii) deliver to the Trustee Notes so
accepted together with an Officers' Certificate listing the Notes or portions
thereof being purchased by the Company. The Paying Agent promptly will deliver
to the Holders of Notes so accepted payment in an amount equal to the Change
of Control Purchase Price (together
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with any accrued and unpaid interest), and the Trustee will promptly
authenticate and mail or deliver to such Holders a new Note equal in principal
amount to any unpurchased portion of the Note surrendered. Any Notes not so
accepted will be promptly mailed or delivered by the Company to the Holder
thereof. The Company will announce publicly the results of the Change of
Control Offer on or as soon as practicable after the Change of Control
Purchase Date.
The Change of Control purchase feature of the Notes may make more difficult
or discourage a takeover of the Company or its Parent, and, thus, the removal
of incumbent management. The Change of Control purchase feature resulted from
negotiations between the Company, its Parent and the Initial Purchasers and is
not the result of any intention on the part of the Company or its Parent or
their management to discourage the acquisition of the Company or its Parent.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under
the Exchange Act and the rules thereunder and all other applicable Federal and
state securities laws and the Company may modify a Change of Control Offer to
the extent necessary to effect such compliance.
Limitation on Incurrence of Additional Indebtedness
The Indenture provides that after the Issue Date the Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
issue, create, incur, assume, guarantee or otherwise directly or indirectly
become liable for (including as a result of an acquisition), or otherwise
become responsible for, contingently or otherwise (individually or
collectively, to "Incur" or, as appropriate, an "Incurrence"), any
Indebtedness. Neither the accrual of interest (including the issuance of "pay
in kind" securities or similar instruments in respect of such accrued
interest) pursuant to the terms of Indebtedness Incurred in compliance with
this covenant, nor the accretion of original issue discount, nor the mere
extension of the maturity of any Indebtedness shall be deemed to be an
Incurrence of Indebtedness.
Notwithstanding the foregoing, if there exists no Default or Event of
Default immediately prior and subsequent thereto, the Company may incur
Indebtedness if the Company's Annualized Operating Cash Flow Ratio, after
giving effect to the Incurrence of such Indebtedness, would have been less
than 8 to 1.
In addition, if there exists no Default or Event of Default immediately
prior and subsequent thereto, the foregoing limitations will not apply to the
Incurrence of (i) Indebtedness by the Company or any of its Restricted
Subsidiaries constituting Existing Indebtedness, reduced by repayments of and
permanent reductions in commitments in satisfaction of the Net Cash Proceeds
application requirement set forth in the "Limitation on Asset Sales and Sales
of Subsidiary Stock" covenant and by repayments and permanent reductions in
amounts outstanding pursuant to scheduled amortization and mandatory
prepayments in accordance with the terms thereof, (ii) Indebtedness, in an
aggregate principal amount not in excess of $525,000,000, permitted under the
Credit Agreement, reduced by (a) repayments of and permanent reductions in
commitments in satisfaction of the Net Cash Proceeds application requirement
set forth in the "Limitation on Asset Sales and Sales of Subsidiary Stock"
covenant and (b) an amount equal to the aggregate amount of Indebtedness
Incurred pursuant to clause (x), below, so long as such amounts Incurred
pursuant to clause (x) remain outstanding; provided that, if there exists a
Default or an Event of Default immediately prior or subsequent thereto, the
Company and its Restricted Subsidiaries may Incur Indebtedness pursuant to
this clause (ii) so long as the proceeds from such Incurrence are not used
directly to pay any amounts owing in respect of any Indebtedness, including,
without limitation, principal, interest and commitment fees, other than with
respect to the Notes and the Holdings Securities, (iii) Indebtedness by the
Company evidenced by the Notes, (iv) (A) Permitted Acquisition Indebtedness by
the Company that satisfies the provisions of clause (x) of the definition
thereof or (B) Permitted Acquisition Indebtedness by any Restricted Subsidiary
that satisfies the provisions of clause (y) of the definition thereof, (v)
Indebtedness between the Company and any Restricted Subsidiary of the Company
or between Restricted Subsidiaries of the Company, provided that, in the case
of Indebtedness of the Company, such obligations shall be unsecured and
subordinated in all respects to the Holders' rights pursuant to the Notes, and
the date of any event that causes a Restricted Subsidiary no longer to be a
Restricted Subsidiary shall be an Incurrence Date
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with respect to such Indebtedness, (vi) Capitalized Lease Obligations and
Purchase Money Indebtedness in an aggregate amount or aggregate principal
amount, as the case may be, outstanding at any time not to exceed in the
aggregate $15,000,000, provided that in the case of Purchase Money
Indebtedness, such Indebtedness shall not constitute less than 75% nor more
than 100% of the cost (determined in accordance with GAAP) to the Company or
such Restricted Subsidiary of the property purchased or leased with the
proceeds thereof, (vii) Indebtedness of the Company or any Restricted
Subsidiary arising from agreements providing for indemnification, adjustment
of purchase price or similar obligations, or from guarantees or letters of
credit, surety bonds or performance bonds securing any obligations of the
Company or its Restricted Subsidiaries pursuant to such agreements, in any
case Incurred in connection with the disposition of any business, assets or
Restricted Subsidiary of the Company to the extent none of the foregoing
results in the obligation to repay an obligation for money borrowed by any
Person and are limited in aggregate amount to no greater than 10% of the fair
market value of such business, assets or Restricted Subsidiary so disposed of,
(viii) any guarantee by any Restricted Subsidiary of any Senior Indebtedness
Incurred in compliance with this covenant, (ix) Indebtedness of the Company or
any Restricted Subsidiary under standby letters of credit or reimbursement
obligations with respect thereto issued in the ordinary course of business and
consistent with industry practices limited in aggregate amount to $5,000,000
at any one time outstanding, (x) Indebtedness of the Company (other than
Indebtedness permitted by clauses (i) through (ix) or (xi) hereof) not to
exceed $100,000,000 at any one time outstanding and (xi) Refinancing
Indebtedness Incurred to extend, renew, replace or refund Indebtedness
permitted under clauses (i) (as so reduced in amount), (ii) (as so reduced in
amount), (iii), (iv) and (xi) of this paragraph.
Indebtedness of any Person that is not a Restricted Subsidiary of the
Company (or that is a Non-Recourse Restricted Subsidiary designated to be a
Restricted Subsidiary, but no longer a Non-Recourse Restricted Subsidiary),
which Indebtedness is outstanding at the time such Person becomes such a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred, as the case may be, at the time such Person becomes such a
Restricted Subsidiary of the Company, or is merged with or into or
consolidated with the Company or a Restricted Subsidiary of the Company.
Limitation on Restricted Payments
The Indenture provides that after the Issue Date the Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
make any Restricted Payment, if, immediately prior or after giving effect
thereto (a) a Default or an Event of Default would exist, (b) the Company's
Annualized Operating Cash Flow Ratio for the Reference Period would exceed 8.5
to 1, or (c) the aggregate amount of all Restricted Payments made by the
Company and its Restricted Subsidiaries, including such proposed Restricted
Payment (if not made in cash, then the fair market value of any property used
therefor, as determined in good faith by the Board of Directors) from and
after the Issue Date and on or prior to the date of such Restricted Payment,
shall exceed the sum of (i) 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 the Issue Date 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 (ii) the aggregate Net Proceeds (other than with
respect to the PCC Equity Contribution) received by the Company from the sale
(other than to a Subsidiary of the Company) of its Qualified Capital Stock
after the Issue Date and on or prior to the date of such Restricted Payment,
plus (iii) to the extent not otherwise included in clauses (i) or (ii), above,
an amount equal to the net reduction in Investments in Unrestricted
Subsidiaries resulting from payments of dividends, repayment of loans or
advances, or other transfers of assets, in each case to the Company or any
Wholly Owned Restricted Subsidiary of the Company from Unrestricted
Subsidiaries, or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company and any Restricted
Subsidiary in such Unrestricted Subsidiary.
Notwithstanding the foregoing paragraph, the provisions set forth in clause
(b) or (c) of the immediately preceding paragraph will not prohibit (i) the
use of an aggregate of $10,000,000 to be used for Restricted
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Payments not otherwise permitted by this "Limitation on Restricted Payments"
covenant, (ii) the distribution of amounts to Holdings sufficient to pay the
scheduled interest or dividends, as applicable, owed by Holdings on the
Holdings Securities as such interest or dividends become due and payable and
so long as (A) Holdings is the direct Parent of the Company owning 100% of the
capital stock of the Company and (B) such Holdings Securities contain no
scheduled requirement for the payment of cash interest or dividends, as
applicable, until at least five years from the date of their original issuance
and (iii) any dividend, distribution or other payment by any Restricted
Subsidiary on shares of its Capital Stock that is paid pro rata to all holders
of such Capital Stock, and notwithstanding the foregoing paragraph, the
provisions set forth in clause (a), (b) or (c) of the immediately preceding
paragraph will not prohibit (iv) the payment of any dividend within 60 days
after the date of its declaration if such dividend could have been made on the
date of its declaration in compliance with the foregoing provisions, or (v)
the redemption, defeasance, repurchase or other acquisition or retirement of
any Indebtedness or Capital Stock of the Company or its Restricted
Subsidiaries either in exchange for or out of the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of
Qualified Capital Stock (in the case of any redemption, defeasance, repurchase
or other acquisition or retirement of any Junior Indebtedness or Capital Stock
of the Company or its Restricted Subsidiaries) or Junior Indebtedness (in the
case of any redemption, defeasance, repurchase or other acquisition or
retirement of any Indebtedness of the Company or its Restricted Subsidiaries)
of the Company.
In determining the aggregate amount expended for Restricted Payments in
accordance with clause (c) of the first paragraph of this description of the
"Limitations on Restricted Payments" covenant, 100% of the amounts expended
under clauses (i) through (v) of the immediately preceding paragraph shall be
deducted.
Limitation on Layering Indebtedness
The Indenture provides that the Company will not incur or suffer to exist
any Indebtedness that is subordinate in right of payment to any other
Indebtedness of the Company, unless, by its terms, such Indebtedness is
subordinate in right of payment to, or ranks pari passu with, the Notes.
Limitation on Restricting Subsidiary Dividends
The Indenture provides that the Company will not, and will not permit any of
its Restricted Subsidiaries to, with respect to securities issued directly
thereby or with respect to which they are obligors, directly or indirectly,
create, assume or suffer to exist any consensual encumbrance or restriction on
the ability of any Restricted Subsidiary of the Company to pay dividends or
make other distributions on the Capital Stock of any Restricted Subsidiary of
the Company or pay or satisfy any obligation to the Company or any of its
Restricted Subsidiaries or otherwise transfer assets or make or pay loans or
advances to the Company or any of its Restricted Subsidiaries, except
encumbrances and restrictions existing under (i) the Indenture and the Notes,
(ii) any Existing Indebtedness, (iii) the Credit Agreement, (iv) any
applicable law or any governmental or administrative regulation or order, (v)
Refinancing Indebtedness permitted under the Indenture, provided that the
restrictions contained in the instruments governing such Refinancing
Indebtedness are no more restrictive in the aggregate than those contained in
the instruments governing the Indebtedness being refinanced immediately prior
to such refinancing, (vi) restrictions with respect solely to a Restricted
Subsidiary of the Company imposed pursuant to a binding agreement which has
been entered into for the sale or disposition of all or substantially all of
the Capital Stock or assets of such Restricted Subsidiary, provided such
restrictions apply solely to the Capital Stock or assets being sold of such
Restricted Subsidiary, (vii) restrictions contained in any agreement relating
to the financing of the acquisition of a Person or real or tangible personal
property after the Issue Date which are not applicable to any Person or
property, other than the Person or property so acquired and which either
(A) were not put in place in anticipation of or in connection with such
acquisition or (B) constituted Permitted Acquisition Indebtedness of a Person
satisfying the provisions of clause (y) of the definition thereof or (viii)
any agreement (other than those referred to in clause (vii)) of a Person
acquired by the Company or a Restricted Subsidiary of the Company, which
restrictions existed at the time of acquisition and were not put in place in
anticipation of or in connection with such acquisition. Notwithstanding the
foregoing, neither (a) customary provisions restricting subletting or
assignment of any lease entered into the ordinary course of business,
consistent with past practices
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nor (b) Liens on assets securing Senior Indebtedness, shall in and of
themselves be considered a restriction on the ability of the applicable
Restricted Subsidiary to transfer such agreement or assets, as the case may
be.
Limitation on Transactions with Related Persons
The Indenture provides that, after the Issue Date, the Company will not, and
will not permit any of its Restricted Subsidiaries or Unrestricted
Subsidiaries to, enter into any contract, agreement, arrangement or
transaction with any Related Person (each a "Related Person Transaction"), or
any series of Related Person Transactions, except for transactions made in
good faith, the terms of which are (i) fair and reasonable to the Company or
such Subsidiary, as the case may be, and (ii) are at least as favorable as the
terms which could be obtained by the Company or such Subsidiary, as the case
may be, in a comparable transaction made on an arm's length basis with Persons
who are not Related Persons.
Without limiting the foregoing, (a) any Related Person Transaction or series
of Related Person Transactions with an aggregate value in excess of $1,000,000
must first be approved by a majority of the Board of Directors of the Company
who are disinterested in the subject matter of the transaction pursuant to a
Board Resolution, and (b) with respect to any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$5,000,000, the Company must first obtain a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Subsidiary,
as the case may be.
Notwithstanding the foregoing, the following shall not constitute Related
Person Transactions: (i) reasonable and customary payments on behalf of
directors, officers or employees of the Company or any of its Restricted
Subsidiaries, or in reimbursement of reasonable and customary payments or
reasonable and customary expenditures made or incurred by such Persons, as
directors, officers or employees, (ii) any contract, agreement, arrangement,
or transaction solely between or among the Company and any of its Restricted
Subsidiaries or between or among Restricted Subsidiaries of the Company, (iii)
any Restricted Payment of the type described by clauses (i) and (ii) of the
definition thereof made to all stockholders on a pro rata basis and not
prohibited by the "Limitation on Restricted Payments" covenant, (iv) any loan
or advance by the Company or a Restricted Subsidiary to employees of the
Company or a Restricted Subsidiary in the ordinary course of business, in an
aggregate amount at any one time outstanding not to exceed $500,000 and (v)
any payment pursuant to a tax-sharing agreement between the Company and any
other Person with which the Company is required or permitted to file a
consolidated tax return or with which the Company is or could be part of a
consolidated group for tax purposes, which payments are not in excess of the
tax liabilities attributable solely to the Company and its Restricted
Subsidiaries (as a consolidated group).
Limitation on Asset Sales and Sales of Subsidiary Stock
The Indenture provides that after the Issue Date the Company will not, and
will not permit any of its Restricted Subsidiaries to, in one or a series of
related transactions, convey, sell, transfer, assign or otherwise dispose of,
directly or indirectly, any of its property, businesses or assets, including
by merger or consolidation, and including any sale or other transfer or
issuance of any Capital Stock of any Restricted Subsidiary of the Company,
whether by the Company or a Restricted Subsidiary (an "Asset Sale"), unless
(1) (a) within 360 days after the date of such Asset Sale, an amount equal to
the Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied to
the optional redemption of the Notes in accordance with the terms of the
Indenture and other Indebtedness of the Company ranking on a parity with the
Notes from time to time outstanding with similar provisions requiring the
Company to make an offer to purchase or to redeem such Indebtedness with the
proceeds from asset sales, pro rata in proportion to the respective principal
amounts (or accreted values in the case of Indebtedness issued with an
original issue discount) of the Notes and such other Indebtedness then
outstanding or to the repurchase of the Notes and such other Indebtedness
pursuant to an irrevocable, unconditional offer (pro rata in proportion to the
respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of the Notes and such other
Indebtedness then outstanding) (the "Asset Sale Offer") to repurchase such
Indebtedness at a purchase price (the "Asset Sale Offer Price") of 100% of the
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principal amount thereof in the case of the Notes or 100% of the principal
amount of such other Indebtedness (or accreted value in the case of
Indebtedness issued with an original issue discount) plus, in each case,
accrued interest to the date of payment, made within 330 days of such Asset
Sale, or (b) within 330 days of such Asset Sale, the Asset Sale Offer Amount
is (i) invested (or committed, pursuant to a binding commitment subject only
to reasonable, customary closing conditions, to be invested, and in fact is so
invested, within an additional 90 days) in tangible assets and property (other
than notes, obligations or securities), which in the good faith reasonable
judgment of the Board of Directors of the Company are of a type used in a
Related Business, or Capital Stock of a Person (which, if such Person becomes
a Subsidiary of the Company by virtue of such Asset Sale, shall initially be
designated a Restricted Subsidiary) all or substantially all of whose assets
and property (in the good faith reasonable judgment of the Board of Directors
of the Company) are of a type used in a Related Business ( provided that, with
respect to such Capital Stock, all of the requirements of the last proviso of
clause (v) of the following paragraph shall have been satisfied) or (ii) used
to retire permanently Senior Indebtedness or Indebtedness of a Restricted
Subsidiary, (2) with respect to any transaction or related series of
transactions of securities, property or assets with an aggregate fair market
value in excess of $1,000,000, at least 75% of the value of consideration for
the assets disposed of in such Asset Sale (excluding (a) Senior Indebtedness
(and any Refinancing Indebtedness issued to refinance any such Indebtedness)
or the Indebtedness of any Restricted Subsidiary assumed by a transferee which
assumption permanently reduces the amount of Indebtedness outstanding on the
Issue Date and permitted to have been Incurred pursuant to the covenant
"Limitation on Incurrence of Additional Indebtedness" (including that in the
case of a revolver or similar arrangement that makes credit available, such
commitment is permanently reduced by such amount), (b) Purchase Money
Indebtedness secured exclusively by the assets subject to such Asset Sale
which is assumed by a transferee and (c) marketable securities that are
promptly converted into cash or Cash Equivalents) consists of cash or Cash
Equivalents, provided that any cash or Cash Equivalents received within 12
months following any such Asset Sale upon conversion of any property or assets
(other than in the form of cash or Cash Equivalents) received in consideration
of such Asset Sale shall be applied promptly in the manner required of Net
Cash Proceeds of any such Asset Sale as set forth above, (3) no Default or
Event of Default shall occur or be continuing after giving effect to, on a pro
forma basis, such Asset Sale, unless such Asset Sale is in consideration
solely of cash or Cash Equivalents and such consideration is applied
immediately to the permanent reduction of the principal amount of Indebtedness
outstanding pursuant to the Credit Agreement, and (4) the Board of Directors
of the Company determines in good faith that the Company or such Restricted
Subsidiary, as applicable, would receive fair market value in consideration of
such Asset Sale. The Indenture provides that an Asset Sale Offer may be
deferred until the accumulated Net Cash Proceeds from Asset Sales not applied
to the uses set forth in (1) (b) above exceeds $5,000,000 and that each Asset
Sale Offer shall remain open for 20 Business Days following its commencement
and no longer, except as otherwise required by applicable law (the "Asset Sale
Offer Period"). Upon expiration of the Asset Sale Offer Period, the Company
shall apply the Asset Sale Offer Amount, plus an amount equal to accrued
interest to the purchase of all Indebtedness properly tendered (on a pro rata
basis as described above if the Asset Sale Offer Amount is insufficient to
purchase all Indebtedness so tendered) at the Asset Sale Offer Price (together
with accrued interest).
Notwithstanding the foregoing provisions of the prior paragraph:
(i) the Company and its Restricted Subsidiaries may, in the ordinary
course of business, convey, sell, lease, transfer, assign or otherwise
dispose of assets acquired and held for resale in the ordinary course of
business;
(ii) the Company and its Restricted Subsidiaries may convey, sell, lease,
transfer, assign or otherwise dispose of assets pursuant to and in
accordance with the "Limitation on Mergers, Sales or Consolidations";
(iii) the Company and its Restricted Subsidiaries may sell or dispose of
damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Restricted Subsidiary, as
applicable;
(iv) the Company and its Restricted Subsidiaries may convey, sell, lease,
transfer, assign or otherwise dispose of assets to the Company or any of
its Restricted Subsidiaries; and
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(v) the Company and its Restricted Subsidiaries may, in the ordinary
course of business (or, if otherwise than in the ordinary course of
business, upon receipt of a favorable written opinion by an independent
financial advisor of national reputation as to the fairness from a
financial point of view to the Company or such Restricted Subsidiary of the
proposed transaction), exchange all or a portion of its property,
businesses or assets for property, businesses or assets which, or Capital
Stock of a Person all or substantially all of whose assets, are of a type
used in a Related Business (provided that such Person shall initially be
designated a Restricted Subsidiary if such Person becomes a Subsidiary of
the Company by virtue of such Asset Sale), or a combination of any such
property, businesses or assets, or Capital Stock of such a Person and cash
or Cash Equivalents; provided that (i) there shall not exist immediately
prior or subsequent thereto a Default or an Event of Default, (ii) a
majority of the independent directors of the Board of Directors of the
Company shall have approved a resolution of the Board of Directors that
such exchange is fair to the Company or such Restricted Subsidiary, as the
case may be, and (iii) any cash or Cash Equivalents received pursuant to
any such exchange shall be applied in the manner applicable to Net Cash
Proceeds from an Asset Sale as set forth pursuant to the provisions of the
immediately preceding paragraph of this covenant; and provided, further,
that any Capital Stock of a Person received in an Asset Sale pursuant to
this clause (v) shall be owned directly by the Company or a Restricted
Subsidiary and, when combined with the Capital Stock of such Person already
owned by the Company and its Restricted Subsidiaries, shall constitute a
majority of the voting power and Capital Stock of such Person, unless (A)
(i) the Company has received a binding commitment from such Person (or the
direct or indirect parent of such Person) that such Person (or the direct
or indirect parent of such Person) will distribute to the Company in cash
an amount equal to the Company's Annualized Operating Cash Flow (determined
as of the date of such Asset Sale) attributable to the property, business
or assets of the Company and its Restricted Subsidiaries exchanged in
connection with such Asset Sale during each consecutive 12-month period
subsequent to such Asset Sale (unless and until the Company shall have sold
all of such Capital Stock, provided that the provisions of clause (B)
below, if applicable, shall have been satisfied), (ii) immediately after
such Asset Sale the aggregate number of Net Pops of the wireless
communications systems in which the Company or any of its Restricted
Subsidiaries has ownership interests ("Company Systems") that are owned
directly by a Person or Persons a majority of whose voting power and
Capital Stock is owned directly or indirectly by the Company is no less
than 80% of the aggregate number of Net Pops of Company Systems immediately
prior to such Asset Sale and (iii) upon consummation of such Asset Sale, on
a pro forma basis, the ratio of such Person's Annualized Operating Cash
Flow to the product of Consolidated Interest Expense for the Reference
Period multiplied by four (but excluding from Consolidated Interest Expense
all amounts that are not required to be paid in cash on a current basis)
shall be at least 1 to 1, or (B) in the case of Capital Stock of a Person
that is not a Subsidiary of the Company owned by the Company or a
Restricted Subsidiary that is exchanged (the "Exchanged Capital Stock") for
Capital Stock of another Person all or substantially all of whose assets
are of a type used in a Related Business, either (i) the Exchanged Capital
Stock shall not have been acquired prior to such Asset Sale in reliance
upon clause (A) of this proviso or (ii) the requirements of subclauses (A)
(i) (based on the original guaranteed cash flow) and (A) (iii) shall be
satisfied with respect to any Capital Stock acquired in consideration of
the Exchanged Capital Stock.
Restricted Payments that are made in compliance with, and are counted
against amounts available to be made as Restricted Payments pursuant to clause
(c) of, the "Limitation on Restricted Payments" covenant, without giving
effect to clause (i) of the second paragraph thereof, shall not be deemed to
be Asset Sales.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the
Exchange Act and the rules and regulations thereunder and all other applicable
Federal and state securities laws.
Limitations on Liens
The Indenture provides that the Company will not and will not permit any
Restricted Subsidiary, directly or indirectly, to Incur or suffer to exist any
Lien (other than Permitted Liens) upon any of its property or assets, whether
now owned or hereafter acquired.
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Limitation on Status as Investment Company
The Indenture prohibits the Company and its Restricted Subsidiaries from
becoming "investment companies" (as that term is defined in the Investment
Company Act of 1940, as amended), or from otherwise becoming subject to
regulation under the Investment Company Act.
Limitation on Merger, Sale or Consolidation
The Indenture provides that the Company will not consolidate with or merge
with or into another Person, or sell, lease, convey, transfer or otherwise
dispose of all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions,
to another Person or group of affiliated Persons, unless (i) either (a) the
Company is the continuing entity or (b) the resulting, surviving or transferee
entity is a corporation organized under the laws of the United States, any
state thereof or the District of Columbia and expressly assumes by
supplemental indenture all of the obligations of the Company in connection
with the Notes and the Indenture; (ii) no Default or Event of Default shall
exist or shall occur immediately after giving effect on a pro forma basis to
such transaction; (iii) (A) immediately after giving effect to such
transaction on a pro forma basis, the consolidated resulting surviving or
transferee entity would immediately thereafter be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Annualized Operating Cash
Flow Ratio provision set forth in the second paragraph of the "Limitation on
Incurrence of Additional Indebtedness" covenant or (B), if the requirement of
clause (A) is not satisfied, (x) any Indebtedness of the resulting surviving
or transferee entity in excess of the amount of the Company's Indebtedness
immediately prior to such transaction is Permitted Acquisition Indebtedness
and (y) the requirement of clause (A) is not satisfied solely due to the
Incurrence of such Permitted Acquisition Indebtedness; and (iv) the Company
shall have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel, if applicable, confirming compliance with the requirements of this
covenant.
Upon any consolidation or merger or any transfer of all or substantially all
of the assets of the Company in accordance with the foregoing, the successor
corporation formed by such consolidation or into which the Company is merged
or to which such transfer is made, shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under the Indenture
with the same effect as if such successor corporation had been named therein
as the Company, and the Company shall be released from the obligations under
the Notes and the Indenture.
Limitation on Lines of Business
The Indenture provides that neither the Company nor any of its Restricted
Subsidiaries shall directly or indirectly engage in any line or lines of
business activity other than that which, in the reasonable, good faith
judgment of the Board of Directors of the Company, is a Related Business.
Restriction on Sale and Issuance of Subsidiary Stock
The Indenture provides that the Company will not sell, and will not permit
any of its Restricted Subsidiaries to issue or sell, any shares of Capital
Stock of any Restricted Subsidiary of the Company to any Person other than the
Company or a Wholly Owned Restricted Subsidiary of the Company, except for
shares of common stock with no preferences or special rights or privileges and
with no redemption or prepayment provisions ("Special Rights"); provided that,
in the case of a Restricted Subsidiary that is a partnership or joint venture
partnership (a "Restricted Partnership") the Company or any of its Restricted
Subsidiaries may sell or such Restricted Partnership may issue or sell Capital
Stock of such Restricted Partnership with Special Rights no more favorable
than those held by the Company or such Restricted Subsidiary in such
Restricted Partnership.
REPORTS
The Indenture provides that whether or not the Company is subject to the
reporting requirements of Section 13 or 15 (d) of the Exchange Act, the
Company shall deliver to the Trustee and to each Holder, within 15 days
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after it is or would have been required to file such with the Commission,
annual and quarterly financial statements substantially equivalent to
financial statements that would have been included in reports filed with the
Commission, if the Company were subject to the requirements of Section 13 or
15(d) of the Exchange Act, including, with respect to annual information only,
a report thereon by the Company's certified independent public accountants as
such would be required in such reports to the Commission, and in each case,
together with a management's discussion and analysis of financial condition
and results of operations which would be so required.
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by the Company
to pay any installment of interest on the Notes as and when the same becomes
due and payable and the continuance of any such failure for 30 days, (ii) the
failure by the Company to pay all or any part of the principal, or premium, if
any, on the Notes when and as the same becomes due and payable at maturity,
redemption, by acceleration or otherwise, including, without limitation,
payment of the Change of Control Purchase Price or the Asset Sale Offer Price,
(iii) the failure by the Company to observe or perform any other covenant or
agreement contained in the Notes or the Indenture and, subject to certain
exceptions, the continuance of such failure for a period of 30 days after
written notice is given to the Company by the Trustee or to the Company and
the Trustee by the Holders of at least 25% in aggregate principal amount of
the Notes outstanding, (iv) certain events of bankruptcy, insolvency or
reorganization in respect of the Company or any of its Significant Restricted
Subsidiaries, (v) the failure to pay at final stated maturity (giving effect
to any applicable grace periods and any extensions thereof) the principal
amount of any Indebtedness of the Company or any Restricted Subsidiary of the
Company or the acceleration of the final stated maturity of any Indebtedness
if the aggregate principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness in default for failure to pay
principal at final maturity or which has been accelerated, aggregates
$15,000,000 or more at any time, and (vi) final unsatisfied judgments not
covered by insurance aggregating in excess of $5,000,000, at any one time
rendered against the Company or any of its Restricted Subsidiaries and not
stayed, bonded or discharged within 60 days. The Indenture will provide that
if a default occurs and is continuing, the Trustee must, within 90 days after
the occurrence of such default, give to the Holders notice of such default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv) above) relating to the Company or any
Restricted Subsidiary, then in every such case, unless the principal of all of
the Notes shall have already become due and payable, either the Trustee or the
Holders of 25% in aggregate principal amount of the Notes then outstanding, by
notice in writing to the Company (and to the Trustee if given by Holders) (an
"Acceleration Notice"), may declare all principal and accrued interest thereon
to be due and payable and the same (i) shall become immediately due and
payable or (ii) if there are any amounts outstanding under the Credit
Agreement, shall become immediately due and payable upon the first to occur of
an acceleration under the Credit Agreement or five business days after receipt
by the Company and the representative of the holders of the Indebtedness under
the Credit Agreement of the Acceleration Notice, but only if such Event of
Default is then continuing. If an Event of Default specified in clause (iv)
above, relating to the Company or any significant Restricted Subsidiary
occurs, all principal and accrued interest thereon will be immediately due and
payable on all outstanding Notes without any declaration or other act on the
part of Trustee or the Holders. The Holders of a majority in aggregate
principal amount of Notes generally are authorized to rescind such
acceleration if all existing Events of Default, other than the non-payment of
the principal of, premium, if any, and interest on the Notes which have become
due solely by such acceleration, have been cured or waived.
The Indenture provides that in the event of a declaration of acceleration of
the Notes because an Event of Default has occurred and is continuing as a
result of the acceleration of any Indebtedness described in clause (v) of the
first paragraph under "--Events of Default and Remedies," the declaration of
acceleration of the Notes shall be automatically annulled if the holders of
all Indebtedness described in clause (v) (without any payment to any holders
of any such Indebtedness) have rescinded the declaration of acceleration in
respect of such Indebtedness within 30 days of the date of such declaration
and if (i) the annulment of the acceleration of the
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Notes would not conflict with any judgment or decree of a court of competent
jurisdiction and (ii) all Events of Default, except nonpayment of principal or
interest on the Notes that became due solely because of the acceleration of
the Notes, have been cured or waived.
The Holders of a majority in aggregate principal amount of the Notes at the
time outstanding may waive on behalf of all the Holders any default, except a
default in the payment of principal of or interest on any Note not yet cured,
or a default with respect to any covenant or provision which cannot be
modified or amended without the consent of the Holder of each outstanding Note
affected. Subject to the provisions of the Indenture relating to the duties of
the Trustee, the Trustee will be under no obligation to exercise any of its
rights or powers under the Indenture at the request, order or direction of any
of the Holders, unless such Holders have offered to the Trustee reasonable
security or indemnity. Subject to all provisions of the Indenture and
applicable law, the Holders of a majority in aggregate principal amount of the
Notes at the time outstanding will have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may, at its option and at any time,
elect to have its obligations discharged with respect to the outstanding Notes
("Legal Defeasance"). Such Legal Defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented, and
the Indenture shall cease to be of further effect as to all outstanding Notes,
except as to (i) rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments
are due from the trust funds; (ii) the Company's obligations with respect to
such 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; (iii) the
rights, powers, trust, duties, and immunities of the Trustee, and the
Company's obligations in connection therewith; and (iv) the Legal Defeasance
provisions of the Indenture. In addition, the Company may, at its option and
at any time, elect to have the obligations of the Company released with
respect to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations shall
not constitute a Default or Event of Default with respect to the 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, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the Holders of the Notes, U.S. Legal Tender, 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, if any, and interest on such Notes on the
stated date for payment thereof or on the redemption date of such principal or
installment of principal of, premium, if any, or interest on such Notes, and
the Holders of Notes must have a valid, perfected, exclusive security interest
in such trust; (ii) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to the Trustee confirming that (A) the Company has received from,
or there has been published by the Internal Revenue Service, a ruling or (B)
since the date of the Indenture, there has been a change in the applicable
Federal income tax law, in each case to the effect that, and based thereon
such opinion of counsel shall confirm that, the Holders of such 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 in the same
amount, in the same manner and at the same times as would have been the case
if such Legal Defeasance had not occurred; (iii) in the case of Covenant
Defeasance, the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to such Trustee confirming
that the Holders of such Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant Defeasance and will
be subject to federal income tax on the same amounts, in the same manner and
at the same times as would have been the case if such Covenant Defeasance had
not occurred; (iv) no Default or Event of Default shall have occurred and be
continuing
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on the date of such deposit 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; (v) such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a
default under the Indenture or any other material 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 is bound; (vi) the Company shall have
delivered to the Trustee an Officers' Certificate stating that the deposit was
not made by the Company with the intent of preferring the Holders of such
Notes 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 (vii) the Company shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for or relating to
the Legal Defeasance or the Covenant Defeasance have been complied with.
AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting the Company and the Trustee to
enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding,
the Company and the Trustee are permitted to amend or supplement the Indenture
or any supplemental indenture or modify the rights of the Holders; provided
that no such modification may, without the consent of each Holder affected
thereby: (i) change the Stated Maturity of any Note, or reduce the principal
amount thereof or the rate (or extend the time for payment) of interest
thereon or any premium payable upon the redemption thereof, or change the
place of payment where, or the coin or currency in which, any Note or any
premium or the interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date), or
reduce the Change of Control Purchase Price or the Asset Sale Offer Price or
alter the security or redemption provisions or the provisions of the
"Repurchase of Notes at the Option of the Holder Upon a Change of Control"
covenant in a manner adverse to the Holders, or (ii) reduce the percentage in
principal amount of the outstanding Notes, the consent of whose Holders is
required for any such amendment, supplemental indenture or waiver provided for
in the Indenture, or (iii) modify any of the waiver provisions, except to
increase any required percentage or to provide that certain other provisions
of the Indenture cannot be modified or waived without the consent of the
Holder of each outstanding Note affected thereby. With the consent of Holders
of two-thirds of the outstanding aggregate principal amount of the Notes, the
Company and the Trustee are permitted to change the Change of Control Purchase
Date or the Asset Sale Offer Period.
NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS
The Indenture provides that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of the Company or any
successor entity shall have any personal liability in respect of the
obligations of the Company under the Indenture or the Notes by reason of his
or its status as such stockholder, employee, officer or director.
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms contained in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (ii) any officer,
director, or controlling stockholder of such other Person. For purposes of
this definition, the term "control" means (a) the power to direct the
management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by
contract, or otherwise, or without limiting the foregoing, the beneficial
ownership of 10% or more of the voting power of the voting common equity
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of such Person (on a fully diluted basis) or of warrants or other rights to
acquire such equity (whether or not presently exercisable).
"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 Subsidiaries, the ratio of (i)
consolidated Indebtedness of such Person and its Subsidiaries on the
Transaction Date (after giving pro forma effect to the Incurrence of such
Indebtedness) divided by (ii) the aggregate amount of Annualized Operating
Cash Flow of such Person (determined on a pro forma basis after giving effect
to all acquisitions or dispositions of businesses made by such Person and its
Subsidiaries from the beginning of the Reference Period through the
Transaction Date as if such acquisition or disposition had occurred at the
beginning of such Reference Period); provided, that for purposes of such
computation, in calculating Annualized Operating Cash Flow and consolidated
Indebtedness, (a) 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; (b) 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 or to acquire businesses)
will be assumed to have occurred (on a pro forma basis) on the first day of
such Reference Period; (c) 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 (d) 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. When the foregoing
definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"Capitalized Lease Obligations" means obligations under a lease that are
required to be capitalized for financial reporting purposes in accordance with
GAAP, and the amount of Indebtedness represented by such obligations shall be
the capitalized amount of such obligations, as determined in accordance with
GAAP.
"Capital Stock" means, with respect to any Person, any capital stock of such
Person and shares, interests, participations or other ownership interests
(however designated) of any Person and any rights (other than debt securities
convertible into capital stock), warrants and options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each
general and limited partnership interest of such Person if such Person is a
partnership.
"Cash Equivalents" means (i) Securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case
maturing within one year after the date of acquisition and (iii) investments
in money market funds substantially all of whose assets comprise securities of
the types described in clauses (i) and (ii) above.
"Change of Control" means (i) any sale, transfer or other conveyance,
whether direct or indirect, of a majority of the fair market value of the
assets of the Company or Parent, on a consolidated basis, in one transaction
or a series of related transactions, if, immediately after giving effect to
such transaction, any "person" or "group" (as such terms are used for purposes
of Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable),
other than an Excluded Person or Excluded Group, is or becomes the "beneficial
owner" (as such term is used in Rule 13d-3 promulgated pursuant to the
Exchange Act), directly or indirectly,
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of more than 50% of the equity of the transferee, (ii) any person or "group"
(as such terms are used for purposes of Sections 13(d) and 14(d) of the
Exchange Act, whether or not applicable), other than an Excluded Person or
Excluded Group, is or becomes the "beneficial owner" (as such term is used in
Rule 13d-3 promulgated pursuant to the Exchange Act), directly or indirectly,
of more than 50% of the equity of the Company or Parent then outstanding
normally entitled to vote in elections of directors, or (iii) during any
period of 12 consecutive months after the Issue Date, individuals who at the
beginning of any such 12-month period constituted the Board of Directors of
the Company or Parent (together with any new directors whose election by such
Board or whose nomination for election by the shareholders of the Company or
Parent was approved by a vote of a majority of the directors then still in
office who were either directors at the beginning of such period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board of Directors of the Company or
Parent then in office.
"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, in accordance with the
following sentence, interest attributable to the Capitalized Lease
Obligations) of such Person and its consolidated Subsidiaries during such
period, 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 Interest Swap and Hedging Obligations, in each
case to the extent attributable to such period, and (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 of such Person to such Person or such Person's Wholly Owned
Subsidiaries). For purposes of this definition, (x) 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 (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or
a Subsidiary of such Person of an obligation of another Person shall be deemed
to be the interest expense attributable to the Indebtedness guaranteed. When
the foregoing definition is used in connection with the Company and its
Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its
Restricted Subsidiaries.
"Consolidated Net Income" of any Person for any period means the net income
(or loss) of such Person and its consolidated Subsidiaries for such period,
determined (on a consolidated basis) in accordance with GAAP, adjusted to
exclude (only to the extent included in computing such net income (or loss)
and without duplication) (i) 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), (ii) the net income, if positive, of any Person,
that is not a Subsidiary in which such Person or any of its Subsidiaries has
an interest, except to the extent of the amount of dividends or distributions
actually paid to such Person or a Subsidiary of such Person that both (x) are
actually paid in cash to such Person or a Subsidiary of such Person during
such period and (y) when taken together with all other dividends and
distributions paid during such period in cash to such Person or a Subsidiary
of such Person, are not in excess of such Person's pro rata share of such
other Person's aggregate net income earned during such period, (iii), 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 (iv) the
net income, if positive, 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. When the foregoing definition is
used in connection with the Company and its Restricted Subsidiaries,
references to a Person and its Subsidiaries in the foregoing definition shall
be deemed to refer to the Company and its Restricted Subsidiaries.
"Credit Agreement" means, the Credit Agreement described under "Description
of New Credit Facility," or any other senior loan facility syndicated by DLJ
Capital Funding in lieu thereof, together with the related documents thereto
(including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or
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otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring or adding
Restricted Subsidiaries of the Issuer as additional borrowers or guarantors
thereunder) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders. There can only be one such credit facility or loan
agreement designated to be the "Credit Agreement" at any one time. Any
Indebtedness Incurred pursuant to the second paragraph of the "Limitation on
Additional Indebtedness" covenant may be Incurred pursuant to the terms of the
Credit Agreement, provided that such Indebtedness so Incurred shall be deemed
to have been Incurred pursuant to the Credit Agreement for all purposes of the
Indenture other than with respect to the "Limitation on Additional
Indebtedness" covenant and clause (3) of the first paragraph of the
"Limitation on Asset Sales and Sales of Subsidiary Stock" covenant.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect
against fluctuation in currency values.
"Default" means any event or condition that is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Senior Indebtedness" means, so long as it is in effect, the
Credit Agreement and, thereafter, any Senior Indebtedness designated by the
Company to be "Designated Senior Indebtedness".
"Disqualified Capital Stock" means, with respect to any Person, Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the
happening of any event or the passage of time would be, required to be
redeemed or repurchased (including at the option of the holder thereof) by
such Person or any of its Subsidiaries, in whole or in part, on or prior to
the Stated Maturity of the Notes; provided that Capital Stock will not be
deemed to be Disqualified Capital Stock if it may only be so redeemed or
repurchased solely in consideration of Qualified Capital Stock of the Company
or Parent.
"Eligible Investments" means United States Treasury Bills maturing no later
than the Business Day preceding December 31, 1997.
"Excluded Group" means a "group" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) that includes one or more Excluded Persons;
provided that the voting power of the Capital Stock of the Company or Parent
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such Excluded Persons (without attribution to such Excluded
Persons of the ownership by other members of the "group") represents a
majority of the voting power of the Capital Stock "beneficially owned" (as
such term is used in Rule 13d-3 promulgated under the Exchange Act) by such
group.
"Excluded Person" means members of the Price family who owned Capital Stock
of the Parent on the Issue Date and any Affiliate of any of the foregoing that
is wholly owned by any of the foregoing.
"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence and outstanding on the Issue Date.
"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 ("FASB") or, if FASB ceases to exist,
any successor thereto; provided, however, that for purposes of determining
compliance with covenants in the Indenture, "GAAP" means such generally
accepted accounting principles as in effect as of the Issue Date.
"Holder" means a Person in whose name a Note is registered. The Holder of a
Note will be treated as the owner of such Note for all purposes.
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"Indebtedness" of any Person means, without duplication, (a) all liabilities
and obligations, contingent or otherwise, of such Person, (i) in respect of
borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such Person or only to a portion thereof), (ii) evidenced by
bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts, payable or other obligations to trade creditors
which have remained unpaid for greater than 90 days past their original due
date or to financial institutions, which obligations are not being contested
in good faith and for which appropriate reserves have been established) those
incurred in the ordinary course of its business that would constitute
ordinarily a trade payable to trade creditors, (iv) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (v) for the
payment of money relating to a Capitalized Lease Obligation, or (vi) evidenced
by a letter of credit or a reimbursement obligation of such Person with
respect to any letter of credit; (b) all obligations of such Person under
Interest Swap and Hedging Obligations; (c) all liabilities of others of the
kind described in the preceding clauses (a) or (b) that such Person has
guaranteed or that is otherwise its legal liability or which are secured by
any assets or property of such Person and all obligations to purchase, redeem
or acquire any Capital Stock; (d) all Disqualified Capital Stock of such
Person and all Preferred Stock of such Person's Subsidiaries; and (e) any and
all deferrals, renewals, extensions, refinancing and refundings (whether
direct or indirect) of, or amendments, modifications or supplements to, any
liability of the kind described in any of the preceding clauses (a), (b), (c),
or (d) or this clause (e), whether or not between or among the same parties;
provided that the outstanding principal amount at any date of any Indebtedness
issued with original issue discount is the face amount of such Indebtedness
less the remaining unamortized portion of the original issue discount of such
Indebtedness at such date.
"Interest Swap and Hedging Obligations" means any obligations of any Person
pursuant to any interest rate swaps, caps, collars and similar arrangements
providing protection against fluctuations in interest rates. For purposes of
the Indenture, the amount of such obligations shall be the amount determined
in respect thereof as of the end of the then most recently ended fiscal
quarter of such Person, based on the assumption that such obligation had
terminated at the end of such fiscal quarter, and in making such
determination, if any agreement relating to such obligation provides for the
netting of amounts payable by and to such Person thereunder or if any such
agreement provides for the simultaneous payment of amounts by and to such
Person, then in each such case, the amount of such obligations shall be the
net amount so determined, plus any premium due upon default by such Person.
"Investment" by any Person in any other Person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise)
by such Person (whether for cash, property, services, securities or otherwise)
of capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities of such other Person or any agreement to make
any such acquisition; (b) the making by such Person of any deposit with, or
advance, loan or other extension of credit to, such other Person (including
the purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) or any commitment to make any such advance, loan or extension; (c) the
entering into by such Person of any guarantee of, or other contingent
obligation with respect to, Indebtedness or other liability of such other
Person; (d) the making of any capital contribution by such Person to such
other Person; and (e) the designation by the Board of Directors of the Company
of any Person to be an Unrestricted Subsidiary. For purposes of the
"Limitation on Restricted Payments" covenant, (i) "Investment" shall include
and be valued at the fair market value of the net assets of any Restricted
Subsidiary at the time that such Restricted Subsidiary is designated an
Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any
Investment shall be the fair market value of such Investment plus the fair
market value of all additional Investments by the Company or any of its
Restricted Subsidiaries at the time any such Investment is made; provided
that, for purposes of this sentence, the fair market value of net assets in
excess of $5,000,000 shall be as determined by an independent appraiser of
national reputation.
"Issue Date" means the time and date of the first issuance of the Notes
under the Indenture.
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"Junior Indebtedness" means Indebtedness of the Company that (i) requires no
payment of principal prior to or on the date on which all principal of and
interest on the Notes is paid in full and (ii) is subordinate and junior in
right of payment to the Notes in all respects.
"Junior Securities" of any Person means securities (including Capital Stock
but excluding Disqualified Capital Stock) issued by such Person to a Holder on
account of the Notes that (i) has a Weighted Average Life and maturity or
mandatory redemption obligation, if any, longer than, or occurring after the
final maturity date of, all Designated Senior Indebtedness of such Person
outstanding on the date of issuance of such Junior Securities, (ii) by their
terms or by law are subordinated to Designated Senior Indebtedness of such
Person outstanding on the date of issuance of such Junior Securities at least
to the same extent as the Notes and (iii) are not secured by any assets or
property of the Company or any of its Subsidiaries. As used herein,
"Designated Senior Indebtedness of such Person outstanding on the date of
issuance of such Junior Securities" shall include securities issued in
connection with a reorganization pursuant to the bankruptcy laws of any
jurisdiction to Persons which held "Designated Senior Indebtedness" in such
reorganization proceeding.
"Lien" means any mortgage, lien, pledge, charge, security interest, or other
encumbrance of any kind, whether or not filed, recorded or otherwise perfected
under applicable law (including any conditional sale or other title retention
agreement and any lease deemed to constitute a security interest and any
option or other agreement to give any security interest).
"Maturity Date" means, when used with respect to any Note, the date
specified on such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to the provisions of the Indenture regarding acceleration of
Indebtedness or any Change of Control Offer, Proceeds Purchase Offer or Asset
Sale Offer).
"Merger" means the merger of the Company with and into Palmer.
"Merger Date" means the time and date of the consummation of the Merger.
"Net Cash Proceeds" means the aggregate amount of cash and Cash Equivalents
received by the Company and its Restricted Subsidiaries in respect of an Asset
Sale (including upon the conversion to cash and Cash Equivalents of (A) any
note or installment receivable at any time, or (B) any other property as and
when any cash and Cash Equivalents are received in respect of any property
received in an Asset Sale but only to the extent such cash and Cash
Equivalents are received within one year after such Asset Sale), less the sum
of (i) all reasonable out-of-pocket fees, commissions and other expenses
incurred in connection with such Asset Sale, including the amount (estimated
in good faith by the Board of Directors of the Company) of income, franchise,
sales and other applicable taxes required to be paid by the Company or any
Restricted Subsidiary of the Company in connection with such Asset Sale and
(ii) the aggregate amount of cash so received which is used to retire any
existing Senior Indebtedness of the Company or Indebtedness of its Restricted
Subsidiaries, as the case may be, which is required to be repaid in connection
with such Asset Sale or is secured by a Lien on the property or assets of the
Company or any of its Restricted Subsidiaries, as the case may be.
"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 net proceeds (including the fair market
value of non-cash proceeds constituting equipment or other assets of a type
generally used in a Related Business an amount reasonably determined by the
Board of Directors of the Company for amounts under $5,000,000 and by a
financial advisor or appraiser of national reputation for equal or greater
amounts) received by a Person from the sale of Qualified Capital Stock (other
than to a Subsidiary of such Person) after payment of out-of-pocket expenses,
commissions and discounts incurred in connection therewith.
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"Obligation" means any principal, premium, interest (including interest
accruing subsequent to a bankruptcy or other similar proceeding whether or not
such interest is an allowed claim enforceable against the Company in a
bankruptcy case under Federal bankruptcy law), penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable
pursuant to the terms of the documentation governing any Indebtedness.
"Operating Cash Flow" of any Person means (a), with respect to any period,
the Consolidated Net Income of such Person for such period, plus (b) the sum,
without duplication (and only to the extent such amounts are deducted from net
revenues in determining such Consolidated Net Income), of (i) the provisions
for income taxes for such period for such Person and its consolidated
Subsidiaries, (ii) depreciation, amortization and other non-cash charges of
such Person and its consolidated Subsidiaries and (iii) Consolidated Interest
Expense of such Person for such period, determined, in each case, on a
consolidated basis for such Person and its consolidated Subsidiaries in
accordance with GAAP, less (c) the amount of all cash payments made during
such period by such Person and its Subsidiaries to the extent such payments
relate to non-cash charges that were added back in determining Operating Cash
Flow for such period or for any prior period. When the foregoing definition is
used in connection with the Company and its Restricted Subsidiaries,
references to a Person and its Subsidiaries in the foregoing definition shall
be deemed to refer to the Company and its Restricted Subsidiaries.
"Parent" shall mean PCC or any directly or indirectly wholly owned
subsidiary of PCC that directly or indirectly wholly owns the Company.
"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 Related Business;
provided that, in the case of the Company or its Restricted Subsidiaries, as
applicable, (x) (i) 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, (ii) the Company's consolidated Senior
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 $120, (iii) the Company's consolidated
Indebtedness divided by the Net Pops of the Company and its Restricted
Subsidiaries does not exceed $160 as a result of the acquisition and such
Incurrence and (iv) 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 or (y) (i) under the terms of such Indebtedness and pursuant to
applicable law, no recourse could be had for the payment of principal,
interest or premium with respect to such Indebtedness or for any claim based
thereon against the Company or any Person that constituted a Restricted
Subsidiary immediately prior to the consummation of such acquisition or any of
their property or assets, (ii) the obligor of such Indebtedness shall have,
immediately after giving effect to such acquisition and such Incurrence on a
pro forma basis, a ratio of Annualized Operating Cash Flow as of the date of
the acquisition to the product of Consolidated Interest Expense for the
Reference Period multiplied by four (but excluding from Consolidated Interest
Expense all amounts that are not required to be paid in cash on a current
basis) of at least 1 to 1 and (iii) immediately subsequent to the Incurrence
of such Indebtedness, the obligor thereof shall be a Restricted Subsidiary and
shall have been designated by the Company (as evidenced by an Officers'
Certificate delivered promptly to the Trustee) to be a "Non-Recourse
Restricted Subsidiary."
"Permitted Investment" means (i) Investments in Cash Equivalents; (ii)
Investments in the Company or a Restricted Subsidiary (other than a Non-
Recourse Restricted Subsidiary); (iii) Investments in a Person substantially
all of whose assets are of a type generally used in a Related Business (an
"Acquired Person") if, as a result of such Investments, (A) the Acquired
Person immediately thereupon becomes a Restricted Subsidiary (other than a
Non-Recourse Restricted Subsidiary) or (B) the Acquired Person immediately
thereupon either (1) is merged or consolidated with or into the Company or any
of its Restricted Subsidiaries (other than a Non-Recourse Restricted
Subsidiary) and the surviving Person is the Company or a Restricted Subsidiary
(other than a Non-Recourse Restricted Subsidiary) or (2) transfers or conveys
all or substantially all of its assets to, or is liquidated into, the Company
or any of its Restricted Subsidiaries (other than a Non-Recourse Restricted
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Subsidiary); (iv) Investments in accounts and notes receivable acquired in the
ordinary course of business; (v) any securities received in connection with an
Asset Sale (other than those of a Non-Recourse Restricted Subsidiary) and any
investment with the Net Cash Proceeds from any Asset Sale in Capital Stock of
a Person, all or substantially all of whose assets are of a type used in a
Related Business, that complies with the "Limitation on Asset Sales and Sales
of Subsidiary Stock" covenant; (vi) any guarantee issued by a Restricted
Subsidiary in respect of Senior Indebtedness Incurred in compliance with the
Indenture; (vii) advances and prepayments for asset purchases in the ordinary
course of business in a Related Business of the Company or a Restricted
Subsidiary; (viii) Investments in Non-Recourse Restricted Subsidiaries with
the proceeds of contributions irrevocably and unconditionally received without
restriction by the Company from Parent; and (ix) customary loans or advances
made in the ordinary course of business to officers, directors or employees of
the Company or any of its Restricted Subsidiaries for travel, entertainment,
and moving and other relocation expenses.
"Permitted Lien" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges
not yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen
or other like Liens arising by operation of law in the ordinary course of
business provided that (i) the underlying obligations are not overdue for a
period of more than 30 days, and (ii) such Liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect
thereto are maintained on the books of the Company in accordance with GAAP;
(d) Liens securing the performance of bids, trade contracts (other than
borrowed money), leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature incurred in the
ordinary course of business; (e) easements, rights-of-way, zoning, similar
restrictions and other similar encumbrances or title defects which, singly or
in the aggregate, do not in any case materially detract from the value of the
property, subject thereto (as such property is used by the Company or any of
its Restricted Subsidiaries) or interfere with the ordinary conduct of the
business of the Company or any of its Restricted Subsidiaries; (f) Liens
arising by operation of law in connection with judgments, only to the extent,
for an amount and for a period not resulting in an Event of Default with
respect thereto; (g) pledges or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance and
other types of social security legislation; (h) Liens in favor of the Trustee
arising under the Indenture; (i) Liens securing Permitted Acquisition
Indebtedness, which either (A) were not incurred or issued in anticipation of
such acquisition or (B) secure Permitted Acquisition Indebtedness meeting the
requirements set forth in clause (y) of the definition thereof; (j) Liens
securing Senior Indebtedness that was incurred in accordance with the
"Limitation on Incurrence of Additional Indebtedness" covenant; (k) Liens
securing Indebtedness of a Person existing at the time such Person becomes a
Restricted Subsidiary or is merged with or into the Company or a Restricted
Subsidiary, provided that such Liens were in existence prior to the date of
such acquisition, merger or consolidation, were not incurred in anticipation
thereof, and do not extend to any other assets; (l) Liens arising from
Purchase Money Indebtedness permitted under the Indenture; (m) Liens securing
Refinancing Indebtedness Incurred to refinance any Indebtedness that was
previously so secured in a manner no more adverse to the Holders of the Notes
than the terms of the Liens securing such refinanced Indebtedness; and (n)
Liens in favor of the Company or a Wholly Owned Restricted Subsidiary.
"Person" means any corporation, individual, joint stock company, joint
venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality
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.
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"Purchase Money Indebtedness" means Indebtedness of the Company or its
Restricted Subsidiaries Incurred in connection with the purchase of property
or assets for the business of the Company or its Restricted Subsidiaries,
provided that the recourse of the lenders with respect to such Indebtedness is
limited solely to the property or assets so purchased without further recourse
to either the Company or any of its Restricted Subsidiaries.
"Qualified Capital Stock" means any Capital Stock of a Person that is not
Disqualified Capital Stock.
"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.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or
(b) constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the
case of Disqualified Capital Stock, liquidation preference (or if such
Indebtedness or Disqualified Capital Stock does not require cash payments
prior to maturity or is otherwise issued at a discount, the original issue
price of such Indebtedness or Disqualified Capital Stock), not to exceed the
sum of (x) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such
Refinancing, (y) the amount of any premium required to be paid in connection
with such refinancing pursuant to the terms of such Indebtedness and (z) all
other customary fees and expenses of the Company or such Restricted Subsidiary
reasonably incurred in connection with such refinancing; provided, that (A)
Refinancing Indebtedness issued by any Restricted Subsidiary of the Company
shall only be used to Refinance outstanding Indebtedness or Disqualified
Capital Stock of such Restricted Subsidiary, (B) Refinancing Indebtedness
shall (x) not have a Weighted Average Life shorter than the Indebtedness or
Disqualified Capital Stock to be so refinanced at the time of such Refinancing
and (y) in all respects, be no less subordinated or junior, if applicable, to
the rights of Holders of the Notes than was the Indebtedness or Disqualified
Capital Stock to be refinanced and (C) such Refinancing Indebtedness shall
have no installments of principal (or redemption payment) scheduled to come
due earlier than the scheduled maturity of any installment of principal (or
redemption payment) of the Indebtedness or Disqualified Capital Stock to be so
refinanced which was scheduled to come due prior to the Stated Maturity of the
Notes.
"Related Business" means any business directly related to the ownership,
development, operation, and acquisition of wireless cellular communications
systems.
"Related Person" means, with respect to any Person, (i) any Affiliate of
such Person or any spouse, immediate family member, or other relative who has
the same principal residence of any Affiliate of such Person and (ii) any
trust in which any Person described in clause (i) above, has a beneficial
interest.
"Restricted Payment" means, with respect to any Person, (i) any dividend or
other distribution on shares of Capital Stock of such Person, its Parent, or
any Subsidiary of such Person, (ii) any payment on account of the purchase,
redemption or other acquisition or retirement for value, or any payment in
respect of any amendment (in anticipation of or in connection with any such
retirement, acquisition or defeasance) in whole or in part, of any shares of
Capital Stock of such Person, its Parent, or any Subsidiary of such Person
held by Persons other than such Person or any of its Restricted Subsidiaries,
(iii) any defeasance, redemption, repurchase or other acquisition or
retirement for value, or any payment in respect of any amendment (in
anticipation of or in connection with any such retirement, acquisition or
defeasance) in whole or in part, of any Indebtedness of the Company (other
than the scheduled repayment thereof at maturity and any mandatory redemption
or mandatory repurchase thereof pursuant to the terms thereof) by such Person
or a Subsidiary of such Person that is
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subordinate in right of payment to, or ranks pari passu (other than the Notes)
with, the Notes (other than in exchange for Refinancing Indebtedness permitted
to be Incurred under the Indenture and except for any such defeasance,
redemption, repurchase, other acquisition or payment in respect of
Indebtedness held by any Restricted Subsidiary) and (iv) any Investment (other
than a Permitted Investment); provided, however, that the term "Restricted
Payment" does not include (i) any dividend, distribution or other payment on
shares of Capital Stock of the Company or any Restricted Subsidiary solely in
shares of Qualified Capital Stock, (ii) any dividend, distribution or other
payment to the Company, or any dividend to any of its Restricted Subsidiaries,
by any of its Subsidiaries, (iii) the purchase, redemption or other
acquisition or retirement for value of shares of Capital Stock of any
Restricted Subsidiary (other than Non-Recourse Restricted Subsidiaries) held
by Persons other than the Company or any of its Restricted Subsidiaries, (iv)
payments to satisfy obligations to pay statutory appraisal rights resulting
from the Merger and any settlement in respect thereof to security holders of
Palmer, (v) fees and expenses incurred in connection with the Merger, and (vi)
cash payment in respect of purchases of options and rights for shares of
Palmer common stock issued pursuant to Palmer's 1995 Stock Option Plan, 1995
Directors' Stock Option Plan, 1995 Employee Stock Purchase Plan and 1995 Non-
Employee Director Stock Purchase Plan.
"Restricted Subsidiary" means any Subsidiary of the Company which at the
time of determination is not an Unrestricted Subsidiary. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary only if, immediately before and after giving effect to
such designation, there would exist no Default or Event of Default and the
Company could incur at least $1.00 of Indebtedness pursuant to the Annualized
Operating Cash Flow Ratio test of the "Limitation on Incurrence of Additional
Indebtedness" covenant, on a pro forma basis taking into account such
designation.
"Senior Indebtedness" means all Indebtedness of the Company (including, with
respect to the Credit Agreement, all Obligations), including interest thereon,
whether outstanding on the Issue Date or thereafter issued, 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.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
shall not include (a) Indebtedness that is expressly subordinated or junior in
right of payment to any Indebtedness of the Company, (b) Indebtedness
represented by Disqualified Capital Stock, (c) any liability for Federal,
state, local or other taxes owed or owing by the Company, (d) Indebtedness of
the Company to any Subsidiary of the Company or any Affiliate of the Company
(other than Purchase Money Indebtedness constituting at least 75% but not more
than 100% of the cost of wireless cellular communication system equipment and
other related fixed assets, Incurred in compliance with the "Limitation on
Incurrence of Additional Indebtedness" covenant), (e) trade payables and (f)
Indebtedness to the extent incurred in violation of the Indenture.
"Significant Restricted Subsidiary" means one or more Restricted
Subsidiaries having an aggregate net book value of assets in excess of 5% of
the net book value of the assets of the Company and its Restricted
Subsidiaries on a consolidated basis.
"Stated Maturity" means the date fixed for the payment of any principal or
premium pursuant to the Indenture and the Notes, including the Maturity Date,
upon redemption, acceleration, Asset Sale Offer, Proceeds Purchase Offer,
Change of Control Offer or otherwise.
"Subsidiary" with respect to any Person, means (i) a corporation at least
fifty percent of whose Capital Stock with voting power, under ordinary
circumstances to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or
by one or more Subsidiaries of such Person, or (ii) a partnership in which
such Person or a Subsidiary of such Person is, at the time, a general partner
of such partnership, or (iii) any Person in which such Person, one or more
Subsidiaries of such Person, or such Person and one or more Subsidiaries of
such Person, directly or indirectly, at the date of determination thereof has
(x) at least a fifty percent ownership interest or (y) the power to elect or
direct the election of the directors or other governing body of such Person.
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"Unrestricted Subsidiary" shall mean any Subsidiary of the Company that, at
the time of determination, shall be an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below). The Board of
Directors of the Company may designate any Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary at or prior to the
time it is so formed or acquired) to be an Unrestricted Subsidiary if (a) no
Default or Event of Default is existing or will occur as a consequence
thereof, (b) such Subsidiary does not own any Capital Stock of, or own or hold
any Lien on any property or asset of, the Company or any Restricted Subsidiary
that is not a Subsidiary of the Subsidiary to be so designated and (c) such
Subsidiary and each of its Subsidiaries has not at the time of designation,
and does not thereafter, create, incur, issue, assume, guarantee, or otherwise
become directly or indirectly liable with respect to any Indebtedness pursuant
to which the lender has recourse to any property or assets of the Company or
any of its Restricted Subsidiaries (except that such Subsidiary and its
Subsidiaries may guarantee the Notes); provided that either (A) the Subsidiary
to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, that such designation would be
permitted under the "Limitation on Restricted Payments" covenant. Each such
designation shall be evidenced by filing with the Trustee a certified copy of
the resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions.
"Voting Stock" means Capital Stock of the Company having generally the right
to vote in the election of a majority of the directors of the Company or
having generally the right to vote with respect to the organizational matters
of the Company.
"Weighted Average Life" means, as of the date of determination, with respect
to any debt instrument, the quotient obtained by dividing (i) the sum of the
products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such debt instrument
multiplied by the amount of each such respective principal payment by (ii) the
sum of all such principal payments.
"Wholly Owned" means, with respect to a Subsidiary of the Company, (i) a
Subsidiary that is a corporation, of which not less than 99% of the Capital
Stock (except for directors' qualifying shares or certain minority interests
owned by other Persons solely due to local law requirements that there be more
than one stockholder, but which interest is not in excess of what is required
for such purpose) is owned directly by such Person or through one or more
other Wholly Owned Subsidiaries of such Person, or (ii) any entity other than
a corporation in which such Person, directly or indirectly, owns not less than
99% of the Capital Stock of such entity.
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
Holders of New Notes are not entitled to any registration rights with
respect to the New Notes. Holders of Old Notes are entitled to certain
registration rights pursuant to the Registration Rights Agreement. Pursuant to
the Registration Rights Agreement, the Company has agreed to file with the SEC
and have declared effective on or prior to December 7, 1997 a registration
statement (the "Exchange Offer Registration Statement") under the Securities
Act with respect with the Exchange Offer. The Company also agreed that, after
the effectiveness of the Exchange Offer Registration Statement, it would,
subject to certain conditions, offer to the Holders of Old Notes who are able
to make certain representations the opportunity to exchange their Old Notes
for New Notes. In the event that applicable interpretations of the staff of
the SEC do not permit the Company to effect the Exchange Offer ("SEC
Blockage") or do not permit any Holder of Old Notes, subject to certain
limitations, to participate in such Exchange Offer, the Company has agreed to
file with the SEC a shelf registration statement (the "Shelf Registration
Statement") to cover resales of the applicable Old Notes. The Registration
Statement of which this Prospectus is a part constitutes the Exchange Offer
Registration Statement.
The Registration Rights Agreement provides that (i) the Company will use its
reasonable best efforts to have the Exchange Offer Registration Statement
(and, if applicable, a Shelf Registration Statement) declared effective by the
SEC on or prior to December 7, 1997. If the Exchange Offer has not been
consummated by January 6, 1998 (unless there exists a SEC Blockage) (such
event, a "Registration Default"), the Company will pay liquidated damages to
each Holder of Old Notes, during the first 90-day period immediately following
the
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occurrence of such Registration Default in an amount equal to $0.05 per week
per $1,000 principal amount of Notes constituting Old Notes held by such
Holder. The amount of the liquidated damages will increase by an additional
$0.05 per week per $1,000 principal amount constituting Old Notes for each
subsequent 90-day period until the Exchange Offer is consummated, up to a
maximum amount of liquidated damages of $0.25 per week per $1,000 principal
amount of Notes constituting Old Notes. All accrued liquidated damages shall
be paid to Holders in the same manner as interest payments on the Notes on
semi-annual Damages Payment Dates which correspond to interest payment dates
for the Notes.
The Registration Rights Agreement provides that the Company (i) shall make
available for a period of 90 days after the consummation of the Exchange Offer
a prospectus meeting the requirements of the Securities Act to any broker-
dealer for use in connection with any resale of any such New Notes and (ii)
shall pay all expenses incident to the Exchange Offer (including the expenses
of one counsel to the Holders of the Notes) and will indemnify certain Holders
of the Notes (including any broker-dealer) against certain liabilities,
including liabilities under the Securities Act.
Holders of Old Notes will be required to make certain representations to the
Company (as described in the Registration Rights Agreement) in order to
participate in the Exchange Offer and will be required to deliver information
to be used in connection with the Shelf Registration Statement and to provide
comments on the Shelf Registration Statement within the time periods set forth
in the Registration Rights Agreement in order to have their Old Notes included
in the Shelf Registration Statement and benefit from the provisions regarding
liquidated damages set forth in the preceding sentence. In addition, for so
long as the Notes are outstanding, the Company will continue to provide to
Holders of Notes and to prospective purchasers of the Notes the information
required by Rule 144A(d)(4). The Company will provide a copy of the
Registration Rights Agreement to prospective investors upon request.
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UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following summary describes the material United States federal income
tax consequences of the ownership and disposition of the Notes by Holders who
acquired such securities in the Offering (the "Initial Holders"). This summary
is based on the Internal Revenue Code of 1986, as amended to the date hereof
(the "Code"), administrative pronouncements, judicial decisions and existing
and proposed Treasury Regulations, changes to any of which subsequent to the
date of this Prospectus may affect the tax consequences described herein. This
summary discusses only Notes held as capital assets within the meaning of
Section 1221 of the Code. It does not discuss all of the tax consequences that
may be relevant to a Holder in light of his particular circumstances or to
Holders subject to special rules, such as persons who are not U.S. Holders (as
defined below) or Initial Holders, certain financial institutions, insurance
companies, dealers in securities and Holders who hold the Notes as part of a
straddle or a hedging or conversion transaction. Holders of Notes should
consult their tax advisors with regard to the application of the United States
federal income tax laws to their particular situations as well as any tax
consequences arising under the laws of any state, local or foreign taxing
jurisdiction.
As used herein, the term "U.S. Holder" means a beneficial owner of a Note
that, for United States federal income tax purposes, is (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized in or under the laws of the United States or of any
political subdivision thereof, or (iii) an estate or trust the income of which
is subject to United States federal income taxation regardless of its source.
The term also includes certain former citizens or residents of the United
States.
PAYMENTS OF INTEREST
Interest paid on a Note will generally be taxable as ordinary income at the
time it accrues or is received in accordance with the U.S. Holder's method of
accounting for federal income tax purposes.
EXCHANGE OFFER
The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not result in any federal income tax consequences to U.S. Holders. When a U.S.
Holder exchanges an Old Note for a New Note pursuant to the Exchange Offer,
the U.S. Holder will have the same adjusted basis and holding period in the
New Note as in the Old Note immediately before the exchange.
REDEMPTION
A U.S. Holder will recognize a capital gain upon a Special Redemption or an
Optional Redemption equal to the excess, if any, of the redemption price over
the principal amount of a Note.
THE MERGER
Although there is no authority with respect to a transaction closely
comparable to the issuance of the Notes in anticipation of a merger of the
obligor into an unrelated entity pursuant to an acquisition agreement between
the obligor's indirect parent and such entity, the Company believes that upon
the Merger an Initial Holder (i) would not have recognized gain or loss, and
(ii) would have a tax basis equal to the principal amount of the Notes and a
holding period that commenced on the date of the Merger.
U.S. Holders who are not Initial Holders are urged to consult their tax
advisors with respect to the consequences, if any, of the Merger.
93
<PAGE>
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that for a period of 90 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any such broker-dealer for use in connection with any such
resale. The Company will not receive any proceeds from any sale of New Notes
by broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the New Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or negotiated prices. Any such
resale may be made directly to purchasers or to or through brokers or dealers
who may receive compensation in the form of commissions or concessions from
any such broker-dealer and/or the purchasers of any such New Notes. Any
broker-dealer that resells New Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker-dealer that participates
in a distribution of such New Notes may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
New Notes and any commissions or concessions received by any such persons may
be deemed to be underwriting compensation under the Securities Act. The Letter
of Transmittal states that by acknowledging that it will deliver and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
For a period of 90 days after the Expiration Date the Company will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the
Letter of Transmittal.
The Company has agreed in the Registration Rights Agreement to indemnify
each broker-dealer reselling New Notes pursuant to this Prospectus, and their
officers, directors and controlling persons, against certain liabilities in
connection with the offer and sale of the New Notes, including liabilities
under the Securities Act, or to contribute to payments that such broker-
dealers may be required to make in respect thereof.
LEGAL MATTERS
The legality of the New Notes offered hereby will be passed upon for the
Company by Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated balance sheets of Palmer Wireless, Inc. and subsidiaries as
of December 31, 1996 and 1995 and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three years ended December 31, 1996 appearing in this Prospectus and
Registration Statement have been audited by KPMG Peat Marwick LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein and
in the Registration Statement, and have been so included in reliance upon the
reports of such firm given upon their authority as experts in accounting and
auditing.
94
<PAGE>
AVAILABLE INFORMATION
This Prospectus constitutes a part of the Registration Statement on Form S-4
under the Securities Act filed by the Company with the SEC under the
Securities Act. As permitted by the rules and regulations of the SEC, this
Prospectus does not contain all of the information contained in the
Registration Statement and the exhibits and schedules thereto and reference is
hereby made to the Registration Statement and the exhibits and schedules
thereto for further information with respect to the Company and the Notes
offered hereby. Statements contained herein concerning the provisions of any
documents filed as an exhibit to the Registration Statement or otherwise filed
with the SEC are not necessarily complete, and in each instance reference is
made to the copy of such document so filed. Each such statement is qualified
in its entirety by such reference.
CERTAIN TERMS
Interests in cellular markets that are licensed by the FCC are commonly
measured on the basis of the population of the market served, with each person
in the market area referred to as a "Pop." The number of Pops or Net Pops
owned is not necessarily indicative of the number of subscribers or potential
subscribers. As used in this Prospectus, unless otherwise indicated, the term
"Pops" means the estimate of the 1996 population of an MSA or RSA, as derived
from the 1996 Donnelley Market Information Service. The term "Net Pops" means
the estimated population with respect to a given service area multiplied by
the percentage interest that the Company owns in the entity licensed in such
service area. MSAs and RSAs are also referred to as "markets." The term
"wireline" license refers to the license for any market initially awarded to a
company or group that was affiliated with a local landline telephone carrier
in the market, and the term "non-wireline" license refers to the license for
any market that was initially awarded to a company, individual or group not
affiliated with any landline carrier. The term "System" means an FCC-licensed
cellular telephone system. The term "CTIA" means the Cellular
Telecommunications Industry Association.
95
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PALMER WIRELESS, INC. AND SUBSIDIARIES
Independent Auditors' Report............................................ F-2
Consolidated Balance Sheets, December 31, 1995 and 1996 ................ F-3
Consolidated Statements of Operations, Years Ended December 31, 1994,
1995 and 1996 ......................................................... F-4
Consolidated Statements of Stockholders' Equity, Years Ended December
31, 1994, 1995
and 1996 .............................................................. F-5
Consolidated Statements of Cash Flows, Years Ended December 31, 1994,
1995 and 1996 ......................................................... F-6
Notes to Consolidated Financial Statements ............................. F-8
Condensed Consolidated Balance Sheets, December 31, 1996 and June 30,
1997 (Unaudited) ...................................................... F-21
Condensed Consolidated Statements of Operations, Six Months Ended June
30, 1996 and 1997 (Unaudited) ......................................... F-22
Condensed Consolidated Statements of Stockholders' Equity, Year Ended
December 31, 1996 and Six Months Ended June 30, 1997 (Unaudited) ...... F-23
Condensed Consolidated Statements of Cash Flows, Six Months Ended June
30, 1996 and 1997 (Unaudited) ......................................... F-24
Notes to Condensed Consolidated Financial Statements (Unaudited) ....... F-25
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Palmer Wireless, Inc.:
We have audited the accompanying consolidated balance sheets of Palmer
Wireless, Inc. and subsidiaries as of December 31, 1995 and 1996, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period 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 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 financial position of Palmer
Wireless, Inc. and subsidiaries at December 31, 1995 and 1996, and the results
of their operations and their cash flows for each of the years in the three-
year period ended December 31, 1996, in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Des Moines, Iowa
January 30, 1997,
except for Note 10 which is as of
February 1, 1997
F-2
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------
1995 1996
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C>
ASSETS (NOTE 4)
Current assets:
Cash and cash equivalents....................... $ 3,436 $ 1,698
Trade accounts receivable, net of allowance for
doubtful accounts of $1,880 in 1995 and $1,791
in 1996........................................ 17,347 18,784
Receivable from other cellular carriers......... 3,936 1,706
Prepaid expenses and deposits................... 1,111 2,313
Inventory....................................... 2,434 5,106
Deferred income taxes (note 5).................. 821 830
-------------- --------------
Total current assets.......................... $ 29,085 $ 30,437
-------------- --------------
Property, plant and equipment:
Land and improvements........................... 3,796 5,238
Buildings and improvements...................... 5,120 7,685
Equipment, communication systems, and
furnishings.................................... 127,140 166,735
-------------- --------------
$ 136,056 $ 179,658
Less accumulated depreciation and amortization.. 35,120 47,220
-------------- --------------
Net property, plant and equipment............... $ 100,936 $ 132,438
-------------- --------------
Licenses and goodwill, at cost less accumulated
amortization of $20,828 in 1995 and $30,188 in
1996 (note 3)................................... 321,053 375,808
Other intangible assets and other assets, at cost
less accumulated amortization of $4,471 in 1995
and $7,311 in 1996.............................. 11,797 11,259
-------------- --------------
Total assets.................................. $ 462,871 $ 549,942
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt (note
4)............................................. $ 7,441 $ 5,296
Notes payable (note 4).......................... -- 1,366
Accounts payable................................ 10,795 10,394
Accrued interest payable........................ 2,508 2,341
Accrued salaries and employee benefits.......... 2,267 2,432
Other accrued liabilities....................... 4,058 3,626
Deferred revenue................................ 2,860 3,929
Customer deposits............................... 591 757
-------------- --------------
Total current liabilities..................... $ 30,520 $ 30,141
Long-term debt, excluding current installments
(note 4)........................................ 343,000 337,000
Deferred income taxes (note 5)................... 9,636 11,500
Minority interests............................... 5,162 6,371
-------------- --------------
Total liabilities............................. $ 388,318 $ 385,012
-------------- --------------
Stockholders' equity (note 7):
Preferred stock par value $.01 per share;
10,000,000 shares authorized; none issued...... -- --
Class A Common Stock par value $.01 per share;
73,000,000 shares authorized; 6,095,772 shares
issued in 1995 and 11,119,681 shares issued in
1996 including shares in treasury and Class B
Common Stock par value $.01 per share;
18,000,000 shares authorized; 17,293,578
shares issued in 1995 and 1996................. 234 284
Additional paid-in capital...................... 72,466 166,975
Retained earnings............................... 1,853 6,535
-------------- --------------
$ 74,553 $ 173,794
Less Class A Common Stock in treasury at cost --
600,000 shares in 1996.......................... -- 8,864
-------------- --------------
Total stockholders' equity.................... $ 74,553 $ 164,930
Commitments and contingencies (note 8).
-------------- --------------
Total liabilities and stockholders' equity.... $ 462,871 $ 549,942
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------
1994 1995 1996
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Revenue:
Service............... $ 61,021 $ 96,686 $ 151,119
Equipment sales and
installation......... 7,958 8,220 8,624
------------------ ------------------ ------------------
Total revenue..... $ 68,979 $ 104,906 $ 159,743
------------------ ------------------ ------------------
Operating expenses:
Engineering,
technical, and other
direct............... 12,776 18,184 28,717
Cost of equipment..... 11,546 14,146 17,944
Selling, general, and
administrative:
Related party, net
(note 6)........... (442) (408) (414)
Other............... 20,199 31,398 47,306
Depreciation and
amortization......... 9,817 15,004 25,013
------------------ ------------------ ------------------
Total operating
expenses......... $ 53,896 $ 78,324 $ 118,566
------------------ ------------------ ------------------
Operating income........ $ 15,083 $ 26,582 $ 41,177
------------------ ------------------ ------------------
Other income (expense):
Interest income:
Investment.......... 93 211 62
Related party (note
6)................. 78 -- --
Interest expense:
Long-term debt...... (11,158) (21,424) (31,524)
Related party (note
6)................. (1,728) -- --
------------------ ------------------ ------------------
Interest expense,
net................ $ (12,715) $ (21,213) $ (31,462)
Other expense, net.... (70) (687) (429)
------------------ ------------------ ------------------
Total other
expense.......... $ (12,785) $ (21,900) $ (31,891)
------------------ ------------------ ------------------
Income before minority
interest share of
income and income tax
expense................ $ 2,298 $ 4,682 $ 9,286
Minority interest share
of income.............. 636 1,078 1,880
------------------ ------------------ ------------------
Income before income tax
expense................ $ 1,662 $ 3,604 $ 7,406
Income tax expense (note
5)..................... -- 2,650 2,724
------------------ ------------------ ------------------
Net income.............. $ 1,662 $ 954 $ 4,682
================== ================== ==================
Net income per share of
common stock........... $ 0.09 $ 0.04 $ 0.18
================== ================== ==================
Average shares
outstanding............ 18,000,000 22,326,613 26,132,455
================== ================== ==================
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK (ACCUMULATED
CLASS A CLASS B ADDITIONAL DEFICIT) TREASURY STOCK TOTAL
------------------ ----------------- PAID-IN RETAINED --------------- STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT EQUITY
----------- ------ ---------- ------ ---------- ------------ ------- ------- -------------
(DOLLAR AMOUNTS IN THOUSANDS EXCEPT SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31,
1993................... 706,422 $ 7 17,293,578 $173 $ 3,064 $ -- -- $ -- $ 3,244
Partnership earnings
before business
combination............ -- -- -- -- 1,829 -- -- -- 1,829
Net loss................ -- -- -- -- -- (167) -- -- (167)
Capital contribution,
net before business
combination............ -- -- -- -- 9 -- -- -- 9
----------- ---- ---------- ---- -------- ------ ------- ------- --------
Balances at December 31,
1994................... 706,422 $ 7 17,293,578 $173 $ 4,902 $ (167) -- $ -- $ 4,915
Partnership loss before
business combination... -- -- -- -- (1,066) -- -- -- (1,066)
Public offering, net of
issuance costs of
$8,114................. 5,369,350 54 -- -- 68,345 -- -- -- 68,399
Exercise of stock
options................ 20,000 -- -- -- 285 -- -- -- 285
Net income.............. -- -- -- -- -- 2,020 -- -- 2,020
----------- ---- ---------- ---- -------- ------ ------- ------- --------
Balances at December 31,
1995................... 6,095,772 $ 61 17,293,578 $173 $ 72,466 $1,853 -- $ -- $ 74,553
Public offering, net of
issuance costs of
$5,826................. 5,000,000 50 -- -- 94,124 -- -- -- 94,174
Exercise of stock
options................ 6,666 -- -- -- 95 -- -- -- 95
Employee and non-
employee director stock
purchase plans......... 17,243 -- -- -- 290 -- -- -- 290
Treasury shares
purchased.............. -- -- -- -- -- -- 600,000 (8,864) (8,864)
Net income.............. -- -- -- -- -- 4,682 -- -- 4,682
----------- ---- ---------- ---- -------- ------ ------- ------- --------
Balances at December 31,
1996................... 11,119,681 $111 17,293,578 $173 $166,975 $6,535 600,000 $(8,864) $164,930
=========== ==== ========== ==== ======== ====== ======= ======= ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1994 1995 1996
(DOLLAR AMOUNTS IN THOUSANDS)
Cash flows from operating activities:
Net income.................................... $ 1,662 $ 954 $ 4,682
--------- --------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization................ 9,817 15,004 25,013
Minority interest share of income............ 636 1,078 1,880
Deferred income taxes........................ -- 2,650 1,855
Increase in trade accounts receivable........ (4,195) (2,741) (1,561)
(Increase) decrease in inventory............. (3,672) 4,076 (2,595)
Increase (decrease) in accounts payable...... 2,508 2,623 (841)
Increase (decrease) in accrued interest
payable...................................... 1,184 (14) (167)
Interest deferred and added to related party
borrowings................................... 1,611 -- --
Deferred interest paid to related party...... (6,475) -- --
Interest deferred and added to other debt.... 537 607 355
Payment of deferred interest................. -- -- (1,080)
Increase in accrued salaries and employee
benefits..................................... 466 241 165
Increase (decrease) in other accrued
liabilities.................................. 895 583 (507)
Increase in deferred revenue................. 1,163 658 912
Increase (decrease) in customer deposits..... 191 (53) 134
Change in other accounts..................... 910 1,994 1,885
--------- --------- ---------
Total adjustments.......................... $ 5,576 $ 26,706 $ 25,448
--------- --------- ---------
Net cash provided by operating activities.. $ 7,238 $ 27,660 $ 30,130
--------- --------- ---------
Cash flows from investing activities:
Cash payment for purchases of non-wireline
cellular telephone systems and licenses
(note 3)..................................... (91,720) (158,397) (67,588)
Purchases of minority interests.............. (3,097) (1,543) (1,854)
Capital expenditures......................... (22,541) (36,564) (41,445)
Proceeds from sales of property, plant and
equipment.................................... 150 38 5
Decrease (increase) in other intangible
assets and other assets...................... 358 (310) (2,180)
Collection of purchase price adjustment...... -- -- 2,452
--------- --------- ---------
Net cash used in investing activities...... $(116,850) $(196,776) $(110,610)
--------- --------- ---------
Cash flows from financing activities:
Advances from Palmer Communications
Incorporated................................. 4,176 -- --
Payments on advances from Palmer
Communications Incorporated................. (2,359) (1,650) --
Increase in notes payable.................... -- -- 1,366
Proceeds from long-term debt................. 137,000 171,000 100,000
Repayment of long-term debt.................. (75) (65,125) (108,319)
Repayment of related party borrowings........ (20,000) -- --
Payment of debt issuance costs............... (6,454) (4,803) --
Public offering proceeds, net................ -- 71,144 95,000
Proceeds from stock options exercised........ -- 285 95
Payment of deferred offering costs........... (1,448) (1,297) (826)
Collection of common stock subscriptions
receivable................................... 100 -- --
Purchase of treasury stock................... -- -- (8,864)
Proceeds from sales under stock purchase
plans........................................ -- -- 290
--------- --------- ---------
Net cash provided by financing activities.. $ 110,940 $ 169,554 $ 78,742
--------- --------- ---------
Net increase (decrease) in cash and cash
equivalents................................ $ 1,328 $ 438 $ (1,738)
Cash and cash equivalents at beginning of
year.......................................... 1,670 2,998 3,436
--------- --------- ---------
Cash and cash equivalents at end of year...... $ 2,998 $ 3,436 $ 1,698
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
During 1994, certain assets net of certain liabilities were transferred
between Palmer Wireless, Inc. and Palmer Communications Incorporated. These
transfers were treated as contributions to and distributions from equity and
amounted to a net contribution of $9 for the year ended December 31, 1994.
During 1994, Palmer Wireless, Inc. accrued $188 for unpaid deferred offering
costs.
During 1995, Palmer Wireless, Inc. committed to purchase certain minority
interests in 1996. This commitment totaling $451 was accrued in 1995 and paid
in 1996.
During 1996, the Company increased the purchase obligations related to the
final purchase price adjustment for the controlling interest in a non-wireline
cellular telephone system purchased in 1991. This increase amounted to $899
and resulted in an increase in licenses.
Acquisitions of non-wireline cellular telephone systems in 1994, 1995 and
1996 (note 3):
<TABLE>
<CAPTION>
1994 1995 1996
<S> <C> <C> <C>
Cash payment...................................... $91,720 $158,397 $67,588
======= ======== =======
Allocated to:
Fixed assets.................................... $11,332 $ 22,846 $ 5,678
Licenses........................................ 79,383 136,940 61,433
Deferred income taxes........................... -- (6,165) --
Current assets and liabilities, net............. 1,005 4,776 477
------- -------- -------
$91,720 $158,397 $67,588
======= ======== =======
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER
31,
-----------------------
1994 1995 1996
<S> <C> <C> <C>
Cash paid for interest.............................. $15,199 $18,435 $29,733
Cash paid for income taxes.......................... -- -- $ 1,591
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Palmer
Wireless, Inc. and its subsidiaries (the "Company"), all of which the Company
has an ownership interest in greater than 50 percent.
Palmer Wireless, Inc. ("Wireless") is a Delaware corporation and was
incorporated on December 15, 1993 to effect an initial public offering of its
Class A Common Stock. At December 31, 1996, Palmer Communications Incorporated
("PCI") owned 61 percent of Wireless' outstanding common stock and had 75
percent of Wireless' voting rights and therefore Wireless is a subsidiary of
PCI.
In March of 1995, Wireless issued common stock for 100 percent of the
partnership interests of Palmer Cellular Partnership (the "Partnership") (see
note 2). Since this exchange was between related parties it has been accounted
for in a manner similar to a pooling of interests. Therefore, the statements
of operations, stockholders' equity and cash flows for the year ended December
31, 1994 have been restated to include the accounts of the Partnership.
Losses in subsidiaries, attributable to minority stockholders and partners,
in excess of their capital accounts and cash capital call provisions are not
eliminated in consolidation.
Significant intercompany accounts and transactions have been eliminated in
the consolidation.
OPERATIONS
The Company has majority ownership in corporations and partnerships which
operate the non-wireline cellular telephone systems in nine Metropolitan
Statistical Areas ("MSA") in three states: Florida (two), Georgia (five) and
Alabama (two). The Company's ownership percentages in these entities range
from approximately 78 percent to 100 percent. The Company owns directly and
operates eight non-wireline cellular telephone systems in Rural Service Areas
("RSA") in Georgia (seven) and Alabama (one).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows the Company considers
repurchase agreements with a maturity of three months or less to be cash
equivalents.
TRADE ACCOUNTS RECEIVABLE
The Company grants credit to its customers. Substantially all of the
customers are residents of the local areas served by the Company. Generally,
the Company discontinues service to customers whose accounts are 60 days past
due. The activity in the Company's allowance for doubtful accounts for the
years ended December 31, 1994, 1995, and 1996 consisted of the following:
<TABLE>
<CAPTION>
ADDITIONS--
BALANCE AT ADDITIONS ALLOWANCE AT BALANCE
BEGINNING CHARGED TO DATES OF DEDUCTIONS NET AT END
OF YEAR EXPENSES ACQUISITIONS OF RECOVERIES OF YEAR
<S> <C> <C> <C> <C> <C>
Year ended December 31,
1994................... $ 681 $1,453 $ 211 $ 778 $1,567
====== ====== ====== ====== ======
Year ended December 31,
1995................... $1,567 $2,078 $ 432 $2,197 $1,880
====== ====== ====== ====== ======
Year ended December 31,
1996................... $1,880 $3,946 $1,270 $5,305 $1,791
====== ====== ====== ====== ======
</TABLE>
F-8
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
INVENTORY
Inventory consisting primarily of cellular telephones and telephone parts is
stated at the lower of cost or market. Cost is determined using the first-in,
first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is provided
principally by the straight-line method over the estimated useful lives,
ranging from 5 to 20 years for buildings and improvements and 5 to 10 years
for equipment, communications systems and furnishings.
ACQUISITIONS AND LICENSES
The cost of acquired companies is allocated first to the identifiable
assets, including licenses, based on the fair market value of such assets at
the date of acquisition (as determined by independent appraisers or management
of the Company). The excess of the total consideration over the amounts
assigned to identifiable assets is recorded as goodwill.
Also included in licenses are expenditures related directly to acquiring
licenses which were not developed or operating at the time of purchase.
Licenses and goodwill are being amortized from the date of commencement of
service to customers (with applicable interest capitalized from acquisition
date to this date) on a straight-line basis over a 40-year period.
Subsequent to the acquisition of the licenses, the Company continually
evaluates whether later events and circumstances have occurred that indicate
the remaining estimated useful life of licenses may warrant revision or that
the remaining balance of the license rights may not be recoverable. The
Company has undergone an annual independent appraisal of its licenses' value.
The Company utilizes projected undiscounted cash flows over the remaining life
of the licenses and sales of comparable businesses to evaluate the recorded
value of licenses. The assessment of the recoverability of the remaining
balance of the license rights will be impacted if projected cash flows are not
achieved.
OTHER INTANGIBLE ASSETS AND OTHER ASSETS
Other intangibles and other assets consist primarily of deferred financing
costs, covenants not to compete, subscriber base, and other items. These costs
are being amortized by the interest or straight-line method over their
respective useful lives, which range from 5 to 10 years.
INCOME TAXES
The Company accounts for income taxes under the asset and liability method
of accounting for deferred income taxes. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss carryforwards. 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. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
The 1994 consolidated financial statements made no provision for income
taxes, due to the fact that the losses of the Partnership were included in the
income tax returns of the individual partners. Also, the consolidated
financial statements made no provision for income taxes of subsidiary
corporations of the Company since those
F-9
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
corporations had approximately $16,182 of net operating loss carryforwards at
December 31, 1994 for federal income tax purposes. In addition, the 1994
consolidated financial statements made no provision for income taxes on the
loss of Wireless due to the non-utilization of Wireless' net operating loss
for the year.
INTEREST RATE SWAP AND CAP AGREEMENTS
The differential to be paid or received in connection with interest rate
swap agreements is accrued as interest rates change and is recognized over the
life of the agreements.
Premiums paid for purchased interest rate cap agreements are amortized to
interest expense over the term of the caps. Unamortized premiums are included
in other assets in the consolidated balance sheet. Amounts receivable under
cap agreements are accrued as a reduction of interest expense.
REVENUE RECOGNITION
Service revenue includes local subscriber revenue and roamer revenue.
The Company earns local subscriber revenue by providing access to the
cellular network (access revenue) or, as applicable, for usage of the cellular
network (airtime revenue). Access revenue is billed one month in advance and
is recognized when earned. Airtime revenue is recognized when the service is
rendered.
Roamer revenue represents revenue earned by the Company for usage of its
cellular network by subscribers of other cellular carriers. Roamer revenue is
recognized when the services are rendered.
Equipment sales and installation revenue is recognized upon delivery or
installation of the equipment to the customer.
OPERATING EXPENSES--ENGINEERING, TECHNICAL AND OTHER DIRECT
Engineering, technical and other direct operating expenses represent certain
costs of providing cellular telephone service to customers. These costs
include cost of incollect roaming service. Incollect roaming is the result of
the Company's subscribers using cellular networks of other cellular carriers.
Incollect roaming revenue is netted against the cost of incollect roaming
service to determine net incollect roaming expense.
STOCK OPTION PLANS
Prior to January 1, 1996, the Company accounted for its stock option plans
in accordance with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees", and related
interpretations. As such, compensation expense would be recorded on the date
of grant only if the current market price of the underlying stock exceeded the
exercise price. On January 1, 1996, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation", which permits entities to recognize as expense over the vesting
period the fair value of all stock-based awards on the date of grant.
Alternatively, SFAS No. 123 also allows entities to continue to apply the
provisions of APB Opinion No. 25 and provide pro forma net income and pro
forma earnings per share disclosures for employee stock option grants made in
1995 and future years as if the fair-value-based method defined in SFAS No.123
had been applied. The Company has elected to continue to apply the provisions
of APB Opinion No.25 and provide the pro forma disclosure provisions of SFAS
No. 123.
F-10
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates, methods and assumptions used to estimate the fair
value of the Company's financial instruments are set forth below:
For cash and cash equivalents, trade accounts receivable, receivable from
other cellular carriers, notes payable, accounts payable and accrued expenses,
the carrying amount approximates the estimated fair value due to the short-
term nature of those instruments.
Rates currently available to the Company for long-term debt with similar
terms and remaining maturities are used to discount the future cash flows to
estimate the fair value for long-term debt. Note 4 presents the fair value for
long-term debt and the related interest rate cap and swap agreements.
Fair value estimates are made as of a specific point in time, based upon the
relevant market information about the financial instruments. Because no market
exists for a majority of the Company's financial instruments, fair value
estimates are based on judgements regarding current economic conditions and
other factors. These estimates are subjective in nature and involve
uncertainties and matters of judgement and, therefore, cannot be determined
with precision. Changes in assumptions could significantly affect the
estimates.
COMPUTATION OF NET INCOME PER SHARE
The computation of net income per share is based on the weighted average
number of common and dilutive common equivalent shares (common stock options
using the treasury stock method) outstanding during the periods presented.
Average shares of common stock outstanding has been computed assuming that the
704,755 shares of Class A Common Stock and 17,288,578 shares of Class B Common
Stock issued in the Exchange (as defined in note 2) have been outstanding
since January 1, 1994 and the 1,667 shares of Class A Common Stock and the
5,000 shares of Class B Common Stock issued in the initial capitalization of
Wireless have been outstanding since January 1, 1994.
(2) OFFERING AND EXCHANGE
On March 21, 1995 and April 18, 1995, Wireless issued 5,000,000 and 369,350
shares, respectively, of Class A Common Stock in an initial public offering
(the "Offering") for net proceeds of $68,399. In connection with the Offering,
on March 21, 1995, Wireless issued 704,755 shares of Class A Common Stock and
17,288,578 shares of Class B Common Stock in exchange for 100 percent of the
Partnership interests of the Partnership (the "Exchange"). The assets and
liabilities received in the Exchange were recorded at their historical cost to
the Partnership and not revalued at fair value on the date of transfer. Since
the Exchange was between related parties it has been accounted for in a manner
similar to a pooling of interests (see note 1).
(3) ACQUISITIONS AND PURCHASE OF LICENSES
On October 31, 1994, the Company acquired the assets of and the licenses to
operate the non-wireline cellular telephone systems serving the Georgia Rural
Service Area Market Nos. 377, 378, 380 and 382, otherwise known as Georgia-7
RSA, Georgia-8 RSA, Georgia-10 RSA and Georgia-12 RSA, respectively, for an
aggregate purchase price of $91,720. The acquisition was accounted for by the
purchase method of accounting. In connection with this acquisition, $79,383 of
the purchase price was allocated to licenses. From the date of acquisition to
December 31, 1994, revenue, depreciation and amortization, operating loss and
net loss before interest expense related to the purchase price of the non-
wireline cellular telephone systems purchased were $1,803, $744, $(645) and
$(644), respectively.
On December 1, 1995, the Company purchased all of the outstanding stock of
Augusta Metronet, Inc. and Georgia Metronet, Inc., which owned either directly
(or in the case of Georgia Metronet, Inc., through its 97.9 percent interest
in the Savannah Cellular Limited Partnership) the licenses to operate the non-
wireline cellular
F-11
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
telephone systems in the Savannah and Augusta, Georgia MSAs, respectively, for
an aggregate purchase price of $158,397. The acquisition was accounted for by
the purchase method of accounting. In connection with this acquisition,
$136,940 of the purchase was allocated to licenses. From the date of
acquisition to December 31, 1995, revenue, depreciation and amortization,
operating income and net income before interest expense related to the
purchase price of the non-wireline cellular telephone systems were $2,126,
$508, $208 and $202, respectively.
On June 20, 1996, the Company acquired the assets of and the license to
operate the non-wireline cellular telephone system serving the Georgia Rural
Service Area Market No. 371, otherwise known as Georgia-1 RSA for an aggregate
purchase price of $31,616. The acquisition was accounted for by the purchase
method of accounting. In connection with the acquisition, $27,942 of the
purchase price was allocated to licenses. From the date of acquisition to
December 31, 1996, revenue, depreciation and amortization, operating loss and
net loss before interest expense related to the purchase of the non-wireline
cellular telephone system were $1,239, $556, $(278), and $(278), respectively.
On July 5, 1996, two of the Company's majority-owned subsidiaries acquired
the assets of and the license to operate the non-wireline cellular telephone
system serving the Georgia Rural Service Area Market No. 376, otherwise known
as Georgia-6 RSA for an aggregate purchase price of $35,972. The acquisition
was accounted for by the purchase method of accounting. In connection with the
acquisition, $33,491 of the purchase price was allocated to licenses. From the
date of acquisition to December 31, 1996, revenue, depreciation and
amortization, operating income, and net income before interest expense related
to the purchase of the non-wireline cellular telephone system were $2,682,
$578, $743, and $743, respectively.
Assuming the 1995 and 1996 acquisitions had occurred on January 1, 1995,
unaudited pro forma revenue, net (loss) income and net (loss) income per share
for the year ended December 31, 1995 would have been $132,958, $(12,437), and
$(.56), respectively, and for the year ended December 31, 1996, would have
been $163,393, $3,840, and $.15, respectively. These pro forma amounts assume
that the financing requirements were met by the incurrence of bank debt and
are not necessarily indicative of what the actual consolidated results of
operation might have been if the acquisition had been effective on January 1,
1995.
(4) NOTES PAYABLE AND LONG-TERM DEBT
On December 1, 1995, the Company entered into a loan agreement with a bank
which provides for a revolving line of credit of up to $5,000 to facilitate
day-to-day cash management needs. The loan agreement provides for interest at
the bank's prime rate and matures November 30, 1997.
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
<S> <C> <C>
Credit agreement (a)......................................... $343,000 $337,000
Purchase obligations (b)..................................... 7,441 5,296
-------- --------
$350,441 $342,296
Less current installments.................................... 7,441 5,296
-------- --------
Long-term debt, excluding current installments............... $343,000 $337,000
======== ========
</TABLE>
(a) On December 1, 1995, the Company entered into an amended and restated
credit agreement with 21 banks which provides for a revolving line of credit
of up to $500,000, subject to certain limitations through June 30, 2004. This
credit agreement increased the Company's previously existing $275,000
revolving line of credit. The credit agreement provides for quarterly
commitment reductions commencing September 30, 1998 and
F-12
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
commitment reductions of 25 to 50 percent of Excess Cash Flow (as defined in
the credit agreement), if any, are required on April 15, 1998 and annually
thereafter. Interest is payable at variable rates and under various interest
rate options. The interest rate at December 31, 1996 ranged from 7.42 to 8.88
percent before the effect of the interest rate swap and cap agreements
outlined below. The credit agreement also provides for a commitment fee of .5
percent per year on any unused amounts of the credit agreement. Amounts
outstanding are secured by the assets of the Company.
The credit agreement provides for various compliance covenants and
restrictions, including items related to mergers or acquisition transactions,
the declaration or payment of dividends or other payments to stockholders,
capital expenditures and maintenance of certain financial ratios. At December
31, 1996, the Company was in compliance with all but one financial ratio
covenant. This covenant was based upon operating results for the year ended
December 31, 1996. The Company obtained a waiver of the noncompliance with
this 1996 financial ratio covenant.
The Company has entered into interest rate swap and cap agreements to reduce
the impact of changes in interest rates on its floating debt and thus were
entered into for purposes other than trading. At December 31, 1996, the
Company had outstanding ten interest rate swap agreements and four interest
rate cap agreements having a total notional value of $295,000. These interest
rate swap and cap agreements effectively change the Company's interest rate
exposure on a quarterly basis on $295,000 of credit.
F-13
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The cap and swap agreements are summarized as follows:
<TABLE>
<CAPTION>
MAXIMUM NOTIONAL
TYPE OF AGREEMENT MATURITY LIBOR(1) VALUE
<S> <C> <C> <C>
Cap....................................... Nov. 17, 1997 8.00 $ 10,000
Swap...................................... Nov. 17, 1997 8.10 10,000
Swap...................................... Nov. 17, 1997 7.48 20,000
Participating Cap (2)..................... Nov. 23, 1997 8.75 15,000
Participating Swap (3).................... Nov. 24, 1997 8.29 15,000
Trigger Cap (4)........................... Nov. 28, 1997 7.50/8.50 15,000
Pay Later Cap (5)......................... Jan. 12, 1998 8.50 20,000
Swap...................................... Aug. 3, 1998 5.26 25,000
Participating Swap (6).................... Aug. 10, 1998 5.98 15,000
Swap...................................... Aug. 6, 1999 6.36 25,000
Swap...................................... Aug. 7, 2000 6.04 50,000
Swap...................................... Aug. 20, 2000 6.07 25,000
Swap...................................... Oct. 10, 2000 6.03 25,000
Swap...................................... Oct. 11, 2000 5.99 25,000
--------
$295,000
========
</TABLE>
- ---------------------
(1) The maximum interest rate is 2.5 percent over the LIBOR stated in the
table below. The 2.5 percent interest rate over such LIBOR decreases if
certain leverage ratios are met by the Company.
(2) On 36 percent ($5,400) the interest rate is set at 8.75 percent, the
balance is set at the three-month LIBOR up to a maximum 8.75 percent.
(3) When the three-month LIBOR is less than 8.29 percent the Company
participates in 50 percent of the difference.
(4) When LIBOR is below 8.5 percent the rate is 7.5 percent, when LIBOR is 8.5
percent or above the rate is 8.5 percent.
(5) When the three-month LIBOR rate is 8.5 percent or higher the Company
receives a quarterly payment of $98.
(6) When the six-month LIBOR is less than 5.98 percent the Company
participates in 45 percent of the difference.
Fees in the amount of $240 were incurred in connection with certain of the
cap agreements and are being amortized over the lives of the respective cap
agreements.
The market value of the swap and cap agreements above, which has not been
reflected in the consolidated financial statements as of December 31, 1996, is
a loss of $1,545.
The Company is exposed to interest rate risk in the event of nonperformance
by the other party to the interest rate swap and cap agreements. However, the
Company does not anticipate nonperformance by any of the banks.
(b) In connection with the purchase of controlling interest in a non-
wireline cellular telephone system in 1991, the Company incurred certain
purchase obligations. The obligations, were retired in July 1996 and January
1997.
Based upon current borrowing rates the fair value approximates the carrying
value of the long-term debt outstanding under the credit agreement described
in (a) above and the purchase obligations described in (b) above.
F-14
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The aggregate maturities of long-term debt are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, AMOUNT
<S> <C>
1997........................... $ 5,296
1998........................... --
1999........................... --
2000........................... --
2001........................... 72,000
Thereafter..................... 265,000
--------
$342,296
========
</TABLE>
(5) INCOME TAXES
Components of income tax expense consist of the following:
<TABLE>
<CAPTION>
FEDERAL STATE TOTAL
<S> <C> <C> <C>
Year ended December 31, 1995:
Current............................................. $ -- $-- $ --
Deferred............................................ 2,550 100 2,650
------ ---- ------
$2,550 $100 $2,650
====== ==== ======
Year ended December 31, 1996:
Current............................................. $ -- $869 $ 869
Deferred............................................ 1,795 60 1,855
------ ---- ------
$1,795 $929 $2,724
====== ==== ======
</TABLE>
The consolidated effective tax rate differs from the statutory United States
federal tax rate for the following reasons and by the following percentages:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER
31,
------------
1995 1996
<S> <C> <C>
Statutory United States federal tax rate........................ 34.0% 34.0%
Partnership loss prior to corporate status...................... 10.1 --
License amortization not deductible for tax..................... 7.7 32.5
Net operating loss carryforwards................................ (59.0) (42.8)
State taxes..................................................... -- 8.3
Recognition of deferred income taxes related to the difference
between financial statement and income tax bases of certain
assets and liabilities in connection with the Exchange......... 73.5 --
Other........................................................... 7.2 4.8
----- -----
Consolidated effective tax rate................................. 73.5% 36.8%
===== =====
</TABLE>
F-15
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The components of the deferred income tax assets and liabilities are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1995 1996
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts..................... $ 658 $ 609
Nondeductible accruals.............................. 163 221
Net operating loss carryforwards.................... 4,314 4,100
-------- --------
Total deferred tax assets......................... $ 5,135 $ 4,930
Valuation allowance................................. (3,898) --
-------- --------
$ 1,237 $ 4,930
-------- --------
Deferred tax liabilities:
Property, plant and equipment....................... (7,323) (7,415)
Licenses............................................ (2,729) (8,185)
-------- --------
Total deferred tax liabilities.................... $(10,052) $(15,600)
-------- --------
Deferred tax liability, net......................... $ (8,815) $(10,670)
======== ========
</TABLE>
The net change in the total valuation allowance for the year ended December
31, 1996 was a decrease of $3,898. A valuation allowance had been recorded
primarily to offset the gross deferred tax assets created by net operating
loss carryforwards until such time as earnings of the Company or alternative
tax planning strategies warranted full recognition. Management believes that
it is more likely than not that the results of future operations will generate
sufficient taxable income to realize that portion of the deferred tax asset
related to the net operating loss carryforwards. The net operating loss
carryforwards totaled approximately $11,700 at December 31, 1996 and expire in
amounts ranging from approximately $400 to $4,100 through 2011. For
carryforwards of approximately $10,900, generated in periods prior to the
Exchange, utilization is limited to the subsidiary that generated the
carryforwards, unless the Company utilizes alternative tax planning
strategies.
(6) RELATED PARTY TRANSACTIONS
During 1994, the Company had a subordinated demand note of $20,000 with
Palmer Broadcasting Limited Partnership, a majority-owned subsidiary of PCI.
Interest expense under the note was $1,611 for the year ended December 31,
1994. The note was paid off in 1994.
PCI had previously extended the Company a line of credit in the amount of
$3,000 that was used for the initial operations of the Company, to pay
organization expenses and to pay expenses of the Offering. The line of credit
bore interest at 2 percent above the prime rate. Interest expense on the line
of credit amounted to $117 for the year ended December 31, 1994. The
borrowings totaling $1,615 were repaid with the proceeds of the Offering.
During 1994, the Company earned $78 of interest income from advances to PCI.
During 1994, the Company performed certain management functions for PCI.
These functions included general management, human resources administration,
accounting, and computer services. PCI was charged a fee based on the
Company's estimate of its time spent managing PCI and usage of its computer.
Concurrently with the Offering and the Exchange, the Company and PCI entered
into both a transitional management and administrative services agreement and
a computer services agreement that extend each December 31 for
F-16
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
additional one-year periods unless and until either party notifies the other.
The fees from these arrangements amounted to a total of $509, $492, and $534
for the years ended December 31, 1994, 1995, and 1996, respectively, and are
included as a reduction of selling, general and administrative expenses.
During 1994, PCI provided certain tax consulting services to the Company.
Concurrently with the Offering and the Exchange, the Company and PCI entered
into a tax consulting agreement that extends each December 31 for additional
one-year periods unless and until either party notifies the other. The fees
for tax consulting services amounted to a total of $67, $84, and $120 for the
years ended December 31, 1994, 1995, and 1996, respectively, and are included
in selling, general and administrative expenses.
PCI has a 401(k) plan with a noncontributory retirement feature and a
matching provision for employees who meet length of service and other
requirements. The Company participates in this plan and was allocated 401(k)
retirement and matching expense of $305, $493, and $696 for the years ended
December 31, 1994, 1995, and 1996, respectively.
(7) COMMON STOCK AND STOCK PLANS
During 1994, the Company amended its certificate of incorporation to
increase the number of authorized shares of common stock from 60,000,000 to
91,000,000 and to provide for Class A Common Stock and Class B Common Stock.
The Class A Common Stock has one vote per share. The Class B Common Stock,
which may be owned only by PCI or certain successors of PCI and of which no
shares may be issued subsequent to the Offering, has five votes per share,
provided, however, that, so long as any Class A Common Stock is issued and
outstanding, at no time will the total outstanding Class B Common Stock have
the right to cast votes having more than 75 percent of the total voting power
of the common stock in the aggregate. Shares of Class B Common Stock shall be
converted into Class A Common Stock on a share-for-share basis: (i) at any
time at the option of the holder; (ii) immediately upon the transfer of shares
of Class B Common Stock to any holder other than a successor of PCI; (iii)
immediately if the shares of Class B Common Stock held by PCI or its
successors constitute 33 percent or less of the outstanding shares of the
Company; (iv) at the end of 20 years from original issuance of those shares of
Class B Common Stock; or (v) if more than 50 percent of the equity interests
in PCI become beneficially owned by persons other than: (i) beneficial owners
of PCI as of December 29, 1994 ("Current PCI Beneficial Owners"); (ii)
affiliates of Current PCI Beneficial Owners; (iii) heirs or devisees of any
individual Current PCI Beneficial Owner, successors of any corporation or
partnership which is a Current PCI Beneficial Owner and beneficiaries of any
trust which is a Current PCI Beneficial Owner; and (iv) any relative, spouse
or relative of a spouse of any Current PCI Beneficial Owner.
The Company adopted a Stock Option Plan in connection with the Offering,
under which options for an aggregate of 1,600,000 shares of Class A Common
Stock are available for grants to key employees. The Company also adopted a
Director's Stock Option Plan in connection with the Offering, under which
options for an aggregate of 300,000 shares of Class A Common Stock are
available for grants to directors who are not officers or employees of the
Company. Stock options under both plans are granted with an exercise price
equal to the stock's fair value at the date of grant. The stock options
granted under the Stock Option Plan have 10-year terms and vest and become
exercisable ratably over three years from the date of grant. The stock options
granted under the Director's Stock Option Plan are vested and become fully
exercisable upon the date of the grant. At December 31, 1996, there were
options with respect to 693,334 and 45,000 shares of Class A Common Stock
outstanding under the Stock Option Plan and the Director's Stock Option Plan,
respectively. At December 31, 1996, there were 880,000 and 255,000 additional
shares available for grant under the Stock Option Plan and the Director's
Stock Option Plan, respectively.
The Company applies APB Opinion No. 25 in accounting for its Stock Option
Plan and Director's Stock Option Plan ("the Plans") and accordingly, no
compensation cost has been recognized for its stock options in
F-17
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
the consolidated financial statements. Had the Company determined compensation
cost based on the fair value at the grant date for its stock options under
SFAS No.123, the Company's net income (loss) and net income (loss) per share
would have been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------
1995 1996
<S> <C> <C>
Net income-as reported...................................... $ 954 $4,682
Net (loss) income-pro forma................................. $(777) $2,850
Net income per share-as reported............................ $ .04 $ .18
Net (loss) income per share-pro forma....................... $(.03) $ .11
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the weighted-average assumptions
as follows: dividend yield of 0.0%; expected volatility of 101%; risk-free
interest rate of 5.5%; and expected lives of five years. The fair value of the
option grants in 1995 and 1996 were $11.04 and $13.36 per share, respectively.
Stock option activity during the periods indicated is as follows:
<TABLE>
<CAPTION>
WEIGHTED
NUMBER OF AVERAGE
SHARES EXERCISE PRICE
<S> <C> <C>
Balance December 31, 1994 -- --
Granted......................................... 692,500 $14.25
Exercised....................................... (20,000) 14.25
-------
Balance December 31, 1995......................... 672,500 14.25
Granted......................................... 72,500 17.25
Exercised....................................... (6,666) 14.25
-------
Balance December 31, 1996......................... 738,334 14.54
=======
</TABLE>
At December 31, 1996, the range of exercise prices and weighted-average
remaining contractual life of outstanding options was $14.25--$17.25 and 8.3
years, respectively.
At December 31, 1995 and 1996, the number of options exercisable was 37,500
and 250,000, respectively, and the weighted average exercise price of those
options was $14.25 and $14.34, respectively.
The Company adopted a stock purchase plan for employees (the "Employee Stock
Purchase Plan") and a stock purchase plan for non-employee directors (the
"Non-Employee Director Stock Purchase Plan"). Under the Employee Stock
Purchase Plan, 160,000 shares of Class A Common Stock are available for
purchase by eligible employees of the Company or any of its subsidiaries.
Under the Non-Employee Director Stock Purchase Plan, 25,000 shares of Class A
Common Stock are available for purchase by non-employee directors of the
Company. The purchase price of each share of Class A Common Stock purchased
under the Employee Stock Purchase Plan or the Non-Employee Director Stock
Purchase Plan will be the lesser of 90 percent of the fair market value of the
Class A Common Stock on the first trading day of the plan year or on the last
day of such plan year; provided, however, that in no event shall the purchase
price be less than the par value of the stock. Both plans will terminate in
2005, unless terminated at an earlier date by the board of directors. During
the year ended December 31, 1996, 15,541 shares were issued under the Employee
Stock Purchase Plan and 1,702 shares were issued under the Non-Employee
Director Stock Purchase Plan at a purchase price of $16.85. Compensation cost
computed under the provisions of SFAS No. 123 related to the shares issued
under the Employee Stock Purchase Plan and the Non-Employee Director Stock
Purchase Plan is immaterial to the consolidated financial statements.
F-18
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(8) COMMITMENTS AND CONTINGENCIES
LEASES
The Company occupies certain buildings and uses certain tower sites, cell
sites and equipment under noncancellable operating leases which expire through
2014. The operating leases for a building and certain tower sites and cell
sites are with related parties.
Future minimum lease payments under noncancellable operating leases as of
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
RELATED PARTIES OTHERS
<S> <C> <C>
1997............................................. $285 $ 3,429
1998............................................. 285 2,899
1999............................................. 52 2,507
2000............................................. 14 2,011
2001............................................. -- 1,348
Later years through 2014......................... -- 4,522
---- -------
Total minimum lease payments................... $636 $16,716
==== =======
</TABLE>
Rental expense was $1,609, $2,487, and $3,551 for the years ended December
31, 1994, 1995 and 1996, respectively, of which $253, $269, and $278 was paid
to related parties for 1994, 1995 and 1996, respectively.
CONTINGENCIES
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 statements.
EMPLOYMENT AGREEMENTS
The Company has employment agreements with six officers of the Company. The
agreements have terms of two or three years and provide for aggregate annual
salaries of $1,181 in 1997. Each employment agreement provides that if the
officer is terminated by the Company without cause (as defined therein) or
terminates the agreement for good reason (as defined therein), the Company
will pay the officer the full base salary and benefits which would have been
paid to such officer during the remaining term of the agreement.
F-19
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(9) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1995 FIRST QUARTER(A) SECOND QUARTER THIRD QUARTER FOURTH QUARTER TOTAL
<S> <C> <C> <C> <C> <C>
Total Revenue........... $22,374 $25,931 $26,055 $30,546 $104,906
======= ======= ======= ======= ========
Operating Income........ $ 4,872 $ 6,892 $ 8,152 $ 6,666 $ 26,582
======= ======= ======= ======= ========
Net (Loss) Income....... $(3,958) $ 1,620 $ 2,801 $ 491 $ 954
======= ======= ======= ======= ========
Net (Loss) Income Per
Share*................. $ (.21) $ .07 $ .12 $ .02 $ .04
======= ======= ======= ======= ========
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 FIRST QUARTER (B) SECOND QUARTER (B) THIRD QUARTER (B) FOURTH QUARTER TOTAL
<S> <C> <C> <C> <C> <C>
Total Revenue........... $36,950 $40,031 $41,171 $41,591 $159,743
======= ======= ======= ======= ========
Operating Income........ $ 8,514 $11,281 $11,977 $ 9,405 $ 41,177
======= ======= ======= ======= ========
Net Income (Loss)....... $ 76 $ 1,684 $ 2,976 $ (54) $ 4,682
======= ======= ======= ======= ========
Net Income (Loss) Per
Share*................. $ .00 $ .07 $ .10 $ (.00) $ .18
======= ======= ======= ======= ========
</TABLE>
- ---------------------
(a) First quarter loss was increased by $2,650 due to the recognition of
deferred income taxes relating to the difference between financial
statement and income tax return bases of certain assets and liabilities
in connection with the Exchange.
(b) Certain reclassifications have been made to conform to the fourth quarter
presentation.
* Weighted average shares outstanding for the quarters are calculated
independent of the weighted average shares outstanding for the year;
therefore, quarterly net income (loss) per share may not total to annual
net income per share.
(10) SUBSEQUENT EVENT
On February 1, 1997, one of the Company's majority-owned subsidiaries
acquired the assets of and license to operate the non-wireline cellular
telephone system serving the Georgia Rural Service Area Market No. 383,
otherwise known as Georgia-13 RSA for a total purchase price of $30,000,
subject to certain adjustments.
F-20
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1996 1997
---------------- --------------
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
ASSETS
Current Assets:
Cash and Cash Equivalents.................. $ 1,698 $ 1,740
Trade Accounts Receivable, Net of Allowance
for Doubtful Accounts..................... 18,784 19,049
Receivable from Other Cellular Carriers.... 1,706 3,669
Deferred Income Taxes...................... 830 980
Prepaid Expenses and Deposits.............. 2,313 1,794
Inventory.................................. 5,106 3,181
-------------- --------------
Total Current Assets..................... $ 30,437 $ 30,413
Net Property, Plant and Equipment............ 132,438 157,596
Licenses, Net of Amortization................ 375,808 398,845
Other Intangible Assets and Other Assets, at
Cost Less Accumulated Amortization.......... 11,259 10,348
-------------- --------------
$ 549,942 $ 597,202
============== ==============
LIABILITIES AND EQUITY
Current Liabilities:
Notes Payable.............................. $ 1,366 $ 2,321
Current Installments of Long-Term Debt..... 5,296 --
Accounts Payable........................... 10,394 9,032
Accrued Expenses........................... 8,399 11,896
Other Liabilities.......................... 4,686 4,874
-------------- --------------
Total Current Liabilities................ $ 30,141 $ 28,123
Long-Term Debt, Excluding Current
Installments................................ 337,000 378,000
Deferred Income Taxes........................ 11,500 15,326
Minority Interests........................... 6,371 7,123
-------------- --------------
Total Liabilities........................ $ 385,012 $ 428,572
-------------- --------------
Stockholders' Equity......................... 164,930 168,630
-------------- --------------
$ 549,942 $ 597,202
============== ==============
</TABLE>
- ---------------------
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes to condensed consolidated financial statements.
F-21
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
------------------------------
1996 1997
(DOLLAR AMOUNTS IN THOUSANDS
EXCEPT SHARE AMOUNTS)
(UNAUDITED)
<S> <C> <C>
Revenue:
Service...................................... $ 72,741 $ 88,140
Equipment Sales and Installation............. 4,239 5,088
-------------- --------------
Total Revenue.............................. $ 76,980 $ 93,228
-------------- --------------
Operating Expenses:
Engineering, Technical and Other Direct...... 14,939 15,554
Cost of Equipment............................ 8,397 11,057
Selling, General and Administrative.......... 21,977 27,204
Depreciation and Amortization................ 11,872 15,129
-------------- --------------
Total Operating Expenses................... $ 57,185 $ 68,944
-------------- --------------
Operating Income........................... $ 19,795 $ 24,284
-------------- --------------
Other Income (Expense):
Interest Expense, Net........................ (16,006) (16,113)
Other (Expense) Income, Net.................. (58) 162
-------------- --------------
Total Other Expense........................ $ (16,064) $ (15,951)
-------------- --------------
Income Before Minority Interest Share of Income
and Income Taxes.............................. $ 3,731 $ 8,333
Minority Interest Share of Income.............. (1,023) (782)
-------------- --------------
Income Before Income Taxes..................... $ 2,708 $ 7,551
Income Taxes................................... (948) (3,851)
-------------- --------------
Net Income................................. $ 1,760 $ 3,700
============== ==============
Net Income Per Share of Common Stock........... $ 0.07 $ 0.13
============== ==============
Average Shares Outstanding..................... 23,940,039 27,813,259
============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-22
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK COMMON STOCK
CLASS A CLASS B ADDITIONAL TREASURY STOCK TOTAL
----------------- ----------------- PAID-IN RETAINED -------------- STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS SHARES AMOUNT EQUITY
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December
31, 1995............... 6,095,772 $ 61 17,293,578 $173 $ 72,466 $ 1,853 -- $ -- $74,553
Public offering, net of
issuance costs
of $5,826.............. 5,000,000 50 -- -- 94,124 -- -- -- 94,174
Exercise of stock
options................ 6,666 -- -- -- 95 -- -- -- 95
Employee and non-
employee director stock
purchase plans......... 17,243 -- -- -- 290 -- -- -- 290
Treasury shares
purchased.............. -- -- -- -- -- 600,000 (8,864) (8,864)
Net income.............. -- -- -- -- -- 4,682 -- -- 4,682
---------- ---- ---------- ---- -------- ------- ------- -------- --------
Balances at December 31,
1996................... 11,119,681 $111 17,293,578 $173 $166,975 $ 6,535 600,000 $(8,864) $164,930
Net income.............. -- -- -- -- -- 3,700 -- -- 3,700
---------- ---- ---------- ---- -------- ------- ------- -------- --------
Balances at June 30,
1997................... 11,119,681 $111 17,293,578 $173 $166,975 $10,235 600,000 $ (8,864) $168,630
========== ==== ========== ==== ======== ======= ======= ======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-23
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
------------------------------
<S> <C> <C>
1996 1997
-------------- --------------
<CAPTION>
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income................................... $ 1,760 $ 3,700
-------------- --------------
Adjustments to reconcile net income to net
cash provided by operating
activities:
Depreciation and amortization.............. 11,872 15,129
Minority interest share of income.......... 1,023 782
Deferred income taxes...................... 498 3,676
Loss (gain) on disposal of property........ 59 (9)
Interest deferred and added to long-term
debt....................................... 326 --
Payment of deferred interest............... -- (1,514)
(Increase) decrease in trade accounts
receivable................................. (809) 500
Decrease in inventory...................... 358 2,085
(Decrease) increase in accounts payable and
accrued expenses........................... (1,629) 1,799
Change in other accounts................... 2,345 (576)
-------------- --------------
Total adjustments........................ $ 14,043 $ 21,872
-------------- --------------
Net cash provided by operating
activities............................... $ 15,803 $ 25,572
-------------- --------------
Cash flows from investing activities:
Capital expenditures......................... (21,639) (31,700)
Proceeds from sales of property and
equipment.................................... 4 201
Purchase of cellular systems................. (31,500) (31,260)
Collection of purchase price adjustment...... 2,452 --
Purchases of minority interests.............. (1,254) (794)
Increase in other intangible assets and other
assets....................................... (1,710) (150)
-------------- --------------
Net cash used in investing activities...... $ (53,647) $ (63,703)
-------------- --------------
Cash flows from financing activities:
Increase in short-term notes payable......... 2,535 955
Repayment of long-term debt.................. (100,050) (3,782)
Proceeds from long-term debt................. 39,000 41,000
Public offering proceeds, net................ 94,295 --
-------------- --------------
Net cash provided by financing activities.. $ 35,780 $ 38,173
-------------- --------------
Net (decrease) increase in cash and cash
equivalents................................ $ (2,064) $ 42
Cash and cash equivalents at the beginning of
period......................................... 3,436 1,698
-------------- --------------
Cash and cash equivalents at the end of period. $ 1,372 $ 1,740
============== ==============
Supplemental disclosure of cash flow
information:
Income taxes paid (received), net............ $ 1,172 $ (617)
============== ==============
Interest paid................................ $ 14,460 $ 16,328
============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
F-24
<PAGE>
PALMER WIRELESS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS IN THOUSANDS)
(UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Palmer
Wireless, Inc. and subsidiaries (the "Company") have been prepared without
audit pursuant to Rule 10-01 of Regulation S-X of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financials. In the opinion of management, all adjustments (none of which were
other than normal recurring items) considered necessary for a fair
presentation have been included. The results of operations for the interim
periods reported are not necessarily indicative of results to be expected for
the year.
The computation of net income per share is based on the weighted average
number of common and, as appropriate, dilutive common equivalent shares
(common stock options using the treasury stock method) outstanding during the
periods presented.
RECLASSIFICATIONS
Certain reclassifications have been made to the 1996 Statement of Operations
to conform to the 1997 presentation.
(2) ACQUISITION AND PURCHASE OF LICENSE
On February 1, 1997, one of the Company's majority-owned subsidiaries
acquired the assets of and license to operate the non-wireline cellular
telephone system serving the Georgia Rural Service Area Market No. 383,
otherwise known as Georgia-13 RSA, for a total purchase price of $31,260.
(3) SALE OF THE COMPANY
On October 6, 1997, the outstanding shares of common stock of the Company
were sold to Price Communications Corporation for a purchase price of $17.50
per share, for an aggregate purchase price of approximately $486,000. In
addition, Price Communications Corporation also repaid approximately $378,000
of outstanding indebtedness of the Company.
F-25
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OTHER PERSON. 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 THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 13
The Acquisition........................................................... 18
Use of Proceeds........................................................... 20
Capitalization............................................................ 21
Unaudited Pro Forma Condensed Consolidated Financial Statements........... 22
Selected Consolidated Financial Data...................................... 30
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 32
The Exchange Offer........................................................ 42
Business.................................................................. 48
Management................................................................ 61
Principal Stockholders.................................................... 64
Description of New Credit Facility........................................ 64
Description of Notes...................................................... 67
United States Federal Income Tax Consequences............................. 93
Plan of Distribution...................................................... 94
Legal Matters............................................................. 94
Experts................................................................... 94
Available Information..................................................... 95
Certain Terms............................................................. 95
Index to Financial Statements............................................. F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$175,000,000
PRICE COMMUNICATIONS WIRELESS, INC.
11 3/4% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007
-----------------------
PROSPECTUS
-----------------------
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Reference is made to Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL"), which enables a corporation in its original certificate of
incorporation or an amendment thereto to eliminate or limit the personal
liability of a director for violations of the director's fiduciary duty,
except (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) pursuant
to Section 174 of the DGCL (providing for liability of directors for the
unlawful payment of dividends or unlawful stock purchases or redemptions) or
(iv) for any transaction from which a director derived an improper personal
benefit.
Section 145 of the DGCL empowers the Company to indemnify, subject to the
standards set forth therein, any person in connection with any action, suit or
proceeding brought before or threatened by reason of the fact that the person
was a director, officer, employee or agent of such company, or is or was
serving as such with respect to another entity at the request of such company.
The DGCL also provides that the Company may purchase insurance on behalf of
any such director, officer, employee or agent.
The Company's Certificate of Incorporation and By-laws provide in effect for
the indemnification by the Company of each director and officer of the Company
to the fullest extent permitted by applicable law.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits (see index to exhibits at E-1)
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes;
(a)(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 offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and 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 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(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.
II-1
<PAGE>
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by a
director, officer or controlling person of the registrant 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 registrant 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 Securities Act and will be
governed by the final adjudication of such issue.
(c) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to Item 4, 10(b), 11, or 13 of this
form, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of the registration statement through the date of responding
to the request.
(d) 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-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NEW YORK, NEW YORK, ON NOVEMBER 7, 1997.
PRICE COMMUNICATIONS WIRELESS, INC.
/s/ Robert Price
By: _________________________________
ROBERT PRICE
DIRECTOR, PRESIDENT AND TREASURER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ Robert Price Director,
_____________________________________ President and November 7,
ROBERT PRICE Treasurer 1997
(Principal
Executive
Officer,
Financial Officer
and Accounting
Officer)
/s/ Ashley B. Dixon Vice President and
_____________________________________ Corporate November 7,
ASHLEY B. DIXON Secretary 1997
(Principal
Executive
Officer)
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 The Merger Agreement
3.1 Articles of Incorporation of the Company
3.2 By-laws of the Company
4.1 Indenture to 11 3/4% Senior Subordinated Notes due 2007 between the
Company and Bank of Montreal Trust Company, as Trustee (including form
of Note)
4.2 Registration Rights Agreement
5.1 Opinion of Davis Polk & Wardwell regarding the validity of the New
Notes
8.1 Opinion of Davis Polk & Wardwell regarding tax matters
10.1 Credit Agreement dated as of October 6, 1997 among the Company,
Holdings, the lenders listed therein, DLJ Capital Funding, Inc., as
syndication agent and Bank of Montreal, Chicago branch, as
administrative agent
10.2 Fort Myers Sale Agreement
10.3 Georgia Sale Agreement
10.4 Ryan Agreement
10.5 Wisehart Agreement
10.6 Meehan Agreement
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges
21.1 Subsidiaries of the Company
23.1 Consent of KPMG Peat Marwick LLP relating to the financial statements
of Palmer
23.2 Consent of Davis Polk & Wardwell (see exhibit 5.1)
25.1 Statement of Eligibility of Bank of Montreal Trust Company
99.1 Form of Letter of Transmittal to 11 3/4% Senior Subordinated Notes due
2007 of the Company
99.2 Form of Notice of Guaranteed Delivery to 11 3/4% Senior Subordinated
Notes due 2007 of the Company
99.3 Form of Instruction to Registered Holder and/or Book-Entry Transfer of
Participant from Owner of the Company
99.4 Form of Letter to Clients
99.5 Form of Letter to Registered Holders and Depository Trust Company
Participants
</TABLE>
E-1
<PAGE>
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into this
23rd day of May, 1997, by and among PALMER WIRELESS, INC., a Delaware
corporation (the "Company"), PRICE COMMUNICATIONS CORPORATION, a New York
corporation ("Acquiror"), and PRICE COMMUNICATIONS CELLULAR MERGER CORP., a
Delaware corporation ("Merger Sub").
WHEREAS, the Boards of Directors of the Company, Acquiror and Merger Sub
have each determined that it is fair to, and in the best interests of their
respective stockholders that Merger Sub, a wholly-owned subsidiary of
Acquiror, merge with and into the Company, pursuant to and subject to the
terms and conditions of this Agreement and the Delaware General Corporation
Law ("Delaware Law"); and
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Acquiror to enter into this Agreement, Palmer Communications
Incorporated, a Delaware corporation ("PCI"), has entered into a voting
agreement with Acquiror (the "Voting Agreement") pursuant to which, among
other things, PCI has agreed to vote its shares of common stock of the Company
in favor of this Agreement, the Merger (as defined below) and the other
transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agrees as follows:
ARTICLE I
The Merger
Section 1.1. The Merger.
Upon the terms and subject to the conditions set forth in this Agreement
(including approval of the Federal Communications Commission (the "FCC")), and
in accordance with Delaware Law, at the Effective Time (as defined in Section
1.2) Merger Sub shall be merged with and into the Company (the "Merger"). As a
result of the Merger, the separate corporate existence of Merger Sub shall
cease and the Company shall continue as the surviving corporation of the
Merger (sometimes referred to herein as the "Surviving Corporation") and a
wholly-owned subsidiary of Acquiror. The name of the Company shall continue as
the name of the Surviving Corporation.
Section 1.2. Effective Time.
At the Closing, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with the relevant provisions of, Delaware Law and in
such form as approved by the Company and Acquiror prior to such filing (the
date and time of the filing of the Certificate of Merger or the time specified
therein being the "Effective Time").
Section 1.3. Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as provided in the
applicable provisions of Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all the rights, privileges, powers and franchises of Merger
Sub and the Company, shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Merger Sub and the Company shall become the debts,
liabilities and duties of the Surviving Corporation.
1
<PAGE>
Section 1.4. Certificate of Incorporation; Bylaws.
At the Effective Time, subject to the terms and conditions of Section 7.8
hereof, (a) the certificate of incorporation of Merger Sub, as in effect
immediately prior to the Effective Time and as amended by the Certificate of
Merger, shall be the certificate of incorporation of the Surviving
Corporation, and (b) the bylaws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the bylaws of the Surviving Corporation.
Section 1.5. Directors and Officers.
The directors of Merger Sub (or such other or additional individuals as
Acquiror may designate prior to Closing) shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the certificate
of incorporation and bylaws of the Surviving Corporation; and the officers of
the Company shall continue as the officers of the Surviving Corporation, in
each case until their respective successors are duly elected or appointed and
qualified.
Section 1.6. Closing.
Subject to the terms and conditions of this Agreement, the closing of the
Merger (the "Closing") will take place as promptly as practicable after
satisfaction of the latest to occur or, if permissible, waiver of the
conditions set forth in Article VIII hereof (the "Closing Date"), at the
offices of Hogan & Hartson L.L.P., Columbia Square, 555 13th Street, N.W.,
Washington, D.C. 20004, unless another date or place is agreed to in writing
by the parties hereto.
Section 1.7. Subsequent Actions.
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or desirable to continue in,
vest, perfect or confirm of record or otherwise in the Surviving Corporation
its right, title or interest in, to or under any of the rights, properties,
privileges, franchises or assets of either of its constituent corporations
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be directed and
authorized to execute and deliver, in the name and on behalf of either of such
constituent corporations, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title
and interest in, to and under such rights, properties, privileges, franchises
or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
ARTICLE II
Conversion of Securities; Exchange of Certificates
Section 2.1. Conversion of Securities.
At the Effective Time, by virtue of the Merger and without any action on the
part of Acquiror, Merger Sub, the Company or the holders of any of the
following securities:
(a) Company Common Stock. Subject to the other provisions of this Section
2.1, each share of (i) Class A common stock, par value $.01 per share, of
the Company ("Class A Common Stock"), issued and outstanding immediately
prior to the Effective Time (excluding any shares described in Sections
2.1(b) and (c) and any Dissenting Shares (as hereinafter defined)), and
(ii) Class B common stock, par value $.01 per share, of the Company ("Class
B Common Stock"; together with the Class A Common Stock, the "Common
Stock"), shall be converted into the right to receive Seventeen Dollars and
Fifty Cents ($17.50) in cash, without interest (the "Per Share Amount").
All such shares of Common Stock shall cease to be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each
certificate previously evidencing any such shares shall thereafter
represent only the right to receive the Merger
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Consideration as described below. The holders of certificates previously
evidencing such shares of Common Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares
of Common Stock, except as otherwise provided herein or by law. Each such
certificate previously evidencing such shares of Common Stock shall be
exchanged for the Per Share Amount multiplied by the number of shares
previously evidenced by the canceled certificate upon the surrender of such
certificate in accordance with the provisions of Section 2.2, without
interest;
(b) Acquiror-Owned Shares. All shares of capital stock of the Company
owned, directly or indirectly, by Acquiror, Merger Sub or any Acquiror
Subsidiary (as defined in Section 5.1) shall be canceled and extinguished
without any conversion thereof and no cash shall be delivered or
deliverable in exchange therefor;
(c) Treasury Stock. All shares of capital stock of the Company held in
the treasury of the Company immediately prior to the Effective Time shall
be canceled and extinguished without any conversion thereof and no cash
shall be delivered or deliverable in exchange therefor; and
(d) Merger Sub Stock. Each share of common stock, par value $.01 per
share, of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one (1) duly and
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
Section 2.2. Payment.
(a) Paying Agent. As of the Effective Time, Acquiror shall, on behalf of
Merger Sub, deposit with a bank theretofore designated by the Company and
Acquiror (the "Paying Agent"), for the benefit of the holders of shares of
Common Stock (excluding any shares described in Sections 2.1(b) and (c) and
any Dissenting Shares), for payment in accordance with this Article II,
through the Paying Agent, cash in an amount equal to the Per Share Amount
multiplied by the number of shares of Common Stock outstanding immediately
prior to the Effective Time (excluding any shares described in Sections 2.1(b)
and (c) and any Dissenting Shares) (such cash being hereinafter referred to as
the "Payment Fund"). Acquiror shall cause the Paying Agent, pursuant to
irrevocable instructions, to deliver the cash contemplated to be paid pursuant
to Section 2.1(a) out of the Payment Fund. The Payment Fund shall not be used
for any other purpose.
(b) Payment Procedures. Promptly after the Effective Time, Acquiror shall
cause the Paying Agent to mail to each record holder, as of the Effective
Time, of an outstanding certificate (each a "Certificate" and collectively,
the "Certificates") that immediately prior to the Effective Time evidenced
outstanding shares of Common Stock (excluding any shares described in Sections
2.1(b) and (c) and any Dissenting Shares), a form letter of transmittal and
instructions for use in effecting the surrender of the Certificates for
payment therefor. Upon surrender to the Paying Agent of a Certificate,
together with such letter of transmittal duly executed, and any other required
documents, the holder of such Certificate shall be entitled to receive in
exchange therefor the consideration set forth in Section 2.1(a) (the "Merger
Consideration"), and such Certificate shall forthwith be canceled. No interest
will be paid or accrued on the cash payable upon the surrender of the
Certificates. Until surrendered in accordance with the provisions of this
Section 2.2, each Certificate shall represent for all purposes only the right
to receive the consideration set forth in Section 2.1(a), without any interest
thereon.
(c) No Further Rights in Common Stock. All cash paid upon conversion of the
shares of Common Stock in accordance with the terms of this Article II, and
all cash paid pursuant to Section 2.5, shall be deemed to have been paid in
full satisfaction of all rights pertaining to such shares of Common Stock.
(d) Termination of Payment Fund. Any portion of the Payment Fund that
remains undistributed to the holders of Common Stock for one hundred eighty
(180) days after the Effective Time shall be delivered to Acquiror, upon
demand, and any holders of Common Stock that have not theretofore complied
with this Article II shall thereafter look only to the Surviving Corporation
and Acquiror for the Merger Consideration to which they are entitled.
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(e) No Liability. Neither Acquiror nor the Surviving Corporation shall be
liable to any holder of shares of Common Stock for any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) Lost, Stolen or Destroyed Certificates. In the event any Certificate
evidencing shares of Common Stock shall have been lost, stolen or destroyed,
upon the making of an affidavit setting forth that fact by the person claiming
such lost, stolen or destroyed Certificate(s) and granting a reasonable
indemnity against any claim that may be made against Acquiror or the Paying
Agent with respect to such Certificate(s), Acquiror shall cause the Paying
Agent to pay to such person the Merger Consideration with respect to such
lost, stolen or destroyed Certificate(s).
Section 2.3. Company Options; Stock Purchase Plan.
(a) Company Options. Immediately prior to the Effective Time, (i) each
outstanding stock option to purchase shares of Class A Common Stock (a "Plan
Option") granted under the Company's 1995 Stock Option Plan and 1995
Directors' Stock Option Plan, each as amended to the date of this Agreement
(collectively, the "Company Stock Option Plans"), and (ii) each phantom option
to purchase shares of Class A Common Stock described on Schedule 3.3 hereto (a
"Phantom Option"; together with the Plan Options, the "Options"), whether or
not any such Options are exercisable, shall be terminated by the Company, and
Acquiror shall, on behalf of Merger Sub, pay to the holder thereof at the
Effective Time, in consideration for such termination, an amount in cash equal
to the excess, if any, of the Per Share Amount over the per share exercise
price of such Option, multiplied by the number of shares of Class A Common
Stock into which the Option remains unexercised. Any such payment shall be
subject to all applicable federal, state and local tax withholding
requirements. The Company shall terminate the Company Stock Option Plans as of
the Effective Time, and take all such action as is necessary to terminate the
Options as of the Effective Time, so that on and after the Effective Time no
holder of an Option shall have any option to purchase shares of Class A Common
Stock or any other equity interest in the Company under the Company Stock
Option Plans or the Phantom Option agreements.
(b) Employee Stock Purchase Plan. Effective as of the Effective Time, the
Company's 1995 Employee Stock Purchase Plan (the "Employee Stock Purchase
Plan") shall be terminated and the then applicable Payroll Deduction Period
(as defined in the Employee Stock Purchase Plan) shall be deemed to have ended
on the last trading day of the Class A Common Stock immediately prior to the
Effective Time. At the Effective Time, Acquiror shall, on behalf of Merger
Sub, pay to each Company employee who is a participant in the Employee Stock
Purchase Plan as of the Effective Time, an amount in cash equal to the Per
Share Amount multiplied by the number of shares of Class A Common Stock which
the accumulated funds in such employee's account would have been entitled to
purchase under the terms of the Employee Stock Purchase Plan as of the end of
such Payroll Deduction Period. Such payments shall be deemed to satisfy all
obligations of the Company and the Surviving Corporation to the participants
in the Employee Stock Purchase Plan. Such payments shall be subject to all
applicable federal, state and local tax withholding requirements. All funds in
the accounts of the participants as of the Effective Time after such payments,
shall belong to and be disbursed in accordance with the instructions of
Acquiror. The Company shall terminate the Employee Stock Purchase Plan as of
the Effective Time so that on and after the Effective Time no former
participant in the Employee Stock Purchase Plan shall have any right to
purchase shares of Class A Common Stock or any other equity interest in the
Company under the Employee Stock Purchase Plan.
(c) Non-Employee Director Stock Purchase Plan. Effective as of the Effective
Time, the Company's 1995 Non-Employee Director Stock Purchase Plan (the
"Director Stock Purchase Plan"; together with the Employee Stock Purchase
Plan, the "Company Stock Purchase Plans"), shall be terminated and the then
applicable Accumulation Period (as defined in the Director Stock Purchase
Plan) shall be deemed to have ended on the last trading day of the Class A
Common Stock immediately prior to the Effective Time. At the Effective Time,
Acquiror shall, on behalf of Merger Sub, pay to each member of the Company's
Board of Directors who is a participant in the Director Stock Purchase Plan as
of the Effective Time, an amount in cash equal to the Per Share Amount
multiplied by the number of shares of Class A Common Stock which the
accumulated funds in
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such director's account would have been entitled to purchase under the terms
of the Director Stock Purchase Plan as of the end of such Accumulation Period.
Such payments shall be deemed to satisfy all obligations of the Company and
the Surviving Corporation to the participants in the Director Stock Purchase
Plan. Such payments shall be subject to all applicable federal, state and
local tax withholding requirements. All funds in the accounts of the
participants as of the Effective Time after such payments, shall belong to and
be disbursed in accordance with the instructions of Acquiror. The Company
shall terminate the Director Stock Purchase Plan as of the Effective Time so
that on and after the Effective Time no former participant in the Director
Stock Purchase Plan shall have any right to purchase shares of Class A Common
Stock or any other equity interest in the Company under the Director Stock
Purchase Plan.
Section 2.4. Stock Transfer Books.
At the Effective Time, the stock transfer books of the Company with respect
to all shares of capital stock of the Company shall be closed and no further
registration of transfers of such shares of capital stock shall thereafter be
made on the records of the Company. On or after the Effective Time, any
Certificates for shares of Common Stock (excluding any shares described in
Sections 2.1(b) and (c) and Dissenting Shares) presented to the Paying Agent,
the Surviving Corporation or Acquiror for any reason shall be converted into
the Merger Consideration.
Section 2.5. Dissenting Shares.
Notwithstanding any other provisions of this Agreement to the contrary,
shares of Class A Common Stock that are issued and outstanding immediately
prior to the Effective Time and that are held by stockholders who shall not
have voted in favor of the Merger or consented thereto in writing and who
shall have demanded properly in writing appraisal for such shares in
accordance with Section 262 of Delaware Law (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the
Merger Consideration. Such stockholders shall be entitled to receive payment
of the appraised value of such shares of Class A Common Stock held by them in
accordance with the provisions of such Section 262, except that all Dissenting
Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or lost their rights to appraisal of such
shares of Class A Common Stock under such Section 262 shall thereupon be
deemed to have been converted into and to have become exchangeable, as of the
Effective Time, for the right to receive, without any interest thereon, the
Merger Consideration, upon surrender, in the manner provided in Section 2.2,
of the certificate or certificates that formerly evidenced such shares of
Class A Common Stock.
ARTICLE III
Representations and Warranties of the Company
The Company hereby represents and warrants to Acquiror and Merger Sub as
follows:
Section 3.1. Organization and Qualification; Subsidiaries.
(a) The Company and each Subsidiary (as defined below) of the Company (each
a "Company Subsidiary" and collectively, the "Company Subsidiaries") is a
corporation or partnership duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization. The Company
and each Company Subsidiary is duly qualified to conduct its business, and is
in good standing, in each jurisdiction where the character of its properties
owned, operated or leased or the nature of its activities makes such
qualification necessary, except for such failure which would not have a
Company Material Adverse Effect (as defined below). The Company and each
Company Subsidiary has the requisite power and authority and any necessary
governmental authority, franchise, license or permit to own, operate, lease
and otherwise to hold and operate its assets and properties and to carry on
the businesses as now being conducted, except for such failures which would
not in the aggregate have a Company Material Adverse Effect. The Company has
no Subsidiaries (as defined below) or any equity or similar interest in any
entity other than those listed in Schedule 3.1. As used herein, the term
"Company Material Adverse Effect" means any material adverse effect on the
business, assets, financial condition or results of operations of the Company
and the Company Subsidiaries taken as a whole.
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(b) For purposes of this Agreement, a "Subsidiary" of any person means any
corporation, partnership, joint venture or other legal entity of which such
person (either alone or through or together with any other Subsidiary) (i)
owns, directly or indirectly, fifty percent (50%) or more of the stock,
partnership interests or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or other
governing body of such corporation, partnership, joint venture or other legal
entity; or (ii) possesses, directly or indirectly, control over the direction
of management or policies of such corporation, partnership, joint venture or
other legal entity (whether through ownership of voting securities, by
agreement or otherwise).
Section 3.2. Certificate of Incorporation and Bylaws.
The Company has heretofore made available to Acquiror a complete and correct
copy of the certificate or articles of incorporation and the bylaws of the
Company and each Company Subsidiary that is a corporation, and a correct copy
of the partnership agreement for each Company Subsidiary that is a
partnership, each as amended to date. Each such certificate or articles of
incorporation, bylaws and partnership agreement is in full force and effect.
Neither the Company nor any Company Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation, bylaws,
partnership agreement or other organizational document.
Section 3.3. Capitalization.
The authorized capital stock of the Company consists, as of the date of this
Agreement, of: (a) seventy-three million (73,000,000) shares of Class A Common
Stock, of which ten million five hundred nineteen thousand six hundred and
eighty-one (10,519,681) shares are issued and outstanding; (b) eighteen
million (18,000,000) shares of Class B Common Stock, of which seventeen
million two hundred ninety-three thousand five hundred and seventy-eight
(17,293,578) shares are issued and outstanding; and (c) ten million
(10,000,000) shares of preferred stock, par value $.01 per share, of which no
shares are issued and outstanding. One million nine hundred thousand
(1,900,000) shares of Class A Common Stock have been reserved for issuance
upon the exercise of Plan Options granted under the Company Stock Option
Plans, of which seven hundred forty-five thousand eight hundred and thirty-
four (745,834) shares are issuable upon the exercise of Plan Options
outstanding under the Company Stock Option Plans as of the date hereof. The
Phantom Options assume the issuance of twenty thousand (20,000) shares of
Class A Common Stock upon exercise thereof. One hundred sixty thousand
(160,000) shares of Class A Common Stock are reserved for issuance under the
Company's 1995 Employee Stock Purchase Plan and twenty-five thousand (25,000)
shares of Class A Common Stock are reserved for issuance under the Company's
1995 Non-Employee Director Stock Purchase Plan. Seventeen million two hundred
ninety-three thousand five hundred and seventy-eight (17,293,578) shares of
Class A Common Stock are reserved for purposes of effecting conversions of
Class B Common Stock into Class A Common Stock. Since December 31, 1996, no
shares of Class A Common Stock or Class B Common Stock have been issued,
except for shares of Class A Common Stock issued upon the exercise of options
granted under the Company's Stock Option Plans and shares of Class A Common
Stock issued pursuant to the Company's Stock Purchase Plan. Except as set
forth in Schedule 3.3, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the
issued or unissued capital stock of the Company or any Company Subsidiary or
obligating the Company or any Company Subsidiary to issue or sell any shares
of capital stock of, or other equity interests in the Company or any Company
Subsidiary. Except as set forth in Schedule 3.3, there are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise
acquire any shares of its capital stock or make any material investment (in
the form of a loan, capital contribution or otherwise) in any other person.
All of the issued and outstanding shares of Class A Common Stock and Class B
Common Stock have been duly authorized and validly issued and are fully paid
and nonassessable and not subject to preemptive rights. Except as set forth in
Schedule 3.3, with respect to each Company Subsidiary that is a corporation,
all of the outstanding shares of capital stock of such Company Subsidiary have
been duly authorized and validly issued and are fully paid and nonassessable.
Except as set forth in Schedule 3.3, with respect to each Company Subsidiary
that is a partnership, all of the partnership interests owned by the Company,
and with respect to each Company Subsidiary that is a corporation, all of the
outstanding shares of capital stock owned by the Company, are owned by the
Company free and clear of any liens, security interests, pledges, agreements,
options, rights, claims, charges or encumbrances (the "Encumbrances"). As of
the date hereof, the only
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outstanding indebtedness for borrowed money of the Company and the Company
Subsidiaries is as set forth in Schedule 3.3 and all such indebtedness is
prepayable in full without premium or penalty in accordance with its terms.
Section 3.4. Authority.
The Company has the necessary corporate power and authority to enter into
this Agreement and subject to obtaining any necessary stockholder approval of
the Merger, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby, other than the approval of this Agreement by the
stockholders of the Company in accordance with Delaware Law. This Agreement
has been duly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Acquiror and Merger Sub, constitutes
a legal, valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally and
by the application of general principles of equity.
Section 3.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do not, and
the performance by the Company of its obligations under this Agreement will
not, subject to compliance with the requirements set forth in Section 3.5(b)
below, (i) conflict with or violate the certificate or articles of
incorporation, bylaws, partnership agreement or other organizational document
of the Company or any Company Subsidiary, (ii) conflict with or violate any
law, statute, ordinance, rule, regulation, order, judgment or decree
applicable to the Company or any Company Subsidiary or by which any of their
respective properties is bound or affected, (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of an
Encumbrance on any of the properties or assets of the Company or any Company
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Company Subsidiary is a party or by which the
Company, any Company Subsidiary or any of their respective properties or
assets is bound or affected, or (iv) result in any material breach of or
constitute a material default (or an event which with notice or lapse of time
or both would become a material default) or give rise to any material rights
to other parties under any Material Contract described in Section 3.12(a)(i),
except, in the case of clauses (ii) and (iii) above for any such conflicts,
violations, breaches, defaults or other alterations or occurrences that in the
aggregate (A) would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent the Company from performing its
obligations under this Agreement in any material respect, and (B) would not
have a Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign (each a
"Governmental Entity"), except (i) for (A) applicable requirements, if any, of
the Securities Exchange Act of 1934, as amended, (the "Exchange Act"), state
takeover laws, the exchange on which the Company's securities are traded, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Communications Act of 1934, as amended, together with the rules,
regulations and published decisions of the FCC (collectively, the
"Communications Act"), (B) applicable requirements, if any, of the consents,
approvals, authorizations or permits described in Schedule 3.5, and (C) filing
and recordation of appropriate merger documents as required by Delaware Law
and (ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not in the aggregate
prevent or delay consummation of the Merger in any material respect, or
otherwise prevent the Company from performing its obligations under this
Agreement in any material respect, and would not in the aggregate have a
Company Material Adverse Effect.
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Section 3.6. SEC Filings; Financial Statements.
(a) The Company has filed all forms, reports, statements and other documents
required to be filed with the Securities and Exchange Commission (the "SEC")
since March 21, 1995, and has heretofore made available to Acquiror, in the
form filed with the SEC since such date, together with any amendments thereto,
its (i) Annual Reports on Form 10-K, (ii) all Quarterly Reports on Form 10-Q,
(iii) all proxy statements relating to meetings of stockholders (whether
annual or special), (iv) all reports on Form 8-K, and (v) all other reports or
registration statements filed by the Company (collectively, the "Company SEC
Reports"). As of their respective filing dates the Company SEC Reports (i)
complied as to form in all material respects with the requirements of the
Exchange Act and the Securities Act of 1933, as amended (the "Securities Act")
and (ii) did not at the time they were filed contain any 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, in the light of the circumstances
under which they were made, not misleading.
(b) The financial statements, including all related notes and schedules,
contained in the Company SEC Reports (or incorporated by reference therein)
fairly present the consolidated financial position of the Company and the
Company Subsidiaries as at the respective dates thereof and the consolidated
results of operations and cash flows of the Company and the Company
Subsidiaries for the periods indicated in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be noted therein) and subject in the case of interim
financial statements to normal year-end adjustments.
Section 3.7. Absence of Certain Changes or Events.
Except as disclosed in the Company SEC Reports filed prior to the date of
this Agreement or as set forth in Schedule 3.7, since December 31, 1996, the
Company and the Company Subsidiaries have not incurred any material liability,
except in the ordinary course of the businesses consistent with their past
practices, and there has not been any change in the business, financial
condition or results of operations of the Company or any of the Company
Subsidiaries or the occurrence of any other event, which has had, or is
reasonably likely to have, a Company Material Adverse Effect, and the Company
and the Company Subsidiaries have conducted their respective businesses in the
ordinary course consistent with their past practices.
Section 3.8. Absence of Litigation.
Except as set forth in Schedule 3.8, as of the date hereof there are (a) no
claims, actions, suits, investigations, or proceedings pending or, to the
Company's knowledge, threatened against the Company or any of the Company
Subsidiaries before any court, administrative, governmental, arbitral,
mediation or regulatory authority or body, domestic or foreign, that (i) if
adversely determined would individually involve the payment of more than One
Hundred Thousand Dollars ($100,000) by the Company or any Company Subsidiary,
(ii) if adversely determined would individually or in the aggregate be
reasonably likely to have a Company Material Adverse Effect, (iii) challenge
or seek to prevent, enjoin, alter or materially delay the transactions
contemplated hereby, or (iv) seek material injunctive relief against the
Company or any Company Subsidiary, and (b) no material judgments, decrees,
injunctions or orders of any Governmental Entity or arbitrator outstanding
against the Company or any Company Subsidiary.
Section 3.9. Licenses and Permits; Compliance with Laws.
The Company and the Company Subsidiaries hold all permits, licenses and
approvals (none of which has been modified or rescinded and all of which are
in full force and effect) from all Governmental Entities (collectively, the
"Permits") necessary for the Company and the Company Subsidiaries to own,
lease and operate their respective properties and to carry on their respective
businesses as now being conducted, except for the Permits for which the
failure to obtain would not have a Company Material Adverse Effect. The
businesses of the Company and the Company Subsidiaries are not being conducted
in violation of any applicable law, statute, ordinance, regulation, judgment,
Permits, order, decree, concession, grant or other authorization of any
Governmental Entity, except for violations that would not be reasonably likely
to have a Company Material Adverse Effect.
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Section 3.10. Taxes.
Except as set forth in Schedule 3.10, the Company and the Company
Subsidiaries have prepared and filed on a timely basis with all appropriate
Governmental Entities all material returns in respect of taxes that they are
required to file on or prior to the Effective Time or by the date therefor
including extensions, and all such returns are correct and complete in all
material respects. Except as set forth in Schedule 3.10, the Company and the
Company Subsidiaries have paid in full all taxes due on or before the
Effective Time and, in the case of taxes accruing on or before the Effective
Time that are not due on or before the Effective Time, the Company has made
adequate provision in its books and records and financial statements for such
payment. Except as set forth in Schedule 3.10, the Company and the Company
Subsidiaries have withheld from each payment made to any of its present or
former employees, officers and directors all amounts required by law to be
withheld and has, where required, remitted such amounts within the applicable
periods to the appropriate Governmental Entities. In addition, except as set
forth in Schedule 3.10, (a) there are no assessments of the Company or any
Company Subsidiary with respect to taxes that have been issued and are
outstanding; (b) no Governmental Entity has examined or audited the Company or
any Company Subsidiary in respect of taxes; (c) neither the Company nor any
Company Subsidiary has executed or filed any agreement extending the period of
assessment or collection of any taxes; and (d) neither the Company nor any
Company Subsidiary has received written notification from any Governmental
Entity of its intention to commence any audit or investigation. Except as set
forth in Schedule 3.10, neither the Company nor any Company Subsidiary is a
party to, is bound by or has any obligation under any tax sharing or tax
indemnification agreement, provision or arrangement, whether formal or
informal, and no power of attorney, which is currently in effect, has been
granted with respect to any matter relating to taxes of the Company or any
Company Subsidiary. Except as set forth in Schedule 3.10, neither the Company
nor any Company Subsidiary is presently required or will be required to
include any adjustment in taxable income under Section 481 of the Internal
Revenue Code of 1986, as amended (the "Code"), (or any similar provision of
the tax laws of any jurisdiction) as a result of any change in method of
accounting or otherwise. Except as set forth in Schedule 3.10, neither the
Company nor any Company Subsidiary has entered into any "intercompany
transaction" as to which any item of deferred gain or loss has not been
restored, and no "excess loss account" exists with respect to the stock of any
Company Subsidiary, as those terms are defined in the Treasury Regulations
issued under Section 1504 of the Code. For the purpose of this Agreement, the
term "tax" (including, with correlative meaning, the terms "taxes" and
"taxable") shall include except where the context otherwise requires, all
federal, state, local and foreign income, profits, franchise, gross receipts,
payroll, sales, employment, use, property, withholding, excise, occupancy and
other taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties and additions imposed with respect to such amounts.
Section 3.11. Intellectual Property.
Except as set forth in Schedule 3.11, the Company or one of the Company
Subsidiaries owns or possesses all rights to use of the service marks,
copyrights, franchises, trademarks, trade names, jingles, slogans, logotypes
and other similar intangible assets (the "Intellectual Property") maintained,
owned, used, held for use or otherwise held by the Company and the Company
Subsidiaries, and all of the rights, benefits and privileges associated
therewith material to the conduct of the business of the Company and the
Company Subsidiaries as currently conducted. To the knowledge of the Company,
neither the Company nor any Company Subsidiary is infringing upon any
Intellectual Property right or other legally protectable right of another. To
the knowledge of the Company, no person is materially infringing upon any
Intellectual Property right of the Company or any Company Subsidiary.
Section 3.12. Material Contracts.
(a) Schedule 3.12 sets forth a complete and correct list, as of the date of
this Agreement, of all agreements of the following type to which the Company
or a Company Subsidiary is a party or may be bound (collectively, the
"Material Contracts"): (i) agreements filed as an exhibit to the Company SEC
Reports and each agreement that would have been required to be filed as an
exhibit to the Company SEC Reports had such agreement been entered into as of
the date of filing any such SEC Report; (ii) employment, severance,
termination, consulting and retirement agreements; (iii) loan agreements,
indentures, letters of credit, mortgages, notes and other debt
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instruments evidencing indebtedness in excess of Five Hundred Thousand Dollars
($500,000); (iv) agreements that require aggregate future payments to or by
the Company or any Company Subsidiary of more than Five Hundred Thousand
Dollars ($500,000) (other than purchase orders and advertising sales contracts
entered into in the ordinary course of business); (v) agreements containing
any "change of control" provisions which, if triggered, would involve payments
by the Company or any Company Subsidiary in excess of Two Hundred Fifty
Thousand Dollars ($250,000) or other material rights or obligations; (vi)
material agreements with any key employee, director, officer, or person known
to the Company to be a direct or indirect stockholder of the Company; (vii)
agreements prohibiting the Company or any Company Subsidiary from engaging or
competing in any line of business or limiting such competition; (viii) except
for the partnership agreements of the Company Subsidiaries, any joint venture,
partnership and similar agreements involving a sharing of profits; (ix)
acquisition or divestiture agreements relating to the (A) sale of assets or
stock of the Company or any Company Subsidiary (other than sales of inventory
in the ordinary course of business) or (B) the purchase of assets or stock of
any other person (other than the purchase of inventory in the ordinary course
of business and acquisitions of additional interests in Company Subsidiaries
involving payments by the Company of less than Five Hundred Thousand Dollars
($500,000) in the aggregate); (x) brokerage, finder's or financial advisory
agreements; (xi) guarantees of indebtedness for borrowed money of any person
(other than a Company Subsidiary); (xii) interconnection agreements and switch
sharing agreements; and (xiii) agreements under which the Company or any
Company Subsidiary manages a cellular system of any third party.
(b) Except as set forth in Schedule 3.12, all the Material Contracts are
valid and in full force and effect on the date hereof except to the extent
they have previously expired in accordance with their terms, and neither the
Company nor any Company Subsidiary has (or has any knowledge that any other
party thereto has) violated any provision of, or committed or failed to
perform any act which with or without notice, lapse of time or both would
constitute a default under the provisions of, any Material Contract, except
for defaults which would not in the aggregate reasonably be expected to have a
Company Material Adverse Effect. True and complete copies of all Material
Contracts have been delivered to Acquiror or made available for inspection.
Section 3.13. Employee Benefit Plans.
(a) Schedule 3.13 sets forth a list of all of the pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus or other material incentive plans, all other
material written employee programs, arrangements or agreements and all other
material employee benefit plans or fringe benefit plans, including, without
limitation, all "employee benefit plans" as that term is defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), currently adopted, maintained by, sponsored in whole or in part by,
or contributed to by the Company or for which the Company could incur a
liability or any entity required to be aggregated with the Company (each, a
"Commonly Controlled Entity") pursuant to Section 414 of the Code for the
benefit of present and former employees or directors of the Company and of
each Company Subsidiary or their beneficiaries, or providing benefits to such
persons in respect of services provided to any such entity (collectively, the
"Benefit Plans"). Any of the Benefit Plans which is an "employee pension
benefit plan", as that term is defined in Section 3(2) of ERISA, is referred
to herein as an "ERISA Plan".
(b) Each of the Benefit Plans intended to be "qualified" within the meaning
of Section 401(a) or 501 of the Code has been determined by the Internal
Revenue Service to be so qualified and to the Company's knowledge, no
circumstances exist that could reasonably be expected by the Company to result
in the revocation of any such determination. Each of the Benefit Plans is in
compliance with their terms and the applicable terms of ERISA and the Code and
any other applicable laws, rules and regulations the breach or violation of
which could result in a material liability to the Company or any Commonly
Controlled Entity.
(c) No ERISA Plan which is a defined benefit pension plan has any "unfunded
current liability", as that term is defined in Section 302(d)(8)(A) of ERISA,
and the present fair market value of the assets of any such plan equals or
exceeds the plan's "benefit liabilities", as that term is defined in Section
4001(a)(16) of ERISA, when determined under actuarial factors that would apply
if the plan terminated in accordance with all applicable legal requirements.
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(d) Except as disclosed in Schedule 3.13, no Benefit Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA (a
"Multiemployer Plan"). Neither the Company nor any Commonly Controlled Entity
has completely or partially withdrawn from any Multiemployer Plan. No
termination liability to the Pension Benefit Guaranty Corporation or
withdrawal liability to any Multiemployer Plan that is material in the
aggregate has been or is reasonably expected to be incurred with respect to
any Multiemployer Plan by the Company or any Commonly Controlled Entity.
(e) The Company has made available to Acquiror complete copies, as of the
date hereof, of all of the Benefit Plans that have been reduced to writing,
together with all documents establishing or constituting any related trust,
annuity contract, insurance contract or other funding instrument. The Company
has made available to Acquiror complete copies of current plan summaries,
employee booklets, personnel manuals and other material documents or written
materials concerning the Benefit Plans that are in the possession of the
Company as of the date hereof.
(f) To the Company's knowledge, except as set forth in Schedule 3.13 and
except for claims for benefits in the ordinary course of business, no claim,
lawsuit, arbitration or other action has been threatened or instituted against
any Benefit Plan.
(g) Except as set forth in Schedule 3.13, Schedule 7.9 or as otherwise
contemplated by the terms of this Agreement, the consummation of the
transactions contemplated by this Agreement will not give rise to any
liability, including, without limitation, liability for severance pay or
termination pay, or accelerate the time of payment or vesting or increase the
amount of compensation or benefits due to any employee, director or
stockholder of the Company (whether current, former, or retired) or their
beneficiaries solely by reason of such transactions. No amounts payable under
any Benefit Plan will fail to be deductible for federal income tax purposes by
virtue of Section 280G or 162(m) of the Code.
(h) Except as set forth in Schedule 3.13 or Schedule 7.9, neither the
Company nor any Company Subsidiary maintains, contributes to, or in any way
provides for any benefits of any kind (other than under Section 4980B of the
Code, the Federal Social Security Act, or a plan qualified under Section
401(a) of the Code) to any current or future retiree or terminee.
(i) Neither the Company, any Company Subsidiary nor any Commonly Controlled
Entity has (or could incur) any liability under Title IV of ERISA.
Section 3.14. Properties; Assets.
Except as set forth in Schedule 3.14, the Company or one of the Company
Subsidiaries (a) has good and marketable title to all the properties and
assets reflected in the latest consolidated balance sheet of the Company dated
as of March 31, 1997 (the "Balance Sheet") as being owned by the Company or
one of the Company Subsidiaries (except properties sold or otherwise disposed
of since the date thereof in the ordinary course of business), or acquired
after the date thereof which are material to the Company's business on a
consolidated basis, free and clear of all Encumbrances except (i) statutory
liens securing payments not yet due, and (ii) such imperfections or
irregularities of title, claims, liens, charges, security interests or
encumbrances as do not materially affect the use of the properties or assets
subject thereto or affected thereby or otherwise materially impair business
operations at such properties, and (b) is the lessee of all leasehold estates
which are material to its business on a consolidated basis and is in
possession of the properties purported to be leased thereunder, and to the
knowledge of the Company, each such lease is valid without default thereunder
by the lessee or lessor. The assets and properties of the Company and the
Company Subsidiaries, taken as a whole, are in good operating condition and
repair (ordinary wear and tear excepted), and constitute all of the assets and
properties which are required for the businesses and operations of the Company
and the Company Subsidiaries as presently conducted.
Section 3.15. Labor Relations.
Neither the Company nor any Company Subsidiary is a party to any collective
bargaining agreement or other contract or agreement with any labor
organization or other representative of any of the employees of the
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Company or any Company Subsidiary. Except as set forth in Schedule 3.15, the
Company and each Company Subsidiary is in compliance in all material respects
with all laws relating to the employment or the workplace, including, without
limitation, provisions relating to wages, hours, collective bargaining, safety
and health, work authorization, equal employment opportunity, immigration and
the withholding of income taxes, unemployment compensation, worker's
compensation, employee privacy and right to know and social security
contributions.
Section 3.16. Environmental Matters.
(a) Except as specifically set forth in those environmental reports
previously made available to Acquiror in the Company's due diligence data room
(the "Environmental Reports"), and except for matters which would not in the
aggregate have a Company Material Adverse Effect, (i) the Company and each
Company Subsidiary is in compliance with all applicable Environmental Laws (as
defined below) in effect on the date hereof; (ii) all Permits and other
governmental authorizations currently held by the Company and each Company
Subsidiary pursuant to the Environmental Laws are in full force and effect,
the Company and each Company Subsidiary is in compliance with all of the terms
of such Permits and authorizations, and no other Permits or authorizations are
required by the Company or any Company Subsidiary for the conduct of their
respective businesses on the date hereof; and (iii) the management, handling,
storage, transportation, treatment, and disposal by the Company and each
Company Subsidiary of any Hazardous Materials (as defined below) has been in
compliance with all applicable Environmental Laws. Neither the Company nor any
Company Subsidiary has received any written communication that alleges that
the Company or any Company Subsidiary is not in compliance in all material
respects with all applicable Environmental Laws in effect on the date hereof.
As of the date hereof, the Environmental Reports do not set forth any facts or
circumstances which have had or are reasonably likely to have a Company
Material Adverse Effect.
(b) Except as specifically set forth in the Environmental Reports, there is
no material Environmental Claim (as defined below) pending or, to the
knowledge of the Company, threatened against or involving the Company or any
of the Company Subsidiaries or against any person or entity whose liability
for any material Environmental Claim the Company or any of the Company
Subsidiaries has or may have retained or assumed either contractually or by
operation of law.
(c) Except as specifically set forth in the Environmental Reports and except
for matters which would not in the aggregate have a Company Material Adverse
Effect, to the knowledge of the Company, there are no past or present actions
or activities by the Company or any Company Subsidiary including the storage,
treatment, release, emission, discharge, disposal or arrangement for disposal
of any Hazardous Materials, that could reasonably form the basis of any
Environmental Claim against the Company or any of the Company Subsidiaries or
against any person or entity whose liability for any Environmental Claim the
Company or any Company Subsidiary may have retained or assumed either
contractually or by operation of law.
(d) As used herein, these terms shall have the following meanings:
(i) "Environmental Claim" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, directives, claims,
liens, investigations, proceedings or notices of noncompliance or violation
(written or oral) by any person or governmental authority alleging
potential liability arising out of, based on or resulting from the
presence, or release or threatened release into the environment, of any
Hazardous Materials at any location owned or leased by the Company or any
Company Subsidiary or other circumstances forming the basis of any
violation or alleged violation of any Environmental Law.
(ii) "Environmental Laws" means all applicable foreign, federal, state
and local laws (including the common law), rules, requirements and
regulations relating to pollution, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or protection of human health as it relates to the
environment including, without limitation, laws and regulations relating to
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials or relating to management of asbestos in
buildings.
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(iii) "Hazardous Materials" means wastes, substances, or materials
(whether solids, liquids or gases) that are deemed hazardous, toxic,
pollutants, or contaminants, including without limitation, substances
defined as "hazardous substances", "toxic substances", "radioactive
materials", or other similar designations in, or otherwise subject to
regulation under, any Environmental Laws.
Section 3.17. Insurance.
Schedule 3.17 contains a list of all insurance policies of title, property,
fire, casualty, liability, life, workmen's compensation, libel and slander,
and other forms of insurance in force at the date thereof with respect to the
Company and the Company Subsidiaries. All such insurance policies: (a) insure
against such risks, and are in such amounts, as appropriate and reasonable
considering the Company and the Company Subsidiaries' properties, businesses
and operations; (b) are in full force and effect; and (c) are valid,
outstanding, and enforceable. Neither the Company nor any of the Company
Subsidiaries has received or given notice of cancellation with respect to any
of the material insurance policies.
Section 3.18. FCC Matters and Governmental Matters.
(a) The Company and the Company Subsidiaries hold all licenses, permits and
other authorizations issued by the FCC to the Company and the Company
Subsidiaries for the operation of their respective businesses (the "FCC
Licenses") as set forth in Schedule 3.18. The FCC Licenses constitute all of
the licenses, permits and authorizations from the FCC that are required for
the operations and businesses of the Company and the Company Subsidiaries as
they are now operated, except where the FCC has not issued a written microwave
authorization. Without limiting the foregoing, the Company and the Company
Subsidiaries have received all necessary authorizations from the Federal
Aviation Administration ("FAA") for all existing towers that are part of the
cellular systems operated by the Company and the Company Subsidiaries and for
any facilities the construction of which have been approved by the FCC or of
which applications or notifications have been filed for such approval.
(b) Schedule 3.18 sets forth each application and notification that the
Company and the Company Subsidiaries have pending before the FCC and sets
forth the expiration date for each of the cellular FCC Licenses. The Company
and the Company Subsidiaries have provided a copy to Acquiror of each of the
FCC Licenses and the applications and notifications listed in Schedule 3.18,
except where the FCC has not issued a written microwave authorization.
(c) The FCC Licenses are valid and in full force and effect, unimpaired by
any condition or restriction or any act or omission by the Company or any of
the Company Subsidiaries which would reasonably be likely to have a Company
Material Adverse Effect. Except as set forth in Schedule 3.18, there are no
modifications, amendments, applications, revocations, or other proceedings, or
complaints pending or, to the knowledge of the Company, threatened, with
respect to the FCC Licenses (other than proceedings that apply to the cellular
industry generally). All fees due and payable to the FCC have been paid and no
event has occurred which, with or without the giving of notice or lapse of
time or both, would constitute grounds for revocation or modification of the
FCC Licenses.
(d) All material reports required by the Communications Act or required to
be filed with the FCC by the Company and the Company Subsidiaries have been
timely filed and are accurate and complete in all material respects. All
material reports required to be filed by the Company and the Company
Subsidiaries with all other governmental or administrative authorities,
federal, state and local, have been timely filed and are accurate and complete
in all material respects.
(e) Except where a lack of compliance would not have a Company Material
Adverse Effect, the Company and the Company Subsidiaries are in compliance
with, and their cellular systems have been operated in compliance with, the
Communications Act and the rules, regulations, policies and orders of the
relevant state public utilities commissions and the FAA, including, without
limitation, the FCC's time and coverage requirements of 47 C.F.R. (S)(S)
22.142, 22.911, 22.912 and 22.946 (the "Statutes"). The Company and the
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Company Subsidiaries have in operation validly licensed and adequate cellular
base stations required to provide 32 dBu contour coverage, as calculated under
the formula prescribed by the FCC in 47 C.F.R. (S) 22.911, to all areas of
their cellular markets except for coverage gaps that are less than 50
contiguous square miles in size. Except as set forth in Schedule 3.10 and
3.18, the Company and the Company Subsidiaries have not received any written
notice to the effect, or otherwise been advised in writing, that they are not
in compliance with any Statutes and do not have any reason to anticipate that
any presently existing circumstances are reasonably likely to result in
violations of any Statutes.
(f) Without limiting the generality of the foregoing, except as set forth in
Schedule 3.8, no adverse finding has been made, no consent decree entered, no
adverse action has been approved or taken by the FCC or any court or other
administrative body, and no admission of liability has been made with respect
to the Company or any of the Company Subsidiaries or any of the Company's
stockholders or any management employee of the Company or the Company
Subsidiaries concerning any civil or criminal suit, action or proceeding
brought under the provision of any federal, state, territorial or local law
relating to any of the following: any felony; unlawful restraint of trade or
monopoly; unlawful combination; contract or agreement in restraint of trade;
the use of unfair methods of competition; fraud; unfair labor practice; or
discrimination.
(g) Neither the Company nor any of the Company Subsidiaries has engaged in
any course of conduct that could reasonably be expected to impair the ability
of Merger Sub or its subsidiaries to be the holder of the FCC Licenses or is
aware of any reason why the FCC Licenses might not be renewed in the ordinary
course, why any of the FCC Licenses might be revoked, or why any pending
applications or notifications might not be approved.
Section 3.19. Board Approval; Vote Required.
The Board of Directors of the Company has determined that the transactions
contemplated by this Agreement are in the best interests of the Company and
its stockholders and has resolved to recommend to such stockholders that they
vote in favor thereof. The affirmative vote of a majority of the votes
entitled to be cast by the holders of outstanding shares of the Class A Common
Stock and Class B Common Stock (voting as a single class) is the only vote of
any class or series of capital stock of the Company necessary to approve the
transactions contemplated under this Agreement and the Merger.
Section 3.20. Opinion of Financial Advisor.
The Company's Board of Directors has received the opinion of Goldman, Sachs
& Co. that the consideration to be received in the Merger by the stockholders
of the Company is fair to such stockholders from a financial point of view, a
written copy of which opinion will be provided to Acquiror when received by
the Company, and such opinion has not been withdrawn or modified in any
material respect.
Section 3.21. Brokers.
Except for Goldman, Sachs & Co., no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
ARTICLE IV
Representations and Warranties of Merger Sub
Acquiror and Merger Sub jointly and severally represent and warrant to the
Company as follows:
Section 4.1. Organization and Qualification.
Merger Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Merger Sub
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement. As of the date of this Agreement, except for obligations or
liabilities incurred
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in connection with its incorporation or organization and the transactions
contemplated by this Agreement, Merger Sub has not incurred, directly or
indirectly, any obligations or liabilities or engaged in any business
activities of any type or kind whatsoever or entered into any agreements or
arrangements with any person.
Section 4.2. Certificate of Incorporation and Bylaws.
Merger Sub has heretofore made available to the Company a complete and
correct copy of the certificate of incorporation and the bylaws of Merger Sub,
each as amended to date. Such certificate of incorporation and bylaws are in
full force and effect. Merger Sub is not in violation of any of the provisions
of its certificate of incorporation or bylaws.
Section 4.3. Authority.
Merger Sub has the necessary corporate power and authority to enter into
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Merger Sub and the consummation by Merger Sub of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Merger Sub
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Merger Sub and, assuming the due authorization, execution and delivery by the
Company and Acquiror, constitutes a legal, valid and binding obligation of
Merger Sub, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally and by the application of general
principles of equity.
Section 4.4. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Merger Sub do not, and
the performance by Merger Sub of its obligations under this Agreement will
not, subject to compliance with the requirements set forth in Section 4.4(b)
below, (i) conflict with or violate the certificate of incorporation or bylaws
of Merger Sub, (ii) conflict with or violate any law, statute, ordinance,
rule, regulation, order, judgment or decree applicable to Merger Sub or by
which any of its properties is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of any Encumbrance on any of the properties or assets of Merger Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Merger
Sub is a party or by which Merger Sub or any of its properties or assets is
bound or affected, except, in the case of clauses (ii) and (iii) above for any
such conflicts, violations, breaches, defaults or other alterations or
occurrences that would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Merger Sub from performing its
obligations under this Agreement in any material respect.
(b) The execution and delivery of this Agreement by Merger Sub does not, and
the performance of this Agreement by Merger Sub will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) for (A) applicable requirements, if any, of
the Exchange Act, state takeover laws, exchanges on which Acquiror's
securities are traded, the HSR Act and the Communications Act, (B) applicable
requirements, if any, of the consents, approvals, authorizations or permits
described in Schedule 4.4, and (C) filing and recordation of appropriate
merger documents as required by Delaware Law and (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings
or notifications, would not prevent or delay consummation of the Merger in any
material respect.
Section 4.5. Vote Required.
The affirmative vote of Acquiror, the sole stockholder of Merger Sub, is the
only vote of the holders of any class or series of Merger Sub capital stock
necessary to approve any of the transactions contemplated hereby.
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ARTICLE V
Representations and Warranties of Acquiror
Acquiror represents and warrants to the Company as follows:
Section 5.1. Organization and Qualification; Subsidiaries.
Acquiror is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its formation. Acquiror is duly
qualified to conduct its business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated or leased
or the nature of its activities makes such qualification necessary, except for
such failure which would not have an Acquiror Material Adverse Effect (as
defined below). Acquiror has the requisite power and authority and any
necessary governmental authority, franchise, license or permit to own,
operate, lease and otherwise to hold and operate its assets and properties and
to carry on the business as now being conducted, except for such failure which
would not have an Acquiror Material Adverse Effect. As used herein, the term
"Acquiror Material Adverse Effect" means any material adverse effect on the
business, assets, financial condition or results of operations of Acquiror and
its subsidiaries (collectively, the "Acquiror Subsidiaries") taken as a whole.
Section 5.2. Organizational Documents.
Acquiror has heretofore made available to the Company a complete and correct
copy of the certificate of incorporation and bylaws of Acquiror, each as
amended to date. Such certificate of incorporation and bylaws are in full
force and effect. Acquiror is not in violation of any of the provisions of its
certificate of incorporation or bylaws.
Section 5.3. Authority.
Acquiror has the necessary power and authority to enter into this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by Acquiror
and the consummation by Acquiror of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action and no
other proceedings on the part of Acquiror are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Acquiror and, assuming the
due authorization, execution and delivery by the Company, constitutes a legal,
valid and binding obligation of Acquiror, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights generally and by the application of
general principles of equity.
Section 5.4. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Acquiror do not, and the
performance by Acquiror of its obligations under this Agreement will not,
subject to compliance with the requirements set forth in Section 5.4(b) below,
(i) conflict with or violate the certificate of incorporation or bylaws of
Acquiror, (ii) conflict with or violate any law, statute, ordinance, rule,
regulation, order, judgment or decree applicable to Acquiror or by which any
of its properties is bound or affected, or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of an
Encumbrance on any of the properties or assets of Acquiror pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Acquiror is a party or by
which Acquiror or any of its properties or assets is bound or affected,
except, in the case of clauses (ii) and (iii) above for any such conflicts,
violations, breaches, defaults or other alterations or occurrences that would
not prevent or delay consummation of the Merger in any material respect, or
otherwise prevent Acquiror from performing its obligations under this
Agreement in any material respect, and would not have an Acquiror Material
Adverse Effect.
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(b) The execution and delivery of this Agreement by Acquiror does not, and
the performance of this Agreement by Acquiror will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Entity, except (i) for (A) applicable requirements, if any, of
the Exchange Act, state takeover laws, exchanges on which Acquiror's
securities are traded, the HSR Act and the Communications Act, (B) applicable
requirements, if any, of the consents, approvals, authorizations or permits
described in Schedule 5.4, and (C) filing and recordation of appropriate
merger documents as required by Delaware Law and (ii) where failure to obtain
such consents, approvals, authorizations or permits, or to make such filings
or notifications, would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent Acquiror from performing its
obligations under this Agreement in any material respect, and would not have
an Acquiror Material Adverse Effect.
Section 5.5. Vote Required.
No vote of the stockholders of Acquiror is necessary to approve any of the
transactions contemplated hereby.
Section 5.6. Financing.
Acquiror will have available on the Effective Time sufficient funds to
consummate the Merger and to make all the payments necessary to consummate the
transactions contemplated hereby, including, without limitation, payments
under Article II hereof for the Common Stock, Options and Dissenting Shares,
and payments necessary to satisfy all amounts outstanding as of the Closing
Date under the Company's credit facilities described on Schedule 3.3 hereto.
Section 5.7. Qualification of Acquiror.
Acquiror is and pending the Effective Time will be legally, technically,
financially and otherwise qualified under the Communications Act and all
rules, regulations and policies of the FCC to acquire, own and operate the
assets and business of the Company and the Company Subsidiaries. There are no
facts or proceedings which would reasonably be expected to disqualify Acquiror
under the Communications Act or otherwise from acquiring or operating any of
the assets and business of the Company and the Company Subsidiaries or would
cause the FCC not to approve the FCC Application (as defined in Section
7.5(a)). Acquiror has no knowledge of any fact or circumstance relating to
Acquiror or any of its affiliates that would reasonably be expected to (a)
cause the filing of any objection to the FCC Application, or (b) lead to a
delay in the processing by the FCC of the FCC Application. No waiver of any
FCC rule or policy is necessary to be obtained for the approval of the FCC
Application, nor will processing pursuant to any exception or rule of general
applicability be requested or required in connection with the consummation of
the transactions herein.
Section 5.8. Absence of Litigation.
Except as set forth in Schedule 5.8, there are (a) no claims, actions,
suits, investigations, or proceedings pending or, to Acquiror's knowledge,
threatened against Acquiror or any of its properties or assets before any
court, administrative, governmental, arbitral, mediation or regulatory
authority or body, domestic or foreign, that challenge or seek to prevent,
enjoin, alter or materially delay the transactions contemplated hereby, and
(b) no judgments, decrees, injunctions or orders of any Governmental Entity or
arbitrator outstanding against Acquiror or any of its properties or assets
that would prevent or materially delay the transactions contemplated hereby.
Section 5.9. Brokers.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Acquiror.
Section 5.10. SEC Filings; Financial Statements.
(a) Acquiror has filed all forms, reports, statements and other documents
required to be filed with the SEC since December 31, 1996, and has heretofore
made available to the Company, in the form filed with the SEC
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since such date, together with any amendments thereto, its (i) Annual Reports
on Form 10-K, (ii) all Quarterly Reports on Form 10-Q, (iii) all proxy
statements relating to meetings of stockholders (whether annual or special),
(iv) all reports on Form 8-K, and (v) all other reports or registration
statements filed by Acquiror (collectively, the "Acquiror SEC Reports"). As of
their respective filing dates the Acquiror SEC Reports (i) complied as to form
in all material respects with the requirements of the Exchange Act and the
Securities Act and (ii) did not at the time they were filed contain any 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, in the light of
the circumstances under which they were made, not misleading.
(b) The financial statements, including all related notes and schedules,
contained in the Acquiror SEC Reports (or incorporated by reference therein)
fairly present the consolidated financial position of Acquiror and Acquiror
Subsidiaries as at the respective dates thereof and the consolidated results
of operations and cash flows of Acquiror and Acquiror Subsidiaries for the
periods indicated in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as may
be noted therein) and subject in the case of interim financial statements to
normal year-end adjustments.
Section 5.11. Absence of Certain Changes or Events.
Except as disclosed in the Acquiror SEC Reports filed prior to the date of
this Agreement or as set forth in Schedule 5.11, since March 31, 1997,
Acquiror and Acquiror Subsidiaries have not incurred any material liability,
except in the ordinary course of their businesses consistent with their past
practices, and there has not been any change in the business, financial
condition or results of operations of Acquiror or any of Acquiror
Subsidiaries, which has had, or is reasonably likely to have, an Acquiror
Material Adverse Effect, and Acquiror and Acquiror Subsidiaries have conducted
their respective businesses in the ordinary course consistent with their past
practices. The representations and warranties contained in this Section 5.11
shall be deemed to speak only as of the date hereof.
ARTICLE VI
Covenants
Section 6.1. Affirmative Covenants of the Company.
The Company hereby covenants and agrees that, prior to the Effective Time,
unless otherwise expressly contemplated by this Agreement or consented to in
writing by Acquiror, the Company shall, and shall cause each Company
Subsidiary to, (a) operate its business in the usual and ordinary course
consistent with past practices; (b) use its reasonable efforts to preserve
substantially intact its business organization, maintain its rights and
franchises, retain the services of its respective principal officers and key
employees and maintain its relationship with its respective principal
customers and suppliers; (c) use its reasonable efforts to maintain and keep
its properties and assets in as good repair and condition as at present,
ordinary wear and tear excepted; and (d) use its reasonable efforts to keep in
full force and effect insurance comparable in amount and scope of coverage to
that currently maintained; provided, however, that in the event the Company or
any of the Company Subsidiaries deems it necessary to take certain actions
that would otherwise be prohibited by clauses (a)-(d) of this Section 6.1, the
Company shall consult with Acquiror and Acquiror shall consider in good faith
the Company's request to take such action and not unreasonably withhold or
delay its consent for such action.
Section 6.2. Negative Covenants of the Company.
Except as expressly contemplated by this Agreement and except as set forth
in Schedule 6.2, or otherwise consented to in writing by Acquiror, from the
date hereof until the Effective Time, the Company shall not, and shall cause
each Company Subsidiary not to, do any of the following:
(a) (i) increase the compensation payable to or to become payable to any
of its directors, executive officers or employees, except for increases in
salary, wages or bonuses payable or to become payable in the ordinary
course of business and consistent with past practice; (ii) grant any
severance or termination pay
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(other than pursuant to existing severance arrangements or policies as in
effect on the date of this Agreement) to, or enter into or modify any
employment or severance agreement with, any of its directors, officers or
employees; or (iii) adopt or amend any employee benefit plan or
arrangement, except as may be required by applicable law;
(b) declare or pay any dividend on, or make any other distribution in
respect of, outstanding shares of its capital stock;
(c) (i) redeem, repurchase or otherwise reacquire any share of its
capital stock or any securities or obligations convertible into or
exchangeable for any share of its capital stock, or any options, warrants
or conversion or other rights to acquire any shares of its capital stock or
any such securities or obligations (except in connection with the exercise
of outstanding Options referred to in Schedule 3.3 in accordance with their
terms); (ii) effect any reorganization or recapitalization; or (iii) split,
combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of, or
in substitution for, shares of its capital stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or propose the
issuance, delivery, award, grant or sale (including the grant of any
Encumbrances) of, any shares of any class of its capital stock (including
shares held in treasury), any securities convertible into or exercisable or
exchangeable for any such shares (including any phantom options or stock
appreciation rights), or any rights, warrants or options to acquire, any
such shares (except for the issuance of shares upon the exercise of
outstanding Options and the issuance of shares under the Company Stock
Purchase Plans); or (ii) amend or otherwise modify the terms of any such
rights, warrants or options in a manner inconsistent with the provisions of
this Agreement or the effect of which shall be to make such terms more
favorable to the holders thereof;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division (other than a wholly-owned
Subsidiary) thereof, or otherwise acquire or agree to acquire any assets of
any other person (other than the purchase of assets in the ordinary course
of business and consistent with past practice), or make or commit to make
any capital expenditures other than capital expenditures in the ordinary
course of business consistent with past practice;
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer
or otherwise dispose of, any of its material assets except for the grant of
purchase money security interests not to exceed Five Hundred Thousand
Dollars ($500,000) in the aggregate and dispositions in the ordinary course
of business and consistent with past practice;
(g) propose or adopt any amendments to its certificate of incorporation
or, as to its bylaws or partnership agreement, as the case may be, any
amendments that would have an adverse impact on the consummation of the
transactions contemplated by this Agreement or would be adverse to
Acquiror's interests;
(h) (i) change any of its methods of accounting in effect at January 1,
1997, or (ii) make or rescind any express or deemed election relating to
taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
taxes (except where the amount of such settlements or controversies,
individually or in the aggregate, does not exceed Five Hundred Thousand
Dollars ($500,000), or change any of its methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of the federal income tax returns for the taxable year ending
December 31, 1996, except, in the case of clause (i) or clause (ii), as may
be required by law or generally accepted accounting principles;
(i) incur any obligation for borrowed money, whether or not evidenced by
a note, bond, debenture or similar instrument, other than (i) purchase
money indebtedness not to exceed Five Hundred Thousand Dollars ($500,000)
in the aggregate, (ii) indebtedness incurred in the ordinary course of
business under the existing loan agreements described on Schedule 3.3
hereto, and (iii) capitalized leases not to exceed One Million Dollars
($1,000,000) in the aggregate;
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(j) without the written consent of Acquiror (which consent shall not be
unreasonably withheld, delayed or conditioned), enter into or modify in any
material respect any agreement which, if in effect as of the date hereof,
would have been required to be disclosed on Schedule 3.12 as a Material
Contract; or
(k) agree in writing or otherwise to do any of the foregoing.
Section 6.3. Negative Covenants of Acquiror.
From the date hereof until the Effective Time, Acquiror shall not (a)
declare or pay any dividend on or make any other distribution of cash or
property in respect of, outstanding shares of its capital stock; or (b)
redeem, repurchase or otherwise reacquire any shares of its capital stock or
any securities or obligations convertible into or exchangeable for any shares
of its capital stock.
Section 6.4. Control of Operations.
Nothing contained in this Agreement shall give Acquiror or Merger Sub,
directly or indirectly, except as expressly provided in this Agreement, the
right to control or direct the Company's operations prior to the Effective
Time. Prior to the Effective Time, each of the Company and Acquiror shall
exercise, consistent with the terms and conditions of this Agreement, complete
control and supervision over its respective operations.
ARTICLE VII
Additional Agreements
Section 7.1. Access and Information.
From the date hereof to the Effective Time, the Company shall, and shall
cause the Company Subsidiaries to, afford to Acquiror and its officers,
employees, accountants, consultants, legal counsel, representatives of current
and prospective sources of financing for the Merger and other representatives
of Acquiror (collectively, the "Acquiror Representatives"), reasonable access
during normal business hours to the properties, executive personnel and all
information concerning the business, properties, contracts, records and
personnel of the Company and the Company Subsidiaries as Acquiror may
reasonably request. The Company further agrees to reasonably cooperate with
Acquiror in connection with Acquiror's obtaining financing for this
transaction (including making appropriate officers of the Company available on
a reasonable basis for road show presentations).
Section 7.2. Confidentiality.
Acquiror acknowledges and agrees that all information received from or on
behalf of the Company or any of the Company Subsidiaries in connection with
the Merger shall be deemed received pursuant to the confidentiality agreement,
dated as of May 21, 1997, between the Company and Acquiror (the
"Confidentiality Agreement") and Acquiror shall, and shall cause the Acquiror
Representatives to comply with the provisions of the Confidentiality Agreement
with respect to such information and the provisions of the Confidentiality
Agreement are hereby incorporated herein by reference with the same effect as
if fully set forth herein.
Section 7.3. Stockholder Approval.
The Company shall, promptly after the date of this Agreement, take all
action necessary in accordance with Delaware Law and its certificate of
incorporation and bylaws to convene a meeting of the Company's stockholders
(the "Stockholders' Meeting"), to approve and adopt this Agreement and the
Merger. The Company shall use its best efforts to solicit from stockholders of
the Company proxies in favor of the approval and adoption of this Agreement
and the Merger and to take all other actions reasonably necessary or in
Acquiror's reasonable judgment advisable to secure such vote as promptly as
practicable, unless otherwise required by applicable fiduciary duties of the
directors of the Company, as determined by such directors in good faith after
consultation with independent legal counsel.
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Section 7.4. Proxy Statement.
(a) As promptly as practicable after the execution and delivery of this
Agreement, the Company shall prepare and file with the SEC a proxy statement
in connection with the matters to be considered at the Stockholders' Meeting
(the "Proxy Statement"). The Company shall use its best efforts to cause the
Proxy Statement to be "cleared" by the SEC for mailing to the stockholders of
the Company as promptly as practicable and shall mail the Proxy Statement to
its stockholders as promptly as practicable thereafter. Acquiror shall furnish
all information concerning it and the holders of its capital stock as the
Company may reasonably request in connection with such actions. The Proxy
Statement shall include the recommendation of the Company's Board of Directors
in favor of approval and adoption of this Agreement and the Merger, unless
otherwise required by applicable fiduciary duties of the directors of the
Company, as determined by such directors in good faith after consultation with
independent legal counsel. Acquiror shall have the right to review the Proxy
Statement before it is filed with the SEC.
(b) The information supplied by Acquiror for inclusion in the Proxy
Statement shall not, at the date the Proxy Statement (or any supplement
thereto) is first mailed by stockholders or at the time of the Stockholders'
Meeting, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading. If at any time prior to the Stockholders' Meeting any
event or circumstance relating to Acquiror or any of its affiliates, or its or
their respective officers or directors, should be discovered by Acquiror that
should be set forth in a supplement to the Proxy Statement, Acquiror shall
promptly inform the Company.
(c) All information contained in the Proxy Statement (other than information
provided by Acquiror for inclusion therein) shall not, at the date the Proxy
Statement (or any supplement thereto) is first mailed to stockholders or at
the time of the Stockholders' Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. If at any time prior
to the Stockholders' Meeting any event or circumstance relating to the Company
or any of the Company Subsidiaries, or to its or their respective officers or
directors, should be discovered by the Company that should be set forth in a
supplement to the Proxy Statement, the Company shall promptly inform Acquiror.
All documents that the Company is responsible for filing with the SEC in
connection with the transactions contemplated herein will comply as to form
and substance in all material respects with the applicable requirements of the
Exchange Act and the rules and regulations thereunder.
Section 7.5. FCC Application.
(a) As promptly as practicable after the execution and delivery of this
Agreement, Acquiror, Merger Sub and the Company shall prepare all appropriate
applications for FCC consent, and such other documents as may be required,
with respect to the transfer of control of the Company to Acquiror
(collectively, the "FCC Application"). Not later than the fifth (5th) business
day following execution and delivery of this Agreement, Acquiror and Merger
Sub shall deliver to the Company their respective completed portions of the
FCC Application. Not later than the tenth (10th) business day following the
execution and delivery of this Agreement, the Company shall file, or cause to
be filed, the FCC Application. Acquiror, Merger Sub and the Company shall
prosecute the FCC Application in good faith and with due diligence in order to
obtain such FCC consent as expeditiously as practicable. If the Closing shall
not have occurred for any reason within the initial effective period of the
granting of approval by the FCC of the FCC Application, and neither Acquiror
nor the Company shall have terminated this Agreement pursuant to Section 9.1,
Acquiror and the Company shall jointly request one or more extensions of the
effective period of such grant. No party hereto shall knowingly take, or fail
to take, any action the intent or reasonably anticipated consequence of which
action or failure to act would be to cause the FCC not to grant approval of
the FCC Application.
(b) Acquiror and the Company shall each pay one-half ( 1/2) of any FCC fees
that may be payable in connection with the filing or granting of approval of
the FCC Application. Acquiror and the Company shall each
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oppose any request for reconsideration or judicial review of the granting of
approval of the FCC Application. The Company shall pay any cost incurred in
connection with complying with the FCC notice and advertisement requirements
in connection with the transfer of control of the Company.
Section 7.6. Further Action; Best Efforts.
(a) Each of the parties shall use best efforts to take, or cause to be
taken, all appropriate action, and do, or cause to be done, all things
necessary, proper or advisable under applicable laws or otherwise to
consummate and make effective the transactions contemplated by this Agreement
as promptly as practicable, including, without limitation, using its best
efforts to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities and parties to contracts
with the Company and Acquiror as are necessary for the transactions
contemplated herein. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use
commercially reasonable efforts to take all such action.
(b) From the date of this Agreement until the Effective Time, each of the
parties shall promptly notify the other in writing of any pending or, to the
knowledge of such party, threatened action, proceeding or investigation by any
Governmental Entity or any other person (i) challenging or seeking damages in
connection with the Merger or the conversion of the Common Stock into the
Merger Consideration pursuant to the Merger or (ii) seeking to restrain or
prohibit the consummation of the Merger or otherwise limit the right of
Acquiror to own or operate all or any portion of the business or assets of the
Company.
(c) The Company shall give prompt written notice to Acquiror, and Acquiror
and Merger Sub shall give prompt written notice to the Company, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Effective Time. Each party shall use
its best efforts to not take any action, or enter into any transaction, which
would cause any of its representations or warranties contained in this
Agreement to be untrue or result in a breach of any covenant made by it in
this Agreement.
Section 7.7. Public Announcements.
Acquiror and the Company shall consult with each other before issuing any
press release or otherwise making any public statements with respect to the
Merger and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or any
listing agreement of Acquiror or the Company with any exchange on which the
securities of the Company or Acquiror are traded.
Section 7.8. Indemnification; Directors' and Officers' Insurance.
(a) The certificate of incorporation and bylaws of the Surviving Corporation
shall contain the provisions with respect to indemnification set forth in the
certificate of incorporation and bylaws of the Company on the date of this
Agreement, which provisions shall not be amended, repealed or otherwise
modified for a period of six (6) years after the Effective Time in any manner
that would adversely affect the rights thereunder of persons who at any time
prior to the Effective Time were identified as prospective indemnities under
the certificate of incorporation or bylaws of the Company in respect of
actions or omissions occurring at or prior to the Effective Time (including,
without limitation, the transactions contemplated by this Agreement), unless
such modification is required by applicable law.
(b) From and after the Effective Time, the Surviving Corporation shall
indemnify, defend and hold harmless the present and former officers, directors
and employees of the Company and the Company Subsidiaries (collectively, the
"Indemnified Parties") against all losses, expenses, claims, damages,
liabilities or amounts that are paid in settlement of, with the approval of
Acquiror and the Surviving Corporation (which approval shall not be
unreasonably withheld), or otherwise in connection with, any claim, action,
suit, proceeding or investigation (a "Claim"), based in whole or in part on
the fact that such person is or was such a director, officer or employee and
arising out of actions or omissions occurring at or prior to the Effective
Time (including, without limitation,
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the transactions contemplated by this Agreement), in each case to the fullest
extent permitted under Delaware Law (and shall pay expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party
to the fullest extent permitted under Delaware Law, upon receipt from the
Indemnified Party to whom expenses are advanced of the undertaking to repay
such advances contemplated by Section 145(e) of Delaware Law).
(c) Without limiting the foregoing, in the event any Claim is brought
against any Indemnified Party (whether arising before or after the Effective
Time) after the Effective Time (i) the Indemnified Parties may retain its
regularly engaged independent legal counsel as of the date of this Agreement,
or other independent legal counsel satisfactory to them provided that such
other counsel shall be reasonably acceptable to Acquiror and the Surviving
Corporation, (ii) the Surviving Corporation shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received, and (iii) the Surviving Corporation will use its
reasonable efforts to assist in the vigorous defense of any such matter,
provided that the Surviving Corporation shall not be liable for any settlement
of any Claim effected without its written consent, which consent shall not be
unreasonably withheld. Any Indemnified Party wishing to claim indemnification
under this Section 7.8, promptly upon learning of any such Claim, shall notify
the Surviving Corporation (although the failure so to notify the Surviving
Corporation shall not relieve the Surviving Corporation from any liability
which the Surviving Corporation may have under this Section 7.8, except to the
extent such failure prejudices the Surviving Corporation), and shall deliver
to the Surviving Corporation the undertaking contemplated by Section 145(e) of
Delaware Law. The Indemnified Parties as a group may retain one law firm (in
addition to local counsel) to represent them with respect to each such matter
unless there is, under applicable standards of professional conduct (as
reasonably determined by counsel to such Indemnified Parties) a conflict on
any significant issue between the position of any two or more of such
Indemnified Parties, in which event, an additional counsel as may be required
may be retained by such Indemnified Parties.
(d) Acquiror shall cause to be maintained in effect for not less than six
(6) years after the Effective Time the current policies of directors' and
officers' liability insurance and fiduciary liability insurance maintained by
the Company with respect to matters occurring prior to the Effective Time;
provided, however, that (i) Acquiror may substitute therefor policies of
substantially the same coverage containing terms and conditions that are
substantially the same for the Indemnified Parties to the extent reasonably
available and (ii) Acquiror shall not be required to pay an annual premium for
such insurance in excess of three hundred percent (300%) of the last annual
premium paid prior to the date of this Agreement, but in such case shall
purchase as much coverage as possible for such amount.
(e) This Section 7.8 is intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties referred to herein, their heirs and
personal representatives and shall be binding on Acquiror and Merger Sub and
the Surviving Corporation and their respective successors and assigns.
Acquiror hereby guarantees the Surviving Corporation's obligations pursuant to
this Section 7.8.
Section 7.9. Employee Benefits Matters.
(a) For a period of two (2) years after the Effective Time, Acquiror shall
cause the Surviving Corporation to provide employee benefits under plans,
programs and arrangements, which, in the aggregate, will provide benefits to
the employees of the Company and the Company Subsidiaries which are no less
favorable, in the aggregate, than those provided pursuant to the plans,
programs and arrangements of the Company in effect and disclosed to Acquiror
on the date hereof; provided, however, that nothing herein shall interfere
with the Surviving Corporation's right or obligation to make such changes to
such plans, programs or arrangements as are necessary to conform with
applicable law; provided, further, however, that with respect to any such
plan, program or arrangement that provides for the issuance of the Company's
Common Stock, or options or securities exercisable or convertible into the
Company's Common Stock, the Surviving Corporation shall be required to adopt
equity compensation programs providing for the issuance of common stock of
Acquiror to such employees.
(b) In furtherance of the provisions of Section 7.9(a), Acquiror shall cause
the Surviving Corporation to provide to those executives listed on Schedule
7.9 hereto with the employee benefits provided to each such
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executive on the date hereof and for the time period set forth in the
Company's employment and/or severance agreements with such executives as set
forth on Schedule 7.9 hereto; provided, however, that notwithstanding the
foregoing, to the extent that any contributions under a qualified retirement
plan would be prohibited by applicable law, Acquiror shall cause the Surviving
Corporation to make cash payments from time to time to such executives equal
to the value of such contributions which can not be so made under applicable
law, as and when such contributions would have been made as noted on Schedule
7.9. The employee benefits provided to such executives on the date hereof
under the Company's employment and/or severance agreements with such
executives are detailed on Schedule 7.9 hereto.
(c) Acquiror acknowledges and agrees that prior to the Effective Time, the
Company will take all such actions as may be necessary to cause (i) all
participants to become fully vested in their benefits under the Company's
401(k) Plan, and (ii) employer contributions to be made with respect to
periods prior to the Effective Time to the Company's 401(k) Plan to the extent
that such contributions would be made if the participants were employed by the
Company on the last day of the calendar year in which the Closing occurs.
Acquiror will allow employees of PCI to continue to participate in the
Company's 401(k) Plan at least until the end of the calendar year in which the
Closing occurs.
(d) On or prior to the Effective Time, the Company shall pay a pro-rated
portion of the annual bonuses and gainshare that would have otherwise been
payable to the eligible employees of the Company after the end of the year,
such bonuses and gainshare to be consistent with the Company's 1997 Management
and Professional Bonus Plan and the Company's Gainshare Program, with past
practice, and the estimates contained in Schedule 7.9(d).
(e) Acquiror agrees that it will not allow the Surviving Corporation to
amend or terminate the Palmer Wireless, Inc. Change of Control Severance
Program for a period of one (1) year after the Effective Time.
(f) Prior to Closing, the Company shall make, or shall make accruals on its
financial statements for, all payments required to be made by the Company
under the terms of any Benefit Plan or by any law applicable to any Benefit
Plan with respect to all periods through the Closing Date.
(g) On or prior to the Effective Time, the Company shall take, or cause to
be taken, such actions as are reasonably necessary to:
(i) cause the Company to adopt the PCI plans providing medical, dental,
vision, prescription drug, flexible spending account, pre-tax premium
contribution, travel accident, accidental death and dismemberment, long
term disability, and life insurance benefits for the benefit of Company
employees;
(ii) add the Company as a contractholder under insurance contracts
providing insurance coverage, and administrative contracts relating to, for
one or more of the benefits listed in the immediately preceding paragraph
(i) above as well as workers compensation liability coverage and provide
that such contracts continue as to the Company after the Effective Time;
(iii) substitute the Company for PCI as the party to the Palmer
Communications Health Care Expense Fund which is a Code Section 501(c)(9)
trust used to fund certain of the benefits listed in paragraph (i) above
and any other trust or account which is used with respect to flexible
spending accounts or pre-tax premium contributions for Company employees;
and
(iv) except as provided in Section 7.9(c) hereof, cease participation and
coverage in the Company plans, trusts and insurance contracts referred to
in paragraphs (i) through (iii) above with respect to all individuals who
are not Company employees as of the Effective Time.
Section 7.10. HSR Act Matters.
Acquiror, Merger Sub and the Company (as may be required pursuant to the HSR
Act) promptly will complete all documents required to be filed with the
Federal Trade Commission and the United States Department of Justice in order
to comply with the HSR Act and, not later than fifteen (15) days after the
date
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hereof, together with the persons who are required to join in such filings,
shall file the same with the appropriate Governmental Entities. Acquiror,
Merger Sub and the Company shall promptly furnish all materials thereafter
required by any of the Governmental Entities having jurisdiction over such
filings, and shall take all reasonable actions and shall file and use best
efforts to have declared effective or approved all documents and notifications
with any such Governmental Entity, as may be required under the HSR Act or
other Federal antitrust laws for the consummation of the Merger and the other
transactions contemplated hereby.
Section 7.11. Negotiation With Others.
(a) Unless and until this Agreement shall have been terminated in accordance
with its terms, the Company shall not, through any officer, director,
employee, representative, agent or direct or indirect stockholder of the
Company or any Company Subsidiaries, directly or indirectly, encourage or
solicit any proposal that constitutes an Acquisition Proposal (as defined
below), engage in any discussions or negotiations or provide any information
to any person relating thereto or in furtherance thereof or accept any
Acquisition Proposal; provided, however, that nothing contained in this
Section 7.11 shall prohibit the Company, or its Board of Directors, from
making any disclosure to its stockholders that, in the judgment of its Board
of Directors in accordance with, and based upon, the advice of outside
counsel, is required under applicable law. For purposes of this Agreement,
"Acquisition Proposal" means any offer to acquire (or meaningful indication of
interest in the acquisition of) all or any substantial part of the business
and properties or capital stock of the Company or the Company Subsidiaries,
whether by merger, consolidation, sale of assets or stock, tender offer or
similar transaction or series of transactions involving the Company, the
Company Subsidiaries or their direct or indirect stockholders.
(b) Notwithstanding Section 7.11(a), the Board of Directors of the Company,
in the exercise of and as required by its fiduciary duties as determined in
good faith by the Board of Directors of the Company in accordance with and
based upon the advice of outside counsel, may (i) furnish information
(including, without limitation, confidential information) concerning the
Company to a third party who makes an unsolicited request for such information
for the purpose of making an Acquisition Proposal, provided that such third
party executes and delivers a confidentiality agreement substantially the same
as the Confidentiality Agreement, and (ii) engage in discussions or
negotiations with a third party who submits in writing an interest in making
an Acquisition Proposal that the Board of Directors believes, based on advice
of its financial advisors, is reasonably capable of being consummated and is
reasonably likely to be superior to the transactions contemplated by this
Agreement from a financial point of view to all stockholders of the Company,
provided, however, that in the case of clause (i) or (ii) hereof, the Company
shall promptly notify Acquiror in writing of such request for information or
Acquisition Proposal, providing reasonable details with respect thereto, and
shall keep Acquiror informed as to the status of any discussions or
negotiations referred to in clause (ii) above.
ARTICLE VIII
Closing Conditions
Section 8.1. Conditions to Obligations of Acquiror, Merger Sub and the
Company to Effect the Merger.
The respective obligations of Acquiror, Merger Sub and the Company to effect
the Merger and the other transactions contemplated herein shall be subject to
the satisfaction at or prior to the Effective Time of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the
Company in accordance with applicable law.
(b) No Order. No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, judgment,
injunction or other order (whether temporary, preliminary or permanent), in
any case which is in effect and which prevents or prohibits consummation of
the Merger or any other transactions contemplated in this Agreement;
provided, however, that the parties shall use their reasonable efforts to
cause any such decree, judgment, injunction or other order to be vacated or
lifted.
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<PAGE>
(c) HSR Act. Any waiting period with any extensions thereof under the HSR
Act shall have expired or been terminated.
(d) FCC Approval. All consents, waivers, approvals and authorizations
(the "FCC Transfer Approvals") required to be obtained, and all filings or
notices required to be made, by Acquiror, Merger Sub and the Company prior
to consummation of the transactions contemplated in this Agreement shall
have been obtained from, and made with, the FCC. Each of the FCC Transfer
Approvals shall have become a Final Order. For purposes of this Agreement,
"Final Order" shall mean an action by the FCC: (i) that is not reversed,
stayed, enjoined, set aside, annulled or suspended within the deadline, if
any, provided by applicable statute or regulation; (ii) with respect to
which no request for stay, motion or petition for reconsideration or
rehearing, application or request for review, or notice of appeal or other
judicial petition for review that is filed within such period is pending,
and (iii) as to which the deadlines, if any, for filing any such request,
motion, petition, application, appeal or notice, and for the entry of
orders staying, reconsidering or reviewing on the FCC's own motion have
expired. Notwithstanding anything to the contrary contained herein or
otherwise, Acquiror may, at is option by written notice to the Company: (i)
waive on behalf of the parties the requirement that each of the FCC
Transfer Approvals shall have become a Final Order; and (ii) acquire the
microwave licenses pursuant to special temporary authority granted to
Acquiror by the FCC.
Section 8.2. Additional Conditions to Obligations of Acquiror.
The obligations of Acquiror to effect the Merger and the other transactions
contemplated in this Agreement are also subject to the following conditions,
any or all of which may be waived, in whole or in part, to the extent
permitted by applicable law:
(a) Representations and Warranties. The representations and warranties of
the Company made in this Agreement shall be true and correct in all
material respects, on and as of the Effective Time with the same effect as
though such representations and warranties had been made on and as of the
Effective Time (provided that any representation or warranty contained
herein that is qualified by a materiality standard shall not be further
qualified hereby), except for representations and warranties that speak as
of a specific date or time other than the Effective Time (which need only
be true and correct in all material respects as of such date or time).
Acquiror shall have received a certificate of the Chief Executive Officer
or Chief Financial Officer of the Company to that effect.
(b) Agreements and Covenants. The agreements and covenants of the Company
required to be performed on or before the Effective Time shall have been
performed in all material respects. Acquiror shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of
the Company to that effect.
(c) Legal Opinions. Acquiror shall have received (i) an opinion from
Hogan & Hartson L.L.P., counsel to the Company, in form and substance
reasonably satisfactory to Acquiror, and (ii) an opinion from the Company's
FCC counsel in substantially the form attached hereto as Exhibit A.
(d) Dissenting Shares. The Dissenting Shares shall constitute not greater
than ten percent (10%) of the shares of Class A Common Stock outstanding on
the Closing Date.
(e) No Company Material Adverse Effect. Since the date of this Agreement,
no Company Material Adverse Effect shall have occurred and be continuing.
Section 8.3. Additional Conditions to Obligations of the Company.
The obligations of the Company to effect the Merger and the other
transactions contemplated in this Agreement are also subject to the following
conditions any or all of which may be waived, in whole or in part, to the
extent permitted by applicable law:
(a) Representations and Warranties. The representations and warranties of
Acquiror and Merger Sub made in this Agreement shall be true and correct in
all material respects, on and as of the Effective
26
<PAGE>
Time with the same effect as though such representations and warranties had
been made on and as of the Effective Time (provided that any representation
or warranty contained herein that is qualified by a materiality standard
shall not be further qualified hereby), except for representations and
warranties that speak as of a specific date or time other than the
Effective Time (which need only be true and correct in all material
respects as of such date or time). The Company shall have received a
certificate of the Chief Executive Officer or Chief Financial Officer of
Acquiror to that effect.
(b) Agreements and Covenants. The agreements and covenants of Acquiror
and Merger Sub required to be performed on or before the Effective Time
shall have been performed in all material respects. The Company shall have
received a certificate of the Chief Executive Officer or Chief Financial
Officer of Acquiror to that effect.
(c) Legal Opinion. The Company shall have received an opinion from
Proskauer Rose Goetz & Mendelsohn LLP, counsel to Acquiror and Merger Sub,
in form and substance reasonably satisfactory to the Company.
ARTICLE IX
Termination, Amendment and Waiver
Section 9.1. Termination.
This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval of this Agreement and the Merger by the
stockholders of the Company:
(a) by mutual written consent of each of Acquiror and the Company;
(b) by Acquiror if the Company shall have breached, or failed to comply
with, in any material respect any of its obligations under this Agreement
or any representation or warranty made by the Company shall have been
incorrect in any material respect when made or shall have since ceased to
be true and correct in any material respect, such that as a result of such
breach, failure or misrepresentation the conditions set forth in Section
8.2(a), 8.2(b) or 8.2(e) would not be satisfied, and such breach, failure
or misrepresentation is not cured within thirty (30) days after notice
thereof;
(c) by the Company if Acquiror or Merger Sub shall have breached, or
failed to comply with, in any material respect any of its obligations under
this Agreement or any representation or warranty made by Acquiror or Merger
Sub shall have been incorrect in any material respect when made or shall
have since ceased to be true and correct in any material respect, such that
as a result of such breach, failure or misrepresentation the conditions set
forth in Section 8.3(a) or 8.3(b) would not be satisfied, and such breach,
failure or misrepresentation is not cured within thirty (30) days after
notice thereof;
(d) by either Acquiror or the Company if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction or any Governmental Entity preventing or prohibiting
consummation of the Merger shall have become final and nonappealable;
(e) by either Acquiror or the Company if the Agreement shall fail to
receive the requisite vote for approval and adoption by the stockholders of
the Company at the Stockholders' Meeting and the Merger shall not have been
consummated within forty-five (45) days thereafter; and
(f) by either the Company or Acquiror if the merger shall not have been
consummated before December 31, 1997 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this Section
9.1(f) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Effective Time to occur on or before the Termination Date.
27
<PAGE>
Section 9.2. Effect of Termination.
Except as provided in Section 9.3 or Section 10.1, in the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void, there shall be no liability on the part of Acquiror,
Merger Sub or the Company or any of their respective officers or directors to
the other parties hereto and all rights and obligations of any party hereto
shall cease, except that nothing herein shall relieve any party for any breach
of this Agreement.
Section 9.3. Expenses; Fee.
(a) Except as otherwise expressly provided herein, all expenses incurred by
the parties hereto shall be borne solely by the party that has incurred such
expenses. All FCC annual regulatory fees which are due and payable prior to
Closing shall be paid by the Company prior to Closing.
(b) Without in any way limiting the Company's obligations under this
Agreement (including without limitation under Sections 1.1, 1.2, 1.6, 2.3,
6.1, 6.2, 7.1, 7.3, 7.4, 7.5, 7.6, 7.10 and 7.11 hereof) or Acquiror's rights
under Section 10.7 hereof, the Company shall pay, or shall cause to be paid
to, Acquiror a Fee (the "Fee") of Fifteen Million Dollars ($15,000,000), if
this Agreement is (i) terminated either (A) by Acquiror under Section 9.1(b)
as a result of the Company's breach of its obligations under Sections 1.1,
1.2, 1.6, 2.3, 6.1, 6.2, 7.1, 7.3, 7.4, 7.5, 7.6, 7.10 or 7.11, (B) by the
Company or Acquiror under Section 9.1(e) and (ii) either (A) an Alternative
Transaction (as defined below) has been publicly announced and has not been
withdrawn at the time of such termination (in which event the Fee shall be
paid simultaneously with such termination) or (B) an Alternative Transaction
is consummated on or prior to the date that is one (1) year after the date of
this Agreement (in which event the Fee shall be paid simultaneously with such
consummation); provided, however, that payment of such Fee shall be deemed to
satisfy in full all of the liabilities and obligations of the Company under
this Agreement. As used herein, an "Alternative Transaction" shall mean any
transaction or proposed transaction or related series of transactions
(including without limitation any merger, consolidation, sale of assets or
stock, tender offer or other transaction) providing for the receipt by the
Company and/or the holders of more than fifty percent (50%) of its Common
Stock of consideration equivalent to a value in excess of Seventeen Dollars
and Fifty Cents ($17.50) per share of Common Stock.
Section 9.4. Amendment.
This Agreement may be amended by the parties hereto by action taken by or on
behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after approval of this Agreement and
the Merger by the stockholders of the Company, no amendment may be made which
would reduce the amount or change the type of consideration into which each
share of Common Stock shall be converted pursuant to this Agreement upon
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
Section 9.5. Waiver.
At any time prior to the Effective Time, the parties may (a) extend the time
for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties
contained in this Agreement or in any document delivered pursuant to this
Agreement and (c) waive compliance by the other party with any of the
agreements or conditions contained in this Agreement. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE X
General Provisions
Section 10.1. Nonsurvival of Representations, Warranties and Agreements.
The representations, warranties and agreements in this Agreement (and in any
certificate delivered in connection with the Closing) shall be deemed to be
conditions to the Merger and shall not survive the Effective Time or
termination of this Agreement, except for the agreements set forth in Articles
I (the Merger) and II
28
<PAGE>
(Conversion of Securities; Exchange of Certificates) and Sections 7.8
(Indemnification and Insurance) and 7.9 (Employee Benefits Matters), each of
which shall survive the Effective Time indefinitely, and Sections 7.2
(Confidentiality), 9.2 (Effect of Termination) and 9.3 (Expenses; Fee), each
of which shall survive termination of this Agreement indefinitely.
Section 10.2. Notices.
All notices and other communications given or made pursuant hereto shall be
in writing and shall be deemed to have been duly given or made as of the date
delivered, mailed or transmitted, and shall be effective upon receipt, if
delivered personally, mailed by registered or certified mail (postage prepaid,
return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like changes of
address) or sent by electronic transmission to the telecopier number specified
below:
(a) If to Acquiror:
Price Communications Corporation
45 Rockefeller Plaza
Suite 3200
New York, New York 10020
Telecopier No.: (212) 397-3755
Attention: Robert Price
With a copy (which shall not constitute notice) to:
Proskauer Rose Goetz & Mendelsohn LLP
1585 Broadway
New York, New York 10036-8299
Telecopier No.: (212) 969-2900
Attention: Peter G. Samuels, Esq.
(b) If to the Company:
Palmer Wireless, Inc.
12800 University Drive
Fort Myers, Florida 33014
Telecopier No.: (941) 433-8213
Attention: Pat Meehan, Esq.
With a copy (which shall not constitute notice) to:
Hogan & Hartson L.L.P.
Columbia Square
555 Thirteenth Street, N.W.
Washington, DC 20004
Telecopier No.: (202) 637-5910
Attention: David B.H. Martin, Jr., Esq.
Section 10.3. Certain Definitions.
For purposes of this Agreement, the term:
(a) "affiliate" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person;
(b) "beneficial owner" means with respect to any shares of Common Stock a
person who shall be deemed to be the beneficial owner of such shares (i)
which such person or any of its affiliates or associates beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 of the Exchange Act) has,
directly or indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time), pursuant
to any agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights,
29
<PAGE>
warrants or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding, (iii) which are beneficially
owned, directly or indirectly, by any other persons with whom such person
or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding voting or disposing of
any such shares or (iv) pursuant to Section 13(d) of the Exchange Act and
any rules or regulations promulgated thereunder;
(c) "business day" shall mean any day other than a day on which banks in
the State of Florida are authorized or obligated to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means, other than for purposes of the Communications Act,
the possession, directly or indirectly or as trustee or executor, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of stock or as trustee or executor,
by contract or credit arrangement or otherwise; and
(e) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in
Section 13(d) of the Exchange Act).
Section 10.4. Headings.
The headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Section 10.5. Severability.
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the
end that transactions contemplated hereby are fulfilled to the extent
possible.
Section 10.6. Entire Agreement.
This Agreement (together with the Exhibits, the Schedules and the other
documents delivered pursuant hereto) and the Confidentiality Agreement
constitute the entire agreement of the parties and supersede all prior
agreements and undertakings, both written and oral, between the parties, or
any of them, with respect to the subject matter hereof and, except as
otherwise expressly provided herein, are not intended to confer upon any other
person any rights or remedies hereunder.
Section 10.7. Specific Performance.
The transactions contemplated by this Agreement are unique. Accordingly,
each of the parties acknowledges and agrees that, in addition to all other
remedies to which it may be entitled, each of the parties hereto is entitled
to a decree of specific performance, provided such party is not in material
default hereunder.
Section 10.8. Assignment.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other party.
Subject to the preceding sentence, this Agreement shall be binding upon, inure
to the benefit of and be enforceable by the parties and their respective
successors and assigns.
Section 10.9. Third Party Beneficiaries.
This Agreement shall be binding upon and inure solely to the benefit of each
party hereto, and nothing in this Agreement, express or implied, is intended
to or shall confer upon any other person any right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement except for (a) the
Indemnified Parties
30
<PAGE>
under Section 7.8, (b) the rights of the holders of Common Stock to receive
the Merger Consideration payable in the Merger pursuant to Article II, and (c)
the rights of the individuals listed on Schedule 7.9 under Section 7.9.
Section 10.10. Governing Law.
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law.
Section 10.11. Counterparts.
This Agreement may be executed and delivered in one or more counterparts,
and by the different parties hereto in separate counterparts, each of which
when executed and delivered shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
In Witness Whereof, the parties hereto have caused this Agreement and Plan
of Merger to be executed and delivered as of the date first written above.
Price Communications Corporation
By: /s/ Robert Price
----------------------------------
Name: Robert Price
Title:President
Price Communications Cellular Merger
Corp.
By: /s/ Robert Price
----------------------------------
Name: Robert Price
Title:President
Palmer Wireless, Inc.
By: /s/ William J. Ryan
----------------------------------
William J. Ryan
President and Chief Executive
Officer
31
<PAGE>
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
PRICE COMMUNICATIONS WIRELESS, INC.
FIRST: The name of the corporation is Price Communications
Wireless, Inc.
SECOND: The registered office of the corporation is to be located at
1013 Centre Road, Wilmington, Delaware, 19805-1297, New Castle County. The name
of its registered agent at that address is Corporation Service Company.
THIRD: The purpose of the corporation is to engage in any lawful
act or activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The corporation shall have the authority to issue 3,000
shares of common stock, par value $0.01 per share.
FIFTH: The name and mailing address of the sole incorporator are as
follows:
Lori S. Smith, Esq.
300 Park Avenue
New York, New York 10022
SIXTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under the
provisions of (S)291 of Title 8 of the Delaware Code or on the application of
trustees in dissolution or of any receiver or receivers appointed for the
corporation under the provisions of (S)279 of Title 8 of the Delaware Code order
a meeting of the creditors or class of creditors, and/or of the stockholders or
class of stockholders of the corporation, as the case may be, to be summoned in
such manner as the said court directs. If a majority in number representing
three fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of the
corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if
<PAGE>
sanctioned by the court to which the said application has been made, be binding
on all the creditors or class of creditors, and/or on all the stockholders or
class of stockholders, of the corporation, as the case may be, and also on the
corporation.
SEVENTH: The corporation shall, to the fullest extent permitted
by law, as the same is now or may hereafter be in effect, indemnify each person
(including the heirs, executors, administrators and other personal
representatives of such person) against expenses including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by such person in connection with any threatened, pending or completed
suit, action or proceeding (whether civil, criminal, administrative or
investigative in nature or otherwise) in which such person may be involved by
reason of the fact that he or she is or was a director or officer of the
corporation or is or was serving any other incorporated or unincorporated
enterprise in such capacity at the request of the corporation.
EIGHT: Unless, and except to the extent that, the by-laws of
the corporation shall so require, the election of directors of the corporation
need not be by written ballot.
NINTH: The corporation hereby confers the power to adopt, amend
or repeal bylaws of the corporation upon the directors.
<PAGE>
Exhibit 3.2
BY-LAWS
OF
PRICE COMMUNICATIONS CELLULAR MERGER CORP.
1. MEETINGS OF STOCKHOLDERS.
------------------------
1.1 Annual Meeting. The annual meeting of stockholders shall be held
--------------
at a place and time as determined by the board of directors of the corporation
(the "Board") in its discretion.
1.2 Special Meetings. Special meetings of the stockholders may be
----------------
called by resolution of the Board or the president and shall be called by the
president or secretary upon the written request (stating the purpose or purposes
of the meeting) of a majority of the directors then in office or of the holders
of a majority of the outstanding shares entitled to vote. Only business related
to the purposes set forth in the notice of the meeting may be transacted at a
special meeting.
1.3 Place and Time of Meetings. Meetings of the stockholders may be
--------------------------
held in or outside Delaware at the place and time specified by the Board or the
officers or stockholders requesting the meeting.
1.4 Notice of Meetings: Waiver of Notice. Written notice of each
------------------------------------
meeting of stockholders shall be given to each stockholder entitled to vote at
the meeting, except the (a) it shall not be necessary to give notice to any
stockholder who submits a signed waiver of notice before or after the meeting,
and (b) no notice of an adjourned meeting need be given, except
<PAGE>
when required under section 1.5 below or by law. Each notice of a meeting shall
be given personally or by mail, not fewer than 10 nor more than 60 days before
the meeting and shall state the time and place of the meeting, and, unless it is
the annual meeting, shall state at whose direction or request the meeting is
called and the purposes for which it is called. If mailed, notice shall be
considered given when mailed to a stockholder at his address on the
corporation's records. The attendance of any stockholder at a meeting, without
protesting at the beginning of this meeting that the meeting is not lawfully
called or convened, shall constitute a waiver of notice by him.
1.5 Quorum. At any meeting of stockholders, the presence in person or by
------
proxy of the holders of a majority of the shares entitled to vote shall
constitute a quorum for the transaction of any business. In the absence of a
quorum, a majority in voting interest of those present or, if no stockholders
are present, any officer entitled to preside at or to act as secretary of the
meeting, may adjourn the meeting until a quorum is present. At any adjourned
meeting at which a quorum is present, any action may be taken that might have
been taken at the meeting as originally called. No notice of an adjourned
meeting need be given, if the time and place are announced at the meeting at
which the adjournment is taken, except that, if adjournment is for more than 30
days or if, after the adjournment, a new record date is fixed for the meeting,
notice of the adjourned meeting shall be given pursuant to section 1.4.
1.6 Voting: Proxies. Each stockholder of record shall be entitled to one
---------------
vote for each share registered in his name. Corporate action to be taken by
stockholder vote, other than the election of directors, shall be authorized by a
majority of the votes cast at a meeting of stockholders, except as otherwise
provided by law or by section 1.8. Directors shall be elected in
<PAGE>
the manner provided in section 2.1. Voting need not be by ballot, unless
requested by a majority of the stockholders entitled to vote at the meeting or
ordered by the chairman of the meeting. Each stockholder entitled to vote at any
meeting of stockholders or to express consent to or dissent from corporate
action in writing without a meeting may authorize another person to act for him
by proxy. No proxy shall be valid after three years from its date, unless it
provides otherwise.
1.7 List of Stockholders. Not fewer than 10 days prior to the date of
--------------------
any meeting of stockholders, the secretary of the corporation shall prepare a
complete list of stockholders entitled to vote at the meeting, arranged in
alphabetical order and showing the address of each stockholder and the number of
shares registered in his name. For a period of not fewer than 10 days prior to
the meeting, the list shall be available during ordinary business hours for
inspection by any stockholder for any purpose germane to the meeting. During
this period, the list shall be kept either (a) at a place within the city where
the meeting is to be held, if that place shall have been specified in the notice
of the meeting, or (b) if not so specified, at the place where the meeting is to
be held. The list shall also be available for inspection by stockholders at the
time and place of the meeting.
1.8 Action by Consent Without a Meeting. Any action required or
-----------------------------------
permitted to be taken at any meeting of stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not fewer than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon
<PAGE>
were present and voting. Prompt notice of the taking of any such action shall be
given to those stockholders who did not consent in writing.
2. BOARD OF DIRECTORS.
------------------
2.1 Number, Qualification, Election and Term of Directors. The business
-----------------------------------------------------
of the corporation shall be managed by the entire Board, which initially shall
consist of one director. The number of directors may be changed by resolution of
a majority of the Board or by the stockholders, but no decrease may shorten the
term of any incumbent director. Directors shall be elected at each annual
meeting of stockholders by a plurality of the votes cast and shall hold office
until the next annual meeting of stockholders and until the election and
qualification of their respective successors, subject to the provisions of
section 2.9. As used in these by-laws, the term "entire Board" means the total
number of directors the corporation would have, if there were no vacancies on
the Board.
2.2 Quorum and Manner of Acting. A majority of the entire Board shall
---------------------------
constitute a quorum for the transaction of business at any meeting, except as
provided in section 2.10. Action of the Board shall be authorized by the vote of
the majority of the directors present at the time of the vote, if there is a
quorum, unless otherwise provided by law or these by-laws. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present.
2.3 Place of Meetings. Meetings of the Board may be held in or outside
-----------------
Delaware.
<PAGE>
2.4 Annual and Regular Meetings. Annual meetings of the Board, for the
---------------------------
election of officers and consideration or other matters, shall be held either
(a) without notice immediately after the annual meeting of stockholders and at
the same place, or (b) as soon as practicable after the annual meeting of
stockholders, on notice as provided in section 2.6. Regular meetings of the
Board may be held without notice at such times and places as the Board
determines. If the day fixed for a regular meeting is a legal holiday, the
meeting shall be held on the next business day.
2.5 Special Meetings. Special meetings of the Board may be called by
----------------
the president or by a majority of the directors.
2.6 Notice of Meetings; Waiver of Notice. Notice of the time and
------------------------------------
place of each special meeting of the Board, and of each annual meeting not held
immediately after the annual meeting of stockholders and at the same place,
shall be given to each director by mailing it to him at his residence or usual
place of business at least three days before the meeting, or by delivering or
telephoning or telegraphing it to him at least two days before the meeting.
Notice of a special meeting also shall state the purpose or purposes for which
the meeting is called. Notice need not be given to any director who submits a
signed waiver of notice before or after the meeting or who attends the meeting
without protesting at the beginning of the meeting the transaction of any
business because the meeting was not lawfully called or convened. Notice of any
adjourned meeting need not be given, other than by announcement at the meeting
at which the adjournment is taken.
<PAGE>
2.7 Board or Committee Action Without a Meeting. Any action required
-------------------------------------------
or permitted to be taken by the Board or by any committee of the Board may be
taken without a meeting, if all the members of the Board or the committee
consent in writing to the adoption of a resolution authorizing the action. The
resolution and the written consents by the members of the Board or the committee
shall be filed with the minutes of the proceedings of the Board or the
committee.
2.8 Participation in Board or Committee Meetings by Conference
----------------------------------------------------------
Telephone. Any or all members of the Board or any committee of the Board may
- ---------
participate in a meeting of the Board or the committee by means of a conference
telephone or similar communications equipment allowing all persons participating
in the meeting to hear each other at the same time. Participation by such means
shall constitute presence in person at the meeting.
2.9 Resignation and Removal of Directors. Any director may resign at
------------------------------------
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any or all of the directors may be removed at
any time, either with or without cause, by vote of the stockholders.
2.10 Vacancies. Any vacancy in the Board, including one created by an
---------
increase in the number of directors, may be filled for the unexpired term by a
majority vote of the remaining directors, though less than a quorum.
2.11 Compensation. Directors shall receive such compensation as the
------------
Board determines, together with reimbursement of their reasonable expenses in
connection with the
<PAGE>
performance of their duties. A director also may be paid for serving the
corporation or its affiliates or subsidiaries in other capacities.
3. COMMITTEES.
----------
3.1 Executive Committee. The Board, by resolution adopted by a
-------------------
majority of the entire Board, may designate an executive committee of one or
more directors, which shall have all the powers and authority of the Board,
except as otherwise provided in the resolution, section 141(c) of the General
Corporation Law of Delaware or any other applicable law. The members of the
executive committee shall serve at the pleasure of the Board. All action of the
executive committee shall be reported to the Board at its next meeting.
3.2 Other Committees. The Board, by resolution adopted by a majority
----------------
of the entire Board, may designate other committees of one or more directors,
which shall serve at the Board's pleasure and have such powers and duties as the
Board determines.
3.3 Rules Applicable to Committees. The Board may designate one or
------------------------------
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In case of the absence
or disqualification of any member of a committee, the member or members present
at a meeting of the committee and not disqualified, whether or not a quorum, may
unanimously appoint another director to act at the meeting in place of the
absent or disqualified member. All action of a committee shall be reported to
the Board at its next meeting. Each committee shall adopt rules of procedure and
shall meet as provided by those rules or by resolutions of the Board.
<PAGE>
4. OFFICERS.
--------
4.1 Number; Security. The executive officers of the corporation shall
----------------
be the president, one or more vice presidents (including an executive vice
president, if the Board so determines), a secretary and a treasurer. Any two or
more offices may be held by the same person. The board may require any officer,
agent or employee to give security for the faithful performance of his duties.
4.2 Election; Term of Office. The executive officers of the
------------------------
corporation shall be elected annually by the Board, and each such officer shall
hold office until the next annual meeting of the Board and until the election of
his successor, subject to the provisions of section 4.4.
4.3 Subordinate Officers. The Board may appoint subordinate officers
--------------------
(including assistant secretaries and assistant treasurers), agents or employees,
each of whom shall hold office for such period and have such powers and duties
as the Board determines. The Board may delegate to any executive officer or
committee the power to appoint and define the powers and duties of any
subordinate officers, agents or employees.
4.4 Resignation and Removal of Officers. Any officer may resign at
-----------------------------------
any time by delivering his resignation in writing to the president or secretary
of the corporation, to take effect at the time specified in the resignation; the
acceptance of a resignation, unless required by its terms, shall not be
necessary to make it effective. Any officer elected or appointed by the Board or
appointed by an executive officer or by a committee may be removed by the Board
<PAGE>
either with or without cause, and in the case of an officer appointed by an
executive officer or by a committee, by the officer or committee that appointed
him or by the president.
4.5 Vacancies. A vacancy in any office may be filled for the unexpired
---------
term in the manner prescribed in sections 4.2 and 4.3 for election or
appointment to the office.
4.6 The President. The president shall be the chief executive officer
-------------
of the corporation. Subject to the control of the Board, he shall have general
supervision over the business of the corporation and shall have such other
powers and duties as presidents of corporations usually have or as the Board
assigns to him.
4.7 Vice President. Each vice president shall have such powers and
--------------
duties as the Board or the president assigns to him.
4.8 The Treasurer. The treasurer shall be the chief financial officer
-------------
of the corporation and shall be in charge of the corporation's books and
accounts. Subject to the control of the Board, he shall have such other powers
and duties as the Board or the president assigns to him.
4.9 The Secretary. The secretary shall be the secretary of, and keep
-------------
the minutes of, all meetings of the Board and the stockholders, shall be
responsible for giving notice of all meetings of stockholders and the Board, and
shall keep the seal and, when authorized by the Board, apply it to any
instrument requiring it. Subject to the control of the Board, he shall have such
powers and duties as the Board or the president assigns to him. In the absence
of the
<PAGE>
secretary from any meeting, the minutes shall be kept by the person appointed
for that purpose by the presiding officer.
4.10 Salaries. The Board may fix the officers' salaries, if any, or it
--------
may authorize the president to fix the salary of any other officer.
5. Shares
------
5.1 Certificates. The corporation's shares shall be represented by
------------
certificates in the form approved by the Board. Each certificate shall be
signed by the president or a vice president, and by the secretary or an
assistant secretary or the treasurer or an assistant treasurer, and shall be
sealed with the corporation's seal or a facsimile of the seal. Any or all the
signatures on the certificate may be a facsimile.
5.2 Transfers. Shares shall be transferable only on the corporation's
---------
books, upon surrender of the certificate for the shares, properly endorsed. The
Board may require satisfactory surety before issuing a new certificate to
replace a certificate claimed to have been lost or destroyed.
5.3 Determination of Stockholders of Record. The Board may fix, in
---------------------------------------
advance, a date as the record date for the determination of stockholders
entitled to notice of or to vote at any meeting of the stockholders, or to
express consent to or dissent from any proposal without a meeting, or to receive
payment of any dividend or the allotment of any rights, or for the purpose of
any other action. The record date may not be more than 60 or fewer than 10 days
before the date of the meeting or more than 60 days before any other action.
<PAGE>
6. INDEMNIFICATION AND INSURANCE.
-----------------------------
6.1 Right to Indemnification. Each person who was or is a party or is
------------------------
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he, or a person of whom he is the
legal representative, is or was a director or officer of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action or inaction in an
official capacity or in any other capacity while serving as director, officer,
employee or agent, shall be indemnified and held harmless by the corporation to
the fullest extent permitted by the General Corporation Law of Delaware, as
amended from time to time, against all costs, charges, expenses, liabilities and
losses (including attorneys' fees, judgments, fines, ERISA excise taxes or
penalties and amounts paid or to be paid in settlement) reasonably incurred or
suffered by such person in connection therewith, and that indemnification 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, executors and
administrators; provided, however, that, except as provided in section 6.2, the
corporation shall indemnify any such person seeking indemnification in
connection with a proceeding (or part thereof) initiated by that person, only if
that proceeding (or part thereof) was authorized by the Board. The right to
indemnification conferred in these by-laws shall be a contract right and shall
include the right to be paid by the corporation the expenses incurred in
defending any such proceeding in advance of its final disposition; provided,
however, that, if the General Corporation Law of Delaware, as amended from time
to time,
<PAGE>
requires, the payment of such expenses incurred by a director or officer in his
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by that person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of a proceeding shall be made only upon delivery to the
corporation of an undertaking, by or on behalf of such director or officer, to
repay all amounts so advanced, if it shall ultimately be determined that such
director or officer is not entitled to be indemnified under these by-laws or
otherwise. The corporation may, by action of its Board, provide indemnification
to employees and agents of the corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
6.2 Right of Claimant to Bring Suit. If a claim under
-------------------------------
section 6.1 is not paid in full by the corporation within 30 days after a
written claim has been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid amount of
the claim and, if successful in whole or in part, the claimant also shall be
entitled to be paid the expense of prosecuting that claim. It shall be a defense
to any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition, where
the required undertaking, if any, is required and has been tendered to the
corporation) that the claimant has failed to meet a standard of conduct that
makes it permissible under Delaware law for the corporation to indemnify the
claimant for the amount claimed. Neither the failure of the corporation
(including its Board, its independent legal counsel or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is permissible in the circumstances because he
has met that standard of conduct, nor an actual determination by the corporation
(including its Board, its
<PAGE>
independent counsel or its stockholders) that the claimant has not met that
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has failed to meet that standard of conduct.
6.3 Non-Exclusivity of Rights. The right to indemnification and the
-----------------------
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this section 6 shall not be exclusive of any other
right any person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.
6.4 Insurance. The corporation may maintain insurance, at its expense,
---------
to protect itself and any director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
corporation would have the power to indemnify such person against that expense,
liability or loss under Delaware law.
6.5 Expenses as a Witness. To the extent any director, officer,
---------------------
employee or agent of the corporation is by reason of such position, or a
position with another entity at the request of the corporation, a witness in any
action, suit or proceeding, he shall be indemnified against all costs and
expense actually and reasonably incurred by him or on his behalf in connection
therewith.
6.6 Indemnity Agreements. The corporation may enter into agreement
--------------------
with any director, officer, employee or agent of the corporation providing for
indemnification to the fullest extent permitted by Delaware law.
<PAGE>
7. MISCELLANEOUS.
-------------
7.1 Seal. The Board shall adopt a corporate seal, which shall be in
----
the form of a circle and shall bear the corporation's name and the year and
state in which it was incorporated.
7.2 Fiscal Year. The Board may determine the corporation's fiscal
-----------
year.
7.3 Voting of Shares in Other Corporations. Shares in other
--------------------------------------
corporations held by the corporation may be represented and voted by an officer
of this corporation or by a proxy or proxies appointed by one of them. The
Board may, however, appoint some other person to vote the shares.
7.4 Amendments. By-laws may be amended, repealed or adopted by the
----------
Board in its discretion.
<PAGE>
Exhibit 4.1
================================================================================
PRICE COMMUNICATIONS WIRELESS, INC.,
Issuer,
and
BANK OF MONTREAL TRUST COMPANY,
Trustee
-------------------
INDENTURE
Dated as of July 10, 1997
-------------------
$175,000,000
11 3/4% Senior Subordinated Notes due 2007
================================================================================
<PAGE>
TABLE OF CONTENTS
----------------------
PAGE
----
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions....................................................1
SECTION 1.02. Incorporation by Reference of TIA.............................25
SECTION 1.03. Rules of Construction.........................................25
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating...............................................26
SECTION 2.02. Execution and Authentication..................................26
SECTION 2.03. Registrar and Paying Agent....................................27
SECTION 2.04. Paying Agent to Hold Assets in Trust..........................28
SECTION 2.05. Securityholder Lists..........................................29
SECTION 2.06. Transfer and Exchange.........................................29
SECTION 2.07. Replacement Securities........................................36
SECTION 2.08. Outstanding Securities........................................36
SECTION 2.09. Treasury Securities...........................................37
SECTION 2.10. Temporary Securities..........................................37
SECTION 2.11. Cancellation..................................................37
SECTION 2.12. Defaulted Interest............................................38
ARTICLE 3
REDEMPTION
SECTION 3.01. Redemption....................................................39
SECTION 3.02. Notices to Trustee............................................40
SECTION 3.03. Selection of Securities to Be Redeemed........................40
SECTION 3.04. Notice of Redemption..........................................41
SECTION 3.05. Effect of Notice of Redemption................................42
SECTION 3.06. Deposit of Redemption Price...................................42
SECTION 3.07. Securities Redeemed in Part...................................43
<PAGE>
PAGE
----
ARTICLE 4
COVENANTS
SECTION 4.01. Transactions Not Subject to Covenants.........................43
SECTION 4.02. Payment of Securities.........................................45
SECTION 4.03. Maintenance of Office or Agency...............................45
SECTION 4.04. Limitation on Restricted Payments.............................46
SECTION 4.05. Corporate Existence...........................................47
SECTION 4.06. Payment of Taxes and Other Claims.............................47
SECTION 4.07. Maintenance of Properties and Insurance.......................48
SECTION 4.08. Compliance Certificate; Notice of Default.....................48
SECTION 4.09. Reports.......................................................49
SECTION 4.10. Limitation on Status as Investment Company....................49
SECTION 4.11. Limitation on Transactions with Related Persons...............49
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness...........50
SECTION 4.13. Limitations on Restricting Subsidiary Dividends...............52
SECTION 4.14. Limitations on Layering of Indebtedness; Liens................53
SECTION 4.15. Limitation on Asset Sales and Sales of Subsidiary Stock.......54
SECTION 4.16. Waiver of Stay, Extension or Usury Laws.......................60
SECTION 4.17. Rule 144A Information Requirement.............................61
SECTION 4.18. Limitation on Lines of Business...............................61
SECTION 4.19. Restriction on Sale and Issuance of Subsidiary Stock..........61
SECTION 4.20. Deposit of Proceeds with Trustee Pending Consummation
of the Merger...............................................61
ARTICLE 5
SUCCESSOR CORPORATION
SECTION 5.01. Limitation on Merger, Sale or Consolidation...................62
SECTION 5.02. Successor Corporation Substituted.............................63
ARTICLE 6
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.01. Events of Default.............................................63
SECTION 6.02. Acceleration of Maturity Date; Rescission and Annulment.......65
SECTION 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee.....................................................67
SECTION 6.04. Trustee May File Proofs of Claim..............................67
ii
<PAGE>
PAGE
----
SECTION 6.05. Trustee May Enforce Claims Without Possession of Securities...68
SECTION 6.06. Priorities....................................................69
SECTION 6.07. Limitation on Suits...........................................69
SECTION 6.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest........................................70
SECTION 6.09. Rights and Remedies Cumulative................................70
SECTION 6.10. Delay or Omission Not Waiver..................................70
SECTION 6.11. Control by Holders............................................71
SECTION 6.12. Waiver of past Default........................................71
SECTION 6.13. Undertaking for Costs.........................................71
SECTION 6.14. Restoration of Rights and Remedies............................72
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee.............................................72
SECTION 7.02. Rights of Trustee.............................................73
SECTION 7.03. Individual Rights of Trustee..................................75
SECTION 7.04. Trustee's Disclaimer..........................................75
SECTION 7.05. Notice of Default.............................................75
SECTION 7.06. Reports by Trustee to Holders.................................75
SECTION 7.07. Compensation and Indemnity....................................75
SECTION 7.08. Replacement of Trustee........................................77
SECTION 7.09. Successor Trustee by Merger, Etc..............................78
SECTION 7.10. Eligibility; Disqualification.................................78
SECTION 7.11. Preferential Collection of Claims Against Company.............78
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance......78
SECTION 8.02. Legal Defeasance and Discharge................................78
SECTION 8.03. Covenant Defeasance...........................................79
SECTION 8.04. Conditions to Legal or Covenant Defeasance....................79
SECTION 8.05. Deposited U.S. Legal Tender Equivalents and U.S.
Government Obligations to be Held in Trust; Other
Miscellaneous Provisions....................................81
SECTION 8.06. Repayment to the Company......................................81
iii
<PAGE>
PAGE
----
SECTION 8.07. Reinstatement.................................................82
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Supplemental Indentures Without Consent of Holders............82
SECTION 9.02. Amendments, Supplemental Indentures and Waivers with
Consent of Holders..........................................83
SECTION 9.03. Compliance with TIA...........................................85
SECTION 9.04. Revocation and Effect of Consents.............................85
SECTION 9.05. Notation on or Exchange of Securities.........................86
SECTION 9.06. Trustee to Sign Amendments, Etc...............................86
ARTICLE 10
COLLATERAL ACCOUNT AND RELEASES
SECTION 10.01. Collateral Account...........................................86
SECTION 10.02. Eligible Investments.........................................87
SECTION 10.03. Release of Collateral........................................88
ARTICLE 11
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. Repurchase of Securities at Option of the Holder Upon a
Change of Control..........................................88
ARTICLE 12
SUBORDINATION
SECTION 12.01. Securities Subordinated to Senior Indebtedness...............91
SECTION 12.02. No Payment on Securities in Certain Circumstances............92
SECTION 12.03. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization.94
SECTION 12.04. Securityholders to Be Subrogated to Rights of Holders of
Senior Indebtedness........................................95
SECTION 12.05. Obligations of the Company Unconditional.....................96
SECTION 12.06. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice..........................................96
SECTION 12.07. Application by Trustee of Assets Deposited with It...........97
iv
<PAGE>
PAGE
----
SECTION 12.08. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness...........97
SECTION 12.09. Securityholders Authorize Trustee to Effectuate
Subordination of Securities................................97
SECTION 12.10. Right of Trustee to Hold Senior Indebtedness.................98
SECTION 12.11. Article Not to Prevent Events of Default....................98
SECTION 12.12. No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness...............................................98
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TIA Controls.................................................99
SECTION 13.02. Notices......................................................99
SECTION 13.03. Communications by Holders with Other Holders................100
SECTION 13.04. Certificate and Opinion as to Conditions Precedent..........100
SECTION 13.05. Statements Required in Certificate or Opinion...............100
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar...................101
SECTION 13.07. Legal Holidays..............................................101
SECTION 13.08. Governing Law...............................................101
SECTION 13.09. No Adverse Interpretation of Other Agreements...............102
SECTION 13.10. No Recourse Against Others..................................102
SECTION 13.11. Successors..................................................102
SECTION 13.12. Duplicate Originals.........................................102
SECTION 13.13. Severability................................................102
SECTION 13.14. Table of Contents, Headings, Etc............................103
SECTION 13.15. Qualification of Indenture..................................103
SECTION 13.16. Registration Rights.........................................103
v
<PAGE>
INDENTURE, dated as of July 10, 1997 between Price Communications
Wireless, Inc., a Delaware corporation (the "Company") and Bank of Montreal
Trust Company, a New York banking corporation (the "Trustee").
Each party hereto agrees as follows for the benefit of each other party
and for the equal and ratable benefit of the Holders of the Company's 11 3/4%
Series A Senior Subordinated Notes due 2007 and the 11 3/4% Series B Senior
Subordinated Notes due 2007 which may be exchanged for the 11 3/4% Series A
Senior Subordinated Notes due 2007:
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Acceleration Notice" shall have the meaning specified in Section 6.02.
"Acceptance Amount" shall have the meaning specified in Section 4.15.
"Accumulated Amount" shall have the meaning specified in Section 4.15.
"Acquired Person" shall have the meaning as set forth in the definition
of "Permitted Investment."
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such specified Person or (ii) any officer,
director, or controlling stockholder of such other Person. For purposes of this
definition, the term "control" means (a) the power to direct the management and
policies of a Person, directly or through one or more intermediaries, whether
through the ownership of voting securities, by contract, or otherwise, or (b)
without limiting the foregoing, the beneficial ownership of 10% or more of the
voting power of the voting common equity of such Person (on a fully diluted
basis) or of warrants or other rights to acquire such equity (whether or not
presently exercisable).
"Agent" means any Registrar, Paying Agent or co-Registrar.
<PAGE>
"Annualized Operating Cash Flow" on any date means, with respect to any
Person, the Operating Cash Flow of such Person 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 Subsidiaries, the ratio of (i)
consolidated Indebtedness of such Person and its Subsidiaries on the Transaction
Date (after giving pro forma effect to the Incurrence of such Indebtedness)
divided by (ii) the aggregate amount of Annualized Operating Cash Flow of such
Person (determined on a pro forma basis after giving effect to all acquisitions
or dispositions of businesses made by such Person and its Subsidiaries from the
beginning of the Reference Period through the Transaction Date as if such
acquisition or disposition had occurred at the beginning of such Reference
Period); provided that for purposes of such computation, in calculating
Annualized Operating Cash Flow and consolidated Indebtedness, (a) 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; (b) 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 or to acquire businesses) will be assumed to have occurred (on a
pro forma basis) on the first day of such Reference Period; (c) 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 (d) 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. When the foregoing definition is used in connection with the Company and
its Restricted Subsidiaries, references to a Person and its Subsidiaries in the
foregoing definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
"Asset Sale" shall have the meaning specified in Section 4.15.
"Asset Sale Offer" shall have the meaning specified in Section 4.15.
"Asset Sale Offer Amount" shall have the meaning specified in Section
4.15.
"Asset Sale Offer Price" shall have the meaning specified in Section
4.15.
2
<PAGE>
"Asset Sale Purchase Date" shall have the meaning specified in Section
4.15.
"Bank" shall have the meaning specified in Section 10.01.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, with respect to any Person, the Board of
Directors of such Person or any committee of the Board of Directors of such
Person authorized, with respect to any particular matter, to exercise the power
of the Board of Directors of such Person.
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Business Day" means a day that is not a Legal Holiday.
"Capitalized Lease Obligations" means obligations under a lease that
are required to be capitalized for financial reporting purposes in accordance
with GAAP, and the amount of Indebtedness represented by such obligations shall
be the capitalized amount of such obligations, as determined in accordance with
GAAP.
"Capital Stock" means, with respect to any Person, any capital stock of
such Person and shares, interests, participations or other ownership interests
(however designated) of any Person and any rights (other than debt securities
convertible into capital stock), warrants and options to purchase any of the
foregoing, including (without limitation) each class of common stock and
preferred stock of such Person if such Person is a corporation and each general
and limited partnership interest of such Person if such Person is a partnership.
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (ii) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
equivalent thereof by Moody's Investors Service, Inc. and in each case maturing
within one year after
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the date of acquisition and (iii) investments in money market funds
substantially all of whose assets comprise securities of the types described in
clauses (i) and (ii) above.
"Change of Control" means (i) any sale, transfer or other conveyance,
whether direct or indirect, of a majority of the fair market value of the assets
of the Company or Parent, on a consolidated basis, in one transaction or a
series of related transactions, if, immediately after giving effect to such
transaction, any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than an Excluded Person or Excluded Group, is or becomes the "beneficial owner"
(as such term is used in Rule 13d-3 promulgated pursuant to the Exchange Act),
directly or indirectly, of more than 50% of the total equity of the transferee,
(ii) any "person" or "group" (as such terms are used for purposes of Sections
13(d) and 14(d) of the Exchange Act, whether or not applicable), other than an
Excluded Person or Excluded Group, is or becomes the "beneficial owner" (as such
term is used in Rule 13d-3 promulgated pursuant to the Exchange Act), directly
or indirectly, of more than 50% of the total equity in the aggregate of all
classes of Capital Stock of the Company or Parent then outstanding normally
entitled to vote in elections of directors, or (iii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of the Company or Parent
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Company or Parent was
approved by a vote of a majority of the directors then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company or Parent then in office.
"Change of Control Offer" shall have the meaning specified in Section
11.01.
"Change of Control Offer Period" shall have the meaning specified in
Section 11.01.
"Change of Control Purchase Date" shall have the meaning specified in
Section 11.01.
"Change of Control Purchase Price" shall have the meaning specified in
Section 11.01.
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"Change of Control Put Date" shall have the meaning specified in
Section 11.01.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all cash and Treasury Bills, and any proceeds
thereof, which are from time to time held in the Collateral Account.
"Collateral Account" means the trust account created and maintained
pursuant to Section 10.01.
"Company" means the party named as such in this Indenture until a
successor replaces it pursuant to the Indenture, and thereafter means such
successor.
"Company Systems" shall have the meaning specified in Section 4.15.
"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, in accordance with the following
sentence, interest attributable to the Capitalized Lease Obligations) of such
Person and its consolidated Subsidiaries during such period, 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 Interest
Swap and Hedging Obligations, in each case to the extent attributable to such
period, and (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 of such Person to such Person or such Person's Wholly
Owned Subsidiaries). For purposes of this definition, (x) 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 (y) interest expense
attributable to any Indebtedness represented by the guaranty by such Person or a
Subsidiary of such Person of an obligation of another Person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed. When the
foregoing definition is used in connection with the Company and its Restricted
Subsidiaries, references to a Person and its Subsidiaries in the foregoing
definition shall be deemed to refer to the Company and its Restricted
Subsidiaries.
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"Consolidated Net Income" of any Person for any period means the net
income (or loss) of such Person and its consolidated Subsidiaries for such
period, determined (on a consolidated basis) in accordance with GAAP, adjusted
to exclude (only to the extent included in computing such net income (or loss)
and without duplication) (i) 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), (ii) the net income, if positive, of any Person,
that is not a Subsidiary in which such Person or any of its Subsidiaries has an
interest, except to the extent of the amount of dividends or distributions
actually paid to such Person or a Subsidiary of such Person that both (x) are
actually paid in cash to such Person or a Subsidiary of such Person during such
period and (y) when taken together with all other dividends and distributions
paid during such period in cash to such Person or a Subsidiary of such Person,
are not in excess of such Person's pro rata share of such other Person's
aggregate net income earned during such period, (iii), 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 (iv) the net income, if positive, 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. When the foregoing definition is used in connection with the Company
and its Restricted Subsidiaries, references to a Person and its Subsidiaries in
the foregoing definition shall be deemed to refer to the Company and its
Restricted Subsidiaries.
"Contiguous" means, when used in connection with any existing RSA or
MSA of the Company or its Subsidiaries, a wireless cellular communications
system, any part of which exists within 50 miles of such RSA or MSA.
"Corporate Trust Office" means the principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which address as of the date hereof is located at 77 Water Street, New York, New
York 10005.
"Covenant Defeasance" shall have the meaning specified in Section 8.03.
"Credit Agreement" means a credit agreement entered into by the Company
and a syndicate of banks, financial institutions and other "accredited
investors" (as defined in Regulation D under the Securities Act); led by
Donaldson, Lufkin & Jenrette Securities Corporation, as arranger, and DLJ
Capital Funding, as syndication agent, or any other senior loan facility
syndicated by DLJ Capital Funding in lieu thereof, together with the related
documents
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thereto (including, without limitation, any guarantee agreements and security
documents), in each case as such agreements may be amended (including any
amendment and restatement thereof), supplemented or otherwise modified from time
to time (including any agreement extending the maturity of, refinancing,
replacing or otherwise restructuring or adding Restricted Subsidiaries of the
Issuer as additional borrowers or guarantors thereunder) and all or any portion
of the Indebtedness under such agreement or any successor or replacement
agreement whether by the same or any other agent, lender or group of lenders.
There can only be one such credit facility or loan agreement designated to be
the "Credit Agreement" at any one time. Any Indebtedness Incurred pursuant to
the second paragraph of Section 4.12 may be Incurred pursuant to the terms of
the Credit Agreement, provided that such Indebtedness so Incurred shall be
deemed to have been Incurred pursuant to the Credit Agreement for all purposes
of the Indenture other than with respect to Section 4.12 and clause (3) of the
first paragraph of Section 4.15.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect against
fluctuation in currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means any event or condition that is, or after notice or
passage of time or both would be, an Event of Default.
"Defaulted Interest" shall have the meaning specified in Section 2.12.
"Definitive Securities" means Securities that are in the form of
Security attached hereto as Exhibit A that do not include the information called
for by footnotes 1 and 3 thereof.
"Depository" means, with respect to the Securities issuable or issued
in whole or in part in global form, the person specified in Section 2.03 as the
Depository with respect to the Securities, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and, thereafter, "Depository" shall mean or include such successor.
"Designated Senior Indebtedness" means, so long as it is in effect, the
Credit Agreement and, thereafter, any Senior Indebtedness designated by the
Company to be "Designated Senior Indebtedness."
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"Disqualified Capital Stock" means, with respect to any Person, Capital
Stock of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of any event or the passage of time would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by such Person or
any of its Subsidiaries, in whole or in part, on or prior to the Stated Maturity
of the Securities; provided that Capital Stock will not be deemed to be
Disqualified Capital Stock if it may only be so redeemed or repurchased solely
in consideration of Qualified Capital Stock of the Company or Parent.
"Eligible Investments" mean United States Treasury Bills maturing no
later than the Business Day preceding December 31, 1997.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"Event of Default" shall have the meaning specified in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Exchanged Capital Stock" shall have the meaning specified in Section
4.15.
"Exchange Securities" means the 11 3/4% Series B Senior Subordinated
Notes due 2007 to be issued pursuant to this Indenture in connection with the
offer to exchange Exchange Securities for the Initial Securities that may be
made by the Company pursuant to the Registration Rights Agreement.
"Excluded Group" means a "group" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that includes one or more Excluded Persons;
provided that the voting power of the Capital Stock of the Company or Parent
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such Excluded Persons (without attribution to such Excluded
Persons of the ownership by other members of the "group") represents a majority
of the voting power of the Capital Stock "beneficially owned" (as such term is
used in Rule 13d-3 promulgated under the Exchange Act) by such "group."
"Excluded Person" means members of the Price Family who owned Capital
Stock of Parent on the Issue Date and any Affiliate of any of the foregoing that
is wholly owned by one of the foregoing.
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"Existing Indebtedness" means Indebtedness of the Company and its
Subsidiaries in existence and outstanding on the Issue Date.
"Final Put Date" shall have the meaning specified in Section 4.15.
"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 ("FASB") or, if FASB ceases to exist,
any successor thereto; provided, however, that for purposes of determining
compliance with covenants in the Indenture, "GAAP" means such generally accepted
accounting principles as in effect as of the Issue Date.
"Global Security" means a Security that contains the paragraph referred
to in footnote 1 and the additional schedule referred to in footnote 3 to the
form of Security attached hereto as Exhibit A.
"Holder" or "Securityholder" means a Person in whose name a Security is
registered. The Holder of a Security will be treated as the owner of such
Security for all purposes.
"Holdings" means Price Communications Cellular Holdings, Inc., the
direct parent of the Company, and a subsidiary of Price Communications
Corporation.
"Holdings Securities" means preferred stock or debt securities issued
by Holdings prior to the Merger.
"Incur" shall have the meaning specified in Section 4.12.
"Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of such Person, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts payable or other obligations to trade creditors
which have remained unpaid for greater than 90 days past their original due date
or to financial institutions, which obligations are not being contested in good
faith and for which appropriate reserves have not been established) those
incurred in the ordinary course of its business that would constitute ordinarily
a trade payable to trade creditors, (iv) evidenced by bankers' acceptances or
similar instruments issued or
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accepted by banks, (v) for the payment of money relating to a Capitalized Lease
Obligation, or (vi) evidenced by a letter of credit or a reimbursement
obligation of such Person with respect to any letter of credit; (b) all
obligations of such Person under Interest Swap and Hedging Obligations; (c) all
liabilities of others of the kind described in the preceding clauses (a) or (b)
that such Person has guaranteed or that is otherwise its legal liability or
which are secured by any assets or property of such Person and all obligations
to purchase, redeem or acquire any Capital Stock; (d) all Disqualified Capital
Stock of such Person and all Preferred Stock of such Person's Subsidiaries; and
(e) any and all deferrals, renewals, extensions, refinancing and refundings
(whether direct or indirect) of, or amendments, modifications or supplements to,
any liability of the kind described in any of the preceding clauses (a), (b),
(c), or (d) or this clause (e), whether or not between or among the same
parties; provided that the outstanding principal amount at any date of any
Indebtedness issued with original issue discount is the face amount of such
Indebtedness less the remaining unamortized portion of the original issue
discount of such Indebtedness at such date.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation, Wasserstein Perella Securities, Inc., NatWest Capital Markets
Limited, Lehman Brothers Inc. and PaineWebber Incorporated.
"Initial Securities" means the 11 3/4% Series A Senior Subordinated
Notes due 2007, as supplemented from time to time in accordance with the terms
hereof, issued pursuant to this Indenture.
"Interest Payment Date" means the stated due date of an installment of
interest on the Securities.
"Interest Swap and Hedging Obligations" means any obligations of any
Person pursuant to any interest rate swaps, caps, collars and similar
arrangements providing protection against fluctuations in interest rates. For
purposes of this Agreement, the amount of such obligations shall be the amount
determined in respect thereof as of the end of the then most recently ended
fiscal quarter of such Person, based on the assumption that such obligation had
terminated at the end of such fiscal quarter, and in making such determination,
if any agreement relating to such obligation provides for the netting of amounts
payable by and to such Person thereunder or if any such agreement provides for
the simultaneous payment of amounts by and to such Person, then in each such
case, the amount of such
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obligations shall be the net amount so determined, plus any premium due upon
default by such Person.
"Investment" by any Person in any other Person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities of such other Person or any agreement to
make any such acquisition; (b) the making by such Person of any deposit with, or
advance, loan or other extension of credit to, such other Person (including the
purchase of property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such property to such other
Person) or any commitment to make any such advance, loan or extension; (c) the
entering into by such Person of any guarantee of, or other contingent obligation
with respect to, Indebtedness or other liability of such other Person; (d) the
making of any capital contribution by such Person to such other Person; and (e)
the designation by the Board of Directors of the Company of any Person to be an
Unrestricted Subsidiary. For purposes of Section 4.04, (i) "Investment" shall
include and be valued at the fair market value of the net assets of any
Restricted Subsidiary at the time that such Restricted Subsidiary is designated
an Unrestricted Subsidiary and shall exclude the fair market value of the net
assets of any Unrestricted Subsidiary at the time that such Unrestricted
Subsidiary is designated a Restricted Subsidiary and (ii) the amount of any
Investment shall be the fair market value of such Investment plus the fair
market value of all additional Investments by the Company or any of its
Restricted Subsidiaries at the time any such Investment is made; provided that,
for purposes of this sentence, the fair market value of net assets in excess of
$5,000,000 shall be as determined by an independent appraiser of national
reputation.
"Issue Date" means the time and date of the first issuance of the
Securities under the Indenture.
"Junior Indebtedness" means Indebtedness of the Company that (i)
requires no payment of principal prior to or on the date on which all principal
of and interest on the Securities is paid in full and (ii) is subordinate and
junior in right of payment to the Securities in all respects.
"Junior Securities" of any Person means securities (including Capital
Stock but excluding Disqualified Capital Stock) issued by such Person to a
Holder on account of the Securities that (i) has a Weighted Average Life and
maturity or mandatory redemption obligation, if any, longer than, or occurring
after the final maturity date of, all Designated Senior Indebtedness of such
Person outstanding
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on the date of issuance of such Junior Securities, (ii) by their terms or by law
are subordinated to Designated Senior Indebtedness of such Person outstanding on
the date of issuance of such Junior Securities at least to the same extent as
the Securities and (iii) are not secured by any assets or property of the
Company or any of its Subsidiaries. As used herein, "Designated Senior
Indebtedness of such Person outstanding on the date of issuance of such Junior
Securities" shall include securities issued in connection with a reorganization
pursuant to the bankruptcy laws of any jurisdiction to Persons which held
"Designated Senior Indebtedness" in such reorganization proceeding.
"Legal Defeasance" shall have the meaning specified in Section 8.02.
"Legal Holiday" shall have the meaning specified in Section 13.07.
"Lien" means any mortgage, lien, pledge, charge, security interest, or
other encumbrance of any kind, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement and any lease deemed to constitute a security interest and
any option or other agreement to give any security interest).
"Maturity Date" means, when used with respect to any Security, the date
specified on such Security as the fixed date on which the final installment of
principal of such Security is due and payable (in the absence of any
acceleration thereof pursuant to the provisions of the Indenture regarding
acceleration of Indebtedness or any Change of Control Offer or Asset Sale
Offer).
"Merger" means the merger of the Company with and into Palmer pursuant
to the Merger Agreement.
"Merger Agreement" means the agreement and plan of merger dated as of
May 23, 1997, among PCC, the Company and Palmer.
"Merger Date" means the time and date of the consummation of the
Merger.
"MSA" shall have the meaning specified in the definition of "Pops."
"Minimum Accumulation Date" shall have the meaning specified in
Section 4.15.
"Net Offering Proceeds" shall have the meaning specified in Section
4.20.
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"Net Cash Proceeds" means the aggregate amount of cash and Cash
Equivalents received by the Company and its Restricted Subsidiaries in respect
of an Asset Sale (including upon the conversion to cash and Cash Equivalents of
(A) any note or installment receivable at any time, or (B) any other property as
and when any cash and Cash Equivalents are received in respect of any property
received in an Asset Sale but only to the extent such cash and Cash Equivalents
are received within one year after such Asset Sale), less the sum of (i) all
reasonable out-of-pocket fees, commissions and other expenses incurred in
connection with such Asset Sale, including the amount (estimated in good faith
by the Board of Directors of the Company) of income, franchise, sales and other
applicable taxes required to be paid by the Company or any Restricted Subsidiary
of the Company in connection with such Asset Sale and (ii) the aggregate amount
of cash so received which is used to retire any existing Senior Indebtedness of
the Company or Indebtedness of its Restricted Subsidiaries, as the case may be,
which is required to be repaid in connection with such Asset Sale or is secured
by a Lien on the property or assets of the Company or any of its Restricted
Subsidiaries, as the case may be.
"Net Pops" of any Person with respect to any cellular telephone 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 net proceeds (including the fair
market value of non-cash proceeds constituting equipment or other assets of a
type generally used in a Related Business an amount reasonably determined by the
Board of Directors of the Company for amounts under $5,000,000 and by a
financial advisor or appraiser of national reputation for equal or greater
amounts) received by a Person from the sale of Qualified Capital Stock (other
than to a Subsidiary of such Person) after payment of out-of-pocket expenses,
commissions and discounts incurred in connection therewith.
"Non-Recourse Restricted Subsidiary" shall have the meaning specified
in the definition of "Permitted Acquisition Indebtedness."
"Notice of Default" shall have the meaning specified in Section
6.01(c).
"Obligation" means any principal, premium, interest (including interest
accruing subsequent to a bankruptcy or other similar proceeding whether or not
such interest is an allowed claim enforceable against the Company in a
bankruptcy case under Federal bankruptcy law), penalties, fees,
indemnifications,
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reimbursements, damages and other liabilities payable pursuant to the terms of
the documentation governing any Indebtedness.
"Offering Memorandum" means that certain Offering Memorandum of the
Company, dated July 2, 1997 relating to the original issuance and sale of the
Initial Securities to the Initial Purchasers.
"Officer" means, with respect to the Company, the Chief Executive
Officer, the President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of the Company.
"Officers' Certificate" means, with respect to the Company or the
Parent, a certificate signed by two Officers or by an Officer and an Assistant
Secretary of the Company or the Parent, respectively, and otherwise complying
with the requirements of Sections 13.04 and 13.05.
"Operating Cash Flow" of any Person means (a) with respect to any
period, the Consolidated Net Income of such Person for such period, plus (b) the
sum, without duplication (and only to the extent such amounts are deducted from
net revenues in determining such Consolidated Net Income), of (i) the provisions
for income taxes for such period for such Person and its consolidated
Subsidiaries, (ii) depreciation, amortization and other non-cash charges of such
Person and its consolidated Subsidiaries and (iii) Consolidated Interest Expense
of such Person for such period, determined, in each case, on a consolidated
basis for such Person and its consolidated Subsidiaries in accordance with GAAP,
less (c) the amount of all cash payments made during such period by such Person
and its Subsidiaries to the extent such payments relate to non-cash charges that
were added back in determining Operating Cash Flow for such period or for any
prior period. When the foregoing definition is used in connection with the
Company and its Restricted Subsidiaries, references to a Person and its
Subsidiaries in the foregoing definition shall be deemed to refer to the Company
and its Restricted Subsidiaries.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
13.04 and 13.05.
"Palmer" means Palmer Wireless, Inc., a Delaware corporation.
"Parent" shall mean PCC or any directly or indirectly wholly owned
subsidiary of PCC that directly or indirectly wholly owns the Company until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
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"Paying Agent" shall have the meaning specified in Section 2.03.
"Payment Blockage Period" shall have the meaning specified in Section
12.02.
"Payment Default" shall have the meaning specified in Section 12.02.
"Payment Notice" shall have the meaning specified in Section 12.02.
"PCC" means Price Communications Corporation, a New York corporation.
"PCC Equity Contribution" means the $128.3 million equity contribution
from PCC or a Subsidiary of PCC which is a Parent of the Company in the form of
cash or common stock of Palmer to the Company in accordance with the terms
thereof described in the Offering Memorandum.
"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 Related Business; provided that, in
the case of the Company or its Restricted Subsidiaries, as applicable, (x)(i)
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,
(ii) the Company's consolidated Senior 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 $120, (iii) the
Company's consolidated Indebtedness divided by the Net Pops of the Company and
its Restricted Subsidiaries does not exceed $160 as a result of the acquisition
and such Incurrence and (iv) 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, or (y)(i) under the terms of such Indebtedness and pursuant to
applicable law, no recourse could be had for the payment of principal, interest
or premium with respect to such Indebtedness or for any claim based thereon
against the Company or any Person that constituted a Restricted Subsidiary
immediately prior to the consummation of such acquisition or any of their
property or assets, (ii) the obligor of such Indebtedness shall have,
immediately after giving effect to such acquisition and such Incurrence on a pro
forma basis, a ratio of Annualized Operating Cash Flow as of the date of the
acquisition to the product of Consolidated Interest Expense for the Reference
Period multiplied by four (but
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excluding from Consolidated Interest Expense all amounts that are not required
to be paid in cash on a current basis) of at least 1 to 1 and (iii) immediately
subsequent to the Incurrence of such Indebtedness, the obligor thereof shall be
a Restricted Subsidiary and shall have been designated by the Company (as
evidenced by an Officers' Certificate delivered promptly to the Trustee) to be a
"Non-Recourse Restricted Subsidiary."
"Permitted Investment" means (i) Investments in Cash Equivalents; (ii)
Investments in the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary); (iii) Investments in a Person substantially all of whose
assets are of a type generally used in a Related Business (an "Acquired Person")
if, as a result of such Investments, (A) the Acquired Person immediately
thereupon becomes a Restricted Subsidiary (other than a Non-Recourse Restricted
Subsidiary) or (B) the Acquired Person immediately thereupon either (1) is
merged or consolidated with or into the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary) and the surviving
Person is the Company or a Restricted Subsidiary (other than a Non-Recourse
Restricted Subsidiary) or (2) transfers or conveys all or substantially all of
its assets to, or is liquidated into, the Company or any of its Restricted
Subsidiaries (other than a Non-Recourse Restricted Subsidiary); (iv) Investments
in accounts and notes receivable acquired in the ordinary course of business;
(v) any securities received in connection with an Asset Sale (other than those
of a Non-Recourse Restricted Subsidiary) and any Investment with the Net Cash
Proceeds from any Asset Sale in Capital Stock of a Person, all or substantially
all of whose assets are of a type used in a Related Business, that complies with
Section 4.15; (vi) any guarantee issued by a Restricted Subsidiary in respect of
Senior Indebtedness Incurred in compliance with the Indenture; (vii) advances
and prepayments for asset purchases in the ordinary course of business in a
Related Business of the Company or a Restricted Subsidiary; (viii) Investments
in Non-Recourse Restricted Subsidiaries with the proceeds of contributions
irrevocably and unconditionally received without restriction by the Company from
Parent; and (ix) customary loans or advances made in the ordinary course of
business to officers, directors or employees of the Company or any of its
Restricted Subsidiaries for travel, entertainment, and moving and other
relocation expenses.
"Permitted Lien" means (a) Liens existing on the Issue Date; (b) Liens
imposed by governmental authorities for taxes, assessments or other charges not
yet subject to penalty or which are being contested in good faith and by
appropriate proceedings, if adequate reserves with respect thereto are
maintained on the books of the Company in accordance with GAAP; (c) statutory
liens of carriers, warehousemen, mechanics, materialmen, landlords, repairmen or
other like Liens arising by operation of law in the ordinary course of business,
provided
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that (i) the underlying obligations are not overdue for a period of more than 30
days, and (ii) such Liens are being contested in good faith and by appropriate
proceedings and adequate reserves with respect thereto are maintained on the
books of the Company in accordance with GAAP; (d) Liens securing the performance
of bids, trade contracts (other than borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a like nature incurred in the ordinary course of business; (e) easements,
rights-of-way, zoning, similar restrictions and other similar encumbrances or
title defects which, singly or in the aggregate, do not in any case materially
detract from the value of the property, subject thereto (as such property is
used by the Company or any of its Restricted Subsidiaries) or interfere with the
ordinary conduct of the business of the Company or any of its Restricted
Subsidiaries; (f) Liens arising by operation of law in connection with
judgments, only to the extent, for an amount and for a period not resulting in
an Event of Default with respect thereto; (g) pledges or deposits made in the
ordinary course of business in connection with worker's compensation,
unemployment insurance and other types of social security legislation; (h) Liens
in favor of the Trustee arising under the Indenture; (i) Liens securing
Permitted Acquisition Indebtedness, which either (A) were not incurred or issued
in anticipation of such acquisition or (B) secure Permitted Acquisition
Indebtedness meeting the requirements set forth in clause (y) of the definition
thereof; (j) Liens securing Senior Indebtedness that was incurred in accordance
with Section 4.12; (k) Liens securing Indebtedness of a Person existing at the
time such Person becomes a Restricted Subsidiary or is merged with or into the
Company or a Restricted Subsidiary, provided that such Liens were in existence
prior to the date of such acquisition, merger or consolidation, were not
incurred in anticipation thereof, and do not extend to any other assets; (l)
Liens arising from Purchase Money Indebtedness permitted under the Indenture;
(m) Liens securing Refinancing Indebtedness Incurred to refinance any
Indebtedness that was previously so secured in a manner no more adverse to the
Holders of the Securities than the terms of the Liens securing such refinanced
Indebtedness; and (n) Liens in favor of the Company or a Wholly Owned Restricted
Subsidiary.
"Person" means any corporation, individual, joint stock company, joint
venture, partnership, unincorporated association, governmental regulatory
entity, country, state or political subdivision thereof, trust, municipality 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
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in the Rand McNally Commercial Atlas or the Rand McNally Commercial Atlas is no
longer published, such other nationally recognized source of such information.
"Preferred Stock" means Capital Stock, other than common stock of an
issuer having no preferences or privileges as to the payment of dividends or the
distribution of the issuer's assets over any other class of such issuer's
Capital Stock.
"Price Family" means Robert Price, an individual, and members of his
family who, as of the Issue Date, beneficially owned Capital Stock of Parent.
"principal" of any Indebtedness means the principal of such
Indebtedness plus, without duplication, applicable premium, if any, on such
Indebtedness.
"property" means any right or interest in or to property or assets of
any kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.
"Purchase Agreement" means that certain Purchase Agreement dated July
3, 1997 by and among the Company, PCC and the Initial Purchasers, as such
agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"Purchase Money Indebtedness" means Indebtedness of the Company or its
Restricted Subsidiaries Incurred in connection with the purchase of property or
assets for the business of the Company or its Restricted Subsidiaries, provided
that the recourse of the lenders with respect to such Indebtedness is limited
solely to the property or assets so purchased without further recourse to either
the Company or any of its Restricted Subsidiaries.
"Qualified Capital Stock" means any Capital Stock of a Person that is
not Disqualified Capital Stock.
"Record Date" means a Record Date specified in the Securities whether
or not such Record Date is a Business Day.
"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption (including the Special
Redemption Date) pursuant to Article 3 of this Indenture and Paragraph 5 in the
form of Security.
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"Redemption Price," when used with respect to any Security to be
redeemed, means the redemption price for such redemption pursuant to Article 3
of this Indenture and Paragraph 5 in the form of Security, which shall include,
without duplication, in each case, any accrued and unpaid interest to the
Redemption Date.
"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 Securities or the
Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital
Stock (a) issued in exchange for, or the proceeds from the issuance and sale of
which are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference (or, if such Indebtedness
or Disqualified Capital Stock does not require cash payments prior to maturity
or is otherwise issued at a discount, the original issue price of such
Indebtedness or Disqualified Capital Stock), not to exceed the sum of (x) the
lesser of (i) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, of the Indebtedness or Disqualified Capital Stock
so Refinanced and (ii) if such Indebtedness being Refinanced was issued with an
original issue discount, the accreted value thereof (as determined in accordance
with GAAP) at the time of such Refinancing, (y) the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
such Indebtedness and (z) all other customary fees and expenses of the Company
or such Restricted Subsidiary reasonably incurred in connection with such
refinancing; provided that (A) Refinancing Indebtedness issued by any Restricted
Subsidiary of the Company shall only be used to Refinance outstanding
Indebtedness or Disqualified Capital Stock of such Restricted Subsidiary, (B)
Refinancing Indebtedness shall (x) not have a Weighted Average Life shorter than
the Indebtedness or Disqualified Capital Stock to be so refinanced at the time
of such Refinancing and (y) in all respects, be no less subordinated or junior,
if applicable, to the rights of Holders of the Securities than was the
Indebtedness or Disqualified Capital Stock to be refinanced and (C) such
Refinancing Indebtedness shall have no installments of principal (or redemption
payment) scheduled to come due earlier than the scheduled maturity of any
installment of principal (or redemption
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payment) of the Indebtedness or Disqualified Capital Stock to be so refinanced
which was scheduled to come due prior to the Stated Maturity of the Securities.
"Registrar" shall have the meaning specified in Section 2.03.
"Registration Rights Agreement" means the Registration Rights Agreement
dated July 10, 1997 by and among the Initial Purchasers and the Company, as such
agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof.
"Related Business" means any business directly related to the
ownership, development, operation, and acquisition of wireless cellular
communications systems.
"Related Person" means, with respect to any Person, (i) any Affiliate
of such Person or any spouse, immediate family member, or other relative who has
the same principal residence of any Affiliate of such Person and (ii) any trust
in which any Person described in clause (i) above has a beneficial interest.
"Restricted Partnership" shall have the meaning specified in Section
4.19.
"Restricted Payment" means, with respect to any Person, (i) any
dividend or other distribution on shares of Capital Stock of such Person, its
Parent, or any Subsidiary of such Person by such Person or any Subsidiary of
such Person, (ii) any payment on account of the purchase, redemption or other
acquisition or retirement for value, or any payment in respect of any amendment
(in anticipation of or in connection with any such retirement, acquisition or
defeasance) in whole or in part, of any shares of Capital Stock of such Person,
its Parent or any Subsidiary of such Person held by Persons other than such
Person or any of its Restricted Subsidiaries, (iii) any defeasance, redemption,
repurchase or other acquisition or retirement for value, or any payment in
respect of any amendment (in anticipation of or in connection with any such
retirement, acquisition or defeasance) in whole or in part, of any Indebtedness
of the Company (other than the scheduled repayment thereof at maturity and any
mandatory redemption or mandatory repurchase thereof pursuant to the terms
thereof) by such Person or a Subsidiary of such Person that is subordinate in
right of payment to, or ranks pari passu (other than the Securities) with, the
Securities (other than in exchange for Refinancing Indebtedness permitted to be
Incurred under the Indenture and except for any such defeasance, redemption,
repurchase, other acquisition or payment in respect of Indebtedness held by any
Restricted Subsidiary) and (iv) any Investment (other than a Permitted
Investment); provided, however, that the term
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"Restricted Payment" does not include (i) any dividend, distribution or other
payment on shares of Capital Stock of the Company or any Restricted Subsidiary
solely in shares of Qualified Capital Stock, (ii) any dividend, distribution or
other payment to the Company, or any dividend to any of its Restricted
Subsidiaries, by any of its Subsidiaries, (iii) the purchase, redemption or
other acquisition or retirement for value of shares of Capital Stock of any
Restricted Subsidiary (other than Non-Recourse Restricted Subsidiaries) held by
Persons other than the Company or any of its Restricted Subsidiaries, (iv)
payments to satisfy obligations to pay statutory appraisal rights resulting from
the Merger and any settlement in respect thereof to security holders of Palmer,
(v) fees and expenses incurred in connection with the Merger and (vi) cash
payments in respect of purchases of options and rights for shares of Palmer
common stock issued pursuant to Palmer's 1995 Stock Option Plan, 1995 Directors'
Stock Option Plan, 1995 Employee Stock Purchase Plan and 1995 Non-Employee
Director Stock Purchase Plan.
"Restricted Security" means a Security, unless or until it has been (i)
disposed of in a transaction effectively registered under the Securities Act or
(ii) distributed to the public pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act; provided that in no case shall an
Exchange Security issued in accordance with this Indenture and the terms and
provisions of the Registration Rights Agreement be a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company which at
the time of determination is not an Unrestricted Subsidiary. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary only if, immediately before and after giving effect to
such designation, there would exist no Default or Event of Default and the
Company could incur at least $1.00 of Indebtedness pursuant to the Annualized
Operating Cash Flow Ratio test of Section 4.12, on a pro forma basis, taking
into account such designation.
"RSA" shall have the meaning specified in the definition of "Pops."
----
"SEC" means the Securities and Exchange Commission.
"Securities" means, collectively, the Initial Securities and, when and
if issued as provided in the Registration Rights Agreement, the Exchange
Securities.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
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"Securities Custodian" means the Trustee, as custodian for the
Depositary with respect to the Securities in global form, or any successor
entity thereto.
"Senior Indebtedness" means all Indebtedness of the Company (including,
with respect to the Credit Agreement, all Obligations) including inter est
thereon, whether outstanding on the Issue Date or thereafter issued, 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 Securities.
Notwithstanding anything to the contrary in the foregoing, Senior Indebtedness
shall not include (a) Indebtedness that is expressly subordinated or junior in
right of payment to any Indebtedness of the Company, (b) Indebtedness
represented by Disqualified Capital Stock, (c) any liability for federal, state,
local or other taxes owed or owing by the Company, (d) Indebtedness of the
Company to any Subsidiary of the Company or any Affiliate of the Company (other
than Purchase Money Indebtedness constituting at least 75% but not more than
100% of the cost of wireless cellular communication system equipment and other
related fixed assets, Incurred in compliance with Section 4.12), (e) trade
payables and (f) Indebtedness to the extent incurred in violation of the
Indenture.
"Significant Restricted Subsidiary" means one or more Restricted
Subsidiaries having an aggregate net book value of assets in excess of 5% of the
net book value of the assets of the Company and its Restricted Subsidiaries on a
consolidated basis.
"Special Record Date" for payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.12.
"Special Redemption" shall have the meaning specified in Section 3.01.
"Special Redemption Amount" shall have the meaning specified in
Section 4.20.
"Special Redemption Date" shall have the meaning specified in Section
3.01.
"Special Rights" shall have the meaning specified in Section 4.19.
"Stated Maturity" means the date fixed for the payment of any principal
or premium pursuant to the Indenture and the Securities, including the Maturity
Date, upon redemption, acceleration, Asset Sale Offer, Change of Control Offer
or otherwise.
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"Subsidiary" with respect to any Person, means (i) a corporation at
least fifty percent of whose Capital Stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, or (ii) a partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner of such
partnership, or (iii) any Person in which such Person, one or more Subsidiaries
of such Person, or such Person and one or more Subsidiaries of such Person,
directly or indirectly, at the date of determination thereof has (x) at least a
fifty percent ownership interest or (y) the power to elect or direct the
election of the directors or other governing body of such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code (S)(S) 77aaa-
77bbbb) as in effect on the date of the execution of this Indenture.
"Transfer Restricted Securities" means Securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"Treasury Bills" means (a) book-entry United States Treasury bills (i)
held in a Participant's Securities Account (as defined in 31 C.F.R. (S)357.2)
with the Federal Reserve Bank of New York pursuant to the Treasury/Reserve
Automated Debt Entry System and (ii) maturing no later than the Business Day
preceding December 31, 1997 and (b) securities entitlements in respect of United
States Treasury bills referred to in (a) above.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.
"Trust Officer" means any officer within the corporate trust division
(or any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Company
that, at the time of determination, shall be an Unrestricted Subsidiary (as
designated by the Board of Directors of the Company, as provided below). The
Board of Directors of the Company may designate any Subsidiary of the Company
(including any newly acquired or newly formed Subsidiary at or prior to the time
it is so formed or acquired) to be an Unrestricted Subsidiary if (a) no
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Default or Event of Default is existing or will occur as a consequence thereof,
(b) such Subsidiary does not own any Capital Stock of, or own or hold any Lien
on any property or asset of, the Company or any Restricted Subsidiary that is
not a Subsidiary of the Subsidiary to be so designated and (c) such Subsidiary
and each of its Subsidiaries has not at the time of designation, and does not
thereafter, create, incur, issue, assume, guarantee, or otherwise become
directly or indirectly liable with respect to any Indebtedness pursuant to which
the lender has recourse to any property or assets of the Company or any of its
Restricted Subsidiaries (except that such Subsidiary and its Subsidiaries may
guarantee the Securities); provided that either (A) the Subsidiary to be so
designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, that such designation would be permitted pursuant to
Section 4.04. Each such designation shall be evidenced by filing with the
Trustee a certified copy of the resolution giving effect to such designation and
an Officers' Certificate certifying that such designation complied with the
foregoing conditions.
"U.S. Government Obligations" means direct non-callable obligations of,
or noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"U.S. Legal Tender Equivalents" means securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof with a maturity of 90 days or less (provided that the
full faith and credit of the United States of America is pledged in support
thereof).
"Voting Stock" means Capital Stock of the Company having generally the
right to vote in the election of a majority of the directors of the Company or
having generally the right to vote with respect to the organizational matters of
the Company.
"Weighted Average Life" means, as of the date of determination, with
respect to any debt instrument, the quotient obtained by dividing (i) the sum of
the products of the numbers of years from the date of determination to the dates
of each successive scheduled principal payment of such debt instrument
multiplied by the amount of each such respective principal payment by (ii) the
sum of all such principal payments.
"Wholly Owned" means, with respect to a Subsidiary of the Company, (i)
a Subsidiary that is a corporation, of which not less than 99% of the Capital
Stock (except for directors' qualifying shares or certain minority interests
owned by other Persons solely due to local law requirements that there be more
than one
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stockholder, but which interest is not in excess of what is required for such
purpose) is owned directly by such Person or through one or more other Wholly
Owned Subsidiaries of such Person, or (ii) any entity other than a corporation
in which such Person, directly or indirectly, owns not less than 99% of the
Capital Stock of such entity.
SECTION 1.02. Incorporation by Reference of TIA. Whenever this
Indenture refers to a provision of the TIA, such provision is incorporated by
reference in and made a part of this Indenture. The following TIA terms used in
this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture securityholder" means a Holder or a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and any
other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
words in the plural include the singular;
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(5) provisions apply to successive events and
transactions;
(6) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision;
(7) references to Sections or Articles means
reference to such Section or Article in this Indenture,
unless stated otherwise; and
(8) whenever in this Indenture or the Securities it
is provided that the principal amount with respect to a
Security shall be paid, such provision shall be deemed to
require (whether or not so expressly stated) the
simultaneous payment of any accrued and unpaid interest to
the date of payment on such Security payable pursuant to
paragraph 1 of the Securities.
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating. The Securities and the Trustee's
certificate of authentication in respect thereof shall be substantially in the
form of Exhibit A hereto, which Exhibit is part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule or usage. The Company shall approve the form of the Securities and
any notation, legend or endorsement on them. Any such notations, legends or
endorsements not contained in the form of Security attached as Exhibit A hereto
shall be delivered in writing to the Trustee. Each Security shall be dated the
date of its authentication.
The terms and provisions contained in the forms of Securities shall
constitute, and are hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their execution and delivery
of this Indenture, expressly agree to such terms and provisions and to be bound
thereby.
SECTION 2.02. Execution and Authentication. Each Security shall be
signed by at least one Officer for the Company by manual or facsimile signature.
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The Company's seal may be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security was an Officer at the
time of such execution but no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless and the
Company shall nevertheless be bound by the terms of the Securities and this
Indenture.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security but
such signature shall be conclusive evidence that the Security has been
authenticated pursuant to the terms of this Indenture.
The Trustee shall authenticate Initial Securities for original issue in
the aggregate principal amount of up to $175,000,000 and shall authenticate
Exchange Securities for original issue in the aggregate principal amount of up
to $175,000,000, in each case upon a written order of the Company in the form of
an Officers' Certificate; provided that such Exchange Securities shall be
issuable only upon the valid surrender for cancellation of Initial Securities of
a like aggregate principal amount in accordance with the Registration Rights
Agreement. The Officers' Certificate shall specify the amount of Securities to
be authenticated and the date on which the Securities are to be authenticated.
The aggregate principal amount of Securities outstanding at any time may not
exceed $175,000,000, except as provided in Section 2.07. Upon the written order
of the Company in the form of an Officers' Certificate, the Trustee shall
authenticate Securities in substitution of Securities originally issued to
reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company, any Affiliate of the Company,
or any of their respective Subsidiaries.
Securities shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency in the Borough of Manhattan, The City of New York, where
Securities may be presented for registration of transfer or for exchange
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("Registrar") and an office or agency where Securities may be presented for
payment ("Paying Agent") and where notices and demands to or upon the Company in
respect of the Securities may be served. The Company may act as Registrar or
Paying Agent, except that, for the purposes of Articles 3, 8, 10, 11, Section
4.15 and as otherwise specified in the Indenture, neither the Company nor any
Affiliate of the Company shall act as Paying Agent. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-Registrars and one or more additional Paying Agents. The
term "Paying Agent" includes any additional Paying Agent. The Company hereby
initially appoints the Trustee as Registrar and Paying Agent, and the Trustee
hereby agrees so to act.
The Company shall enter into an appropriate written agency agreement
with any Agent not a party to this Indenture, which agreement shall implement
the provisions of this Indenture that relate to such Agent. The Company shall
promptly notify the Trustee in writing of the name and address of any such
Agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee
shall act as such.
The Company initially appoints The Depository Trust Company ("DTC") to
act as Depository with respect to the Global Securities.
The Company initially appoints the Trustee to act as Securities
Custodian with respect to the Global Securities.
SECTION 2.04. Paying Agent to Hold Assets in Trust. The Company shall
require each Paying Agent other than the Trustee to agree in writing that each
Paying Agent shall hold in trust for the benefit of the Holders or the Trustee
all assets held by the Paying Agent for the payment of principal of, premium, if
any, or interest on, the Securities (whether such assets have been distributed
to it by the Company or any other obligor on the Securities), and shall notify
the Trustee in writing of any Default in making any such payment. If either of
the Company or a Subsidiary of the Company acts as Paying Agent, it shall
segregate such assets and hold them as a separate trust fund for the benefit of
the Holders or the Trustee. The Company at any time may require a Paying Agent
to distribute all assets held by it to the Trustee and account for any assets
disbursed and the Trustee may at any time during the continuance of any payment
Default, upon written request to a Paying Agent, require such Paying Agent to
distribute all assets held by it to the Trustee and to account for any assets
distributed. Upon distribution to the Trustee of all assets that shall have been
delivered by the Company to the Paying Agent, the Paying Agent (if other than
the Company) shall have no further liability for such assets.
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SECTION 2.05. Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Holders. If the Trustee is not the Registrar, the
Company shall furnish to the Trustee on or before the third Business Day
preceding each Interest Payment Date and at such other times as the Trustee may
request in writing a list in such form and as of such date as the Trustee
reasonably may require of the names and addresses of Holders.
SECTION 2.06. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When Definitive
Securities are presented to the Registrar or a co-Registrar with a request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-Registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Registrar or co-Registrar, duly executed by the Holder thereof
or his attorney duly authorized in writing; and
(ii) in the case of Transfer Restricted Securities that are
Definitive Securities, shall be accompanied by the following additional
information and documents, as applicable:
(A) if such Transfer Restricted Securities are being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, a certification from such
Holder to that effect (in substantially the form set forth on the
reverse of the Security); or
(B) if such Transfer Restricted Security is being
transferred to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in accordance with Rule 144A
under the Securities Act, a certification to that effect (in
substantially the form set forth on the reverse of the Security);
or
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(C) if such Transfer Restricted Security is being
transferred pursuant to any exemption from registration in
accordance with Regulation S under the Securities Act, a
certification to that effect (in substantially the form set
forth on the reverse of the Security); or
(D) if such Transfer Restricted Security is being
transferred to an institutional investor that is an
"accredited investor" within the meaning of Rule
501(a)(1),(2),(3) or (7) under the Securities Act which
delivers a certificate in the form of Exhibit B to the
Indenture to the Trustee; or
(E) if such Transfer Restricted Security is being
transferred in reliance on another exemption from the
registration requirements of the Securities Act, a
certification to that effect (in substantially the form set
forth on the reverse of the Security) accompanied by a
customary opinion of counsel substantially to the effect that
such transfer may be effected in reliance upon such exemption.
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Trustee of
a Definitive Security, duly endorsed or accompanied by appropriate instruments
of transfer, in form satisfactory to the Trustee, together with:
(i) if such Definitive Security is a Transfer Restricted
Security, certification, substantially in the form set forth on
the reverse of the Security, that such Definitive Security is
being transferred to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with Rule
144A under the Securities Act; and
(ii) whether or not such Definitive Security is a Transfer
Restricted Security, written instructions directing the Trustee to
make, or to direct the Securities Custodian to make, an
endorsement on the Global Security to reflect an increase in the
aggregate principal amount of the Securities represented by the
Global Security,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
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procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Global Security to
be increased accordingly. If no Global Securities are then outstanding, the
Company shall issue and the Trustee shall authenticate a new Global Security in
the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository, in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor.
(d) Transfer of a Beneficial Interest in a Global Security for a
Definitive Security.
(i) Upon receipt by the Trustee of written instructions or such other
form of instructions as is customary for the Depository from the Depository or
its nominee on behalf of any Person having a beneficial interest in a Global
Security and upon receipt by the Trustee of a written order or such other form
of instructions as is customary for the Depository or the Person designated by
the Depository as having such a beneficial interest in a Transfer Restricted
Security only, the following additional information and documents (all of which
may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depository as being the beneficial owner,
a certification from such person to that effect (in substantially
the form set forth on the reverse of the Security); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities
Act, a certification to that effect from the transferor (in
substantially the form set forth on the reverse of the Security);
or
(C) if such beneficial interest is being transferred
pursuant to any exemption from registration in accordance with
Regulation S under the Securities Act, a certification to that
effect (in substantially the form set forth on the reverse of the
Security); or
(D) if such Transfer Restricted Security is being
transferred to an institutional investor that is an "accredited
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investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) under the Securities Act which delivers a certificate in
the form of Exhibit B to the Indenture to the Trustee; or
(E) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification to that
effect from the transferee or transferor (in substantially the
form set forth on the reverse of the Security) accompanied by
a customary opinion of counsel substantially to the effect
that such transfer may be effected in reliance upon such
exemption,
then the Trustee or the Securities Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures existing
between the Depository and the Securities Custodian, the aggregate principal
amount of the Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the form of
an Officers' Certificate, the Trustee will authenticate and deliver to the
transferee a Definitive Security.
(ii) Definitive Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.06(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect
participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Definitive Securities to the persons in whose names
such Securities are so registered.
(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.06), a Global Security
may not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(f) Authentication of Definitive Securities in Absence of Depository.
If at any time:
(i) the Depository for the Securities notifies the Company
that the Depository is unwilling or unable to continue as Depository
for the Global Securities and a successor Depository for the Global
Securities is
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not appointed by the Company within 90 days after delivery of such
notice; or
(ii) the Company, in its sole discretion, notifies the Trustee
in writing that they elect to cause the issuance of Definitive
Securities under this Indenture,
then the Company will execute, and the Trustee, upon receipt of an Officers'
Certificate requesting the authentication and delivery of Definitive Securities,
will authenticate and deliver Definitive Securities, in an aggregate principal
amount equal to the principal amount of the Global Securities, in exchange for
such Global Securities.
(g) Legends
(i) Except as permitted by the following paragraph (ii), each
Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor
or substitution thereof) shall bear a 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 UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING 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"), OR (B) IT IS NOT A U.S. PERSON,
IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN THE
TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO
ACCOUNT THE PROVISIONS OF RULE 144(d) UNDER THE SECURITIES
ACT, IF APPLICABLE) UNDER THE
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SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF
THIS NOTE, RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A
PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB
PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB
IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY
RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE, AND BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), (E)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR (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) AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE
STATE SECURITIES LAWS, 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,"
"UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN
TO THEM BY RULE 902 OF REGULATIONS UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER A TRANSFER OF THIS NOTE IN
VIOLATION OF THE FOREGOING RESTRICTIONS.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Act or an effective
registration statement under the Act:
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(A) in the case of any Transfer Restricted Security that
is a Definitive Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Definitive Security that does not bear the legend set
forth above and rescind any restriction on the transfer of
such Transfer Restricted Security in the case of a Rule 144
Transfer, after delivery of a customary opinion of counsel;
and
(B) any such Transfer Restricted Security represented by
a Global Security shall not be subject to the provisions set
forth in (i) above (such sales or transfers being subject only
to the provisions of Section 2.06(c) hereof); provided,
however, that with respect to any request for an exchange of a
Transfer Restricted Security that is represented by a Global
Security for a Definitive Security that does not bear a
legend, which request is made in reliance upon Rule 144, the
Holder thereof shall certify in writing (to be accompanied by
a customary opinion of counsel) to the Registrar that such
request is being made pursuant to Rule 144 (such certification
to be substantially in the form set forth on the reverse of
the Security).
(h) Cancellation and/or Adjustment of Global Security. At such time as
all beneficial interests in a Global Security have either been exchanged for
Definitive Securities, redeemed, repurchased or cancelled, such Global Security
shall be returned to or retained and cancelled by the Trustee. At any time prior
to such cancellation, if any beneficial interest in a Global Security is
exchanged for Definitive Securities, redeemed, repurchased or cancelled, the
principal amount of Securities represented by such Global Security shall be
reduced and an endorsement shall be made on such Global Security, by the Trustee
or the Securities Custodian, at the direction of the Trustee, to reflect such
reduction.
(i) Obligations with respect to Transfers and Exchanges of Definitive
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-Registrar's
request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental
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charge payable in connection therewith (other than any such transfer
taxes, assessments, or similar governmental charge payable upon
exchanges or transfers pursuant to Section 2.02 (fourth paragraph),
2.10, 3.07, 4.15(8), 9.05, or 11.01 (final paragraph)).
(iii) The Registrar or co-Registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article 3,
except the unredeemed portion of any Definitive Security being redeemed
in part, or (b) any Security for a period beginning 15 Business Days
before the mailing of a notice of an offer to repurchase pursuant to
Article 11 or Section 4.15 hereof or the mailing of a notice of
redemption of Securities pursuant to Article 3 hereof and ending at the
close of business on the day of such mailing.
SECTION 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Trustee or if the Holder of a Security claims and submits an
affidavit or other evidence, satisfactory to the Trustee, to the Trustee to the
effect that the Security has been lost, destroyed or wrongfully taken, the
Company shall issue and the Trustee shall authenticate a replacement Security if
the Trustee's requirements are met. If required by the Trustee or the Company,
such Holder must provide an indemnity bond or other indemnity, sufficient in the
judgment of both the Company and the Trustee, to protect the Company, the
Trustee or any Agent from any loss which any of them may suffer if a Security is
replaced. The Company may charge such Holder for its reasonable, out-of-pocket
expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08. Outstanding Securities. Securities outstanding at any
time are all the Securities that have been authenticated by the Trustee
(including any Security represented by a Global Security) except those cancelled
by it, those delivered to it for cancellation, those reductions in the interest
in a Global Security effected by the Trustee hereunder and those described in
this Section 2.08 as not outstanding. A Security does not cease to be
outstanding because the Company or an Affiliate of the Company holds the
Security, except as provided in Section 2.09.
If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a
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bona fide purchaser. A mutilated Security ceases to be outstanding upon
surrender of such Security and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent (other
than the Company or an Affiliate of a Company) holds cash sufficient to pay all
of the principal and interest due on the Securities payable on that date and
payment of the Securities called for redemption or payable on such Maturity Date
is not otherwise prohibited pursuant to this Indenture, then on and after that
date such Securities cease to be outstanding and interest on them ceases to
accrue.
SECTION 2.09. Treasury Securities. In determining whether the Holders
of the required principal amount of Securities have concurred in any direction,
amendment, supplement, waiver or consent, Securities owned by the Company or
Affiliates of the Company shall be disregarded, except that, for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, amendment, supplement, waiver or consent, only Securities that the
Trustee knows are so owned shall be disregarded.
SECTION 2.10. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company reasonably and in
good faith considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities in exchange for temporary Securities. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as permanent Securities authenticated and delivered
hereunder.
SECTION 2.11. Cancellation. The Company at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for transfer,
exchange or payment. The Trustee, or at the direction of the Trustee, the
Registrar or the Paying Agent (other than the Company or an Affiliate of the
Company), and no one else, shall cancel and, at the written direction of the
Company, shall dispose of all Securities surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Company may not issue new
Securities to replace Securities that have been paid or delivered to the Trustee
for cancellation. No Securities shall be authenticated in lieu of or in exchange
for any Securities cancelled as provided in this Section 2.11, except as
expressly permitted in the form of Securities and as permitted by this
Indenture.
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SECTION 2.12. Defaulted Interest. Interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the person in whose name that Security (or one or more
predecessor Securities) is registered at the close of business on Record Date
for such interest.
Any interest on any Security which is payable, but is not punctually
paid or duly provided for, on any Interest Payment Date plus, to the extent
lawful, any interest payable on the defaulted interest (herein called "Defaulted
Interest") shall forthwith cease to be payable to the registered holder on the
relevant Record Date, and such Defaulted Interest may be paid by the Company, at
its election in each case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any
Defaulted Interest to the persons in whose names the
Securities (or their respective predecessor
Securities) are registered at the close of business
on a Special Record Date for the payment of such
Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted
Interest proposed to be paid on each Security and the
date of the proposed payment, and at the same time
the Company shall deposit with the Trustee an amount
of cash equal to the aggregate amount proposed to be
paid in respect of such Defaulted Interest or shall
make arrangements satisfactory to the Trustee for
such deposit prior to the date of the proposed
payment, such cash when deposited to be held in trust
for the benefit of the persons entitled to such
Defaulted Interest as provided in this clause (1).
Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which
shall be not more than 15 days and not less than 10
days prior to the date of the proposed payment and
not less than 10 days after the receipt by the
Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such
Special Record Date and, in the name and at the
expense of the Company, shall cause notice of the
proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his
address as it appears in the Security register not
less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted
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Interest and the Special Record Date therefor having
been mailed as aforesaid, such Defaulted Interest
shall be paid to the persons in whose names the
Securities (or their respective predecessor
Securities) are registered on such Special Record
Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any
Defaulted Interest in any other lawful manner not
inconsistent with the requirements of any securities
exchange on which the Securities may be listed, and
upon such notice as may be required by such exchange,
if, after notice given by the Company to the Trustee
of the proposed payment pursuant to this clause, such
manner shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
ARTICLE 3
REDEMPTION
SECTION 3.01. Redemption.
(a) Right of Redemption. Redemption of Securities, as permitted by any
provision of this Indenture, shall be made in accordance with such provision and
this Article 3. The Company will not have the right to redeem any Securities
prior to July 15, 2002. On or after July 15, 2002, the Company will have the
right to redeem all or any part of the Securities at the Redemption Prices
specified in the form of Security attached as Exhibit A set forth therein under
the caption "Redemption," in each case, including accrued and unpaid interest,
if any, to the applicable Redemption Date (subject to the right of Holders of
record on the relevant regular Record Date to receive interest due on an
Interest Payment Date that is on or prior to the Redemption Date).
Notwithstanding the foregoing paragraph (a), prior to July 10, 2002, in
the event that the Company or Parent consummates one or more offerings of their
Qualified Capital Stock on or before the third anniversary of the date of the
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issuance of the Securities, the Company may at its option, use all or a portion
of the cash contributed to it from such offerings to redeem up to 35% of the
original aggregate principal amount of the Securities at a cash redemption price
equal to 111.75% of the principal amount of the Securities plus accrued and
unpaid interest thereon, if any, to the redemption date; provided that at least
65% of the original aggregate principal amount of the Securities remains
outstanding thereafter.
(b) Special Redemption. Notwithstanding paragraph (a) of this section,
if (i) the Merger is not consummated on or before December 31, 1997 or (ii) if
it appears, in the sole judgment of the Company evidenced by a Board Resolution,
that the Merger will not be consummated by December 31, 1997, the Company shall
redeem the Securities (the "Special Redemption") on, or at any time prior to,
December 31, 1997 at a redemption price of 101% of the principal amount of the
Securities plus accrued interest to the date of the Special Redemption (the
"Special Redemption Date").
SECTION 3.02. Notices to Trustee. If the Company elects or is required
to redeem Securities pursuant to Paragraph 5 of the Securities, it shall notify
the Trustee in writing of the Redemption Date and the principal amount of
Securities to be redeemed and whether it wants the Trustee to give notice of
redemption to the Holders.
If the Company elects to reduce the principal amount of Securities to
be redeemed pursuant to Paragraph 5 of the Securities by crediting against any
such redemption Securities it has not previously delivered to the Trustee for
cancellation, it shall so notify the Trustee of the amount of the reduction and
deliver such Securities with such notice, provided that no Initial Securities
received by the Company in exchange for Exchange Securities may be made the
basis for such credit.
The Company shall give each notice to the Trustee provided for in this
Section 3.02 with respect to any optional redemption pursuant to Section 3.01(a)
at least 45 days before the Redemption Date (unless a shorter notice shall be
satisfactory to the Trustee). Any such notice may be cancelled at any time prior
to notice of such redemption being mailed to any Holder and shall thereby be
void and of no effect.
SECTION 3.03. Selection of Securities to Be Redeemed.
If less than all of the Securities are to be redeemed pursuant to
Paragraph 5(a) thereof, the Trustee shall select the Securities to be redeemed
on a pro
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rata basis, by lot, or by such other method as the Trustee shall determine to be
fair and appropriate and in such manner as complies with any applicable
Depositary, legal and stock exchange requirements.
The Trustee shall make the selection from the Securities outstanding
and not previously called for redemption and shall promptly notify the Company
in writing of the Securities selected for redemption and, in the case of any
Security selected for partial redemption, the principal amount thereof to be
redeemed. Securities in denominations of $1,000 may be redeemed only in whole.
The Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Securities that have denominations larger
than $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.04. Notice of Redemption.
At least 30 days but not more than 60 days before a Redemption Date
other than the Special Redemption Date, the Company shall mail a notice of re-
demption by first class mail, postage prepaid, to the Trustee and each Holder
whose Securities are to be redeemed. In the event of the Special Redemption, the
Company shall mail by first class mail, postage prepaid, a notice of redemption
to the Trustee and each Holder at least 5 Business Days before the Special
Redemption Date. At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice for
redemption shall identify the Securities to be redeemed and shall state:
(a) the Redemption Date;
(b) the Redemption Price, including the amount of accrued and unpaid
interest, if any, to be paid upon such redemption;
(c) the name, address and telephone number of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the
Paying Agent at the address specified in such notice to collect the Redemption
Price;
(e) that, unless (i) with respect to a redemption pursuant to
Paragraph 5(a) of the Securities, the Company defaults in its obligation to
deposit cash with the Paying Agent in accordance with Section 3.06 hereof or
(ii) such redemption payment is prohibited pursuant to Article 12 hereof or
other laws, the interest on Securities (or portion thereof) called for
redemption ceases to accrue
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on and after the Redemption Date and the only remaining right of the Holders of
such Securities is to receive payment of the Redemption Price, as the case may
be, including any accrued and unpaid interest to the Redemption Date, upon
surrender to the Paying Agent of the Securities called for redemption and to be
redeemed;
(f) if any Security is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Security to be re deemed and that, after the Redemption Date, and upon surrender
of such Security, a new Security or Securities in aggregate principal amount
equal to the unredeemed portion thereof will be issued;
(g) if less than all the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be redeemed,
as well as the aggregate principal amount of such Securities to be redeemed and
the aggregate principal amount of Securities to be outstanding after such
partial redemption;
(h) the CUSIP number of the Securities to be redeemed; and
(i) that the notice is being sent pursuant to this Section 3.04 and
pursuant to the optional redemption provisions of Paragraph 5(a) of the
Securities or the special redemption provisions of Paragraph 5(b) of the
Securities, as the case may be.
SECTION 3.05. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.04,
Securities called for redemption become due and payable on the Redemption Date
and at the Redemption Price including any accrued and unpaid interest to the
Redemption Date, if any. Upon surrender to the Trustee or Paying Agent, such
Securities called for redemption shall be paid at the Redemption Price,
including interest, if any, accrued and unpaid to the Redemption Date; provided
that if the Redemption Date is after a regular Record Date and on or prior to
the Interest Payment Date, the accrued interest shall be payable to the Holder
of the redeemed Securities registered on the relevant Record Date; and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
SECTION 3.06. Deposit of Redemption Price. On or prior to any
Redemption Date, other than a Special Redemption Date, the Company shall deposit
with the Paying Agent (other than the Company or an Affiliate of the Company)
cash sufficient to pay the Redemption Price of, including any accrued
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and unpaid interest on, all Securities to be redeemed on such Redemption Date
(other than Securities or portions thereof called for redemption on that date
that have been delivered by the Company to the Trustee for cancellation). The
Paying Agent shall promptly return to the Company any cash so deposited which is
not required for that purpose upon the written request of the Company.
One Business Day prior to the Special Redemption Date, the Trustee
shall withdraw Treasury Bills and proceeds from the Collateral Account, sell
such Treasury Bills and deliver to the Paying Agent on behalf of the Company an
amount equal to the Redemption Price, and the Paying Agent shall on behalf of
the Company apply that amount to redeem the Securities on the Special Redemption
Date as provided by Section 3.01.
If the Company complies with the preceding paragraph and the other
provisions of this Article 3 and payment of the Securities called for redemption
is not prohibited under this Indenture, interest on the Securities to be
redeemed will cease to accrue on the applicable Redemption Date, whether or not
such Securities are presented for payment. Notwithstanding anything herein to
the contrary, if any Security surrendered for redemption in the manner provided
in the Securities shall not be so paid upon surrender for redemption because of
the failure of the Company to comply with the preceding paragraph, interest
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.02 hereof and the Securities.
SECTION 3.07. Securities Redeemed in Part. Upon surrender of a Security
that is to be redeemed in part, the Company shall execute and the Trustee shall
authenticate and deliver to the Holder, without service charge to the Holder, a
new Security or Securities equal in principal amount to the unredeemed portion
of the Security surrendered.
ARTICLE 4
COVENANTS
SECTION 4.01. Transactions Not Subject to Covenants. Notwithstanding
anything to the contrary in this Indenture, the following transactions shall not
be prohibited by this Indenture (regardless of the form or substance of the
transaction or series of transactions effecting the same):
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(a) the Merger, including, without limitation, (i) payments made by
the Company to fund (x) the cash consideration payable in the Merger (including,
whether or not required by the Merger Agreement, pursuant to statutory appraisal
rights and any settlement thereof) to security holders of Palmer and (y) fees
and expenses of the Company incurred in connection with the Merger, (ii) the
Incurrence, as a result of the Merger, of any Indebtedness of Palmer or any
subsidiary of Palmer, which Indebtedness was in existence immediately prior to
the Merger and not incurred in contemplation thereof, (iii) the assumption or
the suffering to exist of any consensual encumbrance or restriction on the
ability of Palmer or any Subsidiary thereof to pay dividends or make other
distributions on the Capital Stock of any Subsidiary or to pay or satisfy any
obligation to Palmer or any of its Subsidiaries or to otherwise transfer assets
or make or pay loans or advances to Palmer or any of its Subsidiaries, which
encumbrance or restriction was contained in an instrument that was in effect
immediately prior to the Merger and not put into place in contemplation thereof
and (iv) the Incurrence or the suffering to exist of any Lien upon any of the
property or assets of Palmer or any of its Subsidiaries which Liens were in
existence immediately prior to the effectiveness of the Merger and not imposed
in contemplation thereof; and
(b) any transaction involving FMT Ltd. or any subsidiary of FMT Ltd.
or any of their assets or the Company's partnership interest in FMT Ltd. (each
"FMT-Related Assets") provided that, in the case of this clause (b), no such
transaction shall (i) in and of itself cause or result in an increase in the
consolidated Indebtedness of the Company and its Restricted Subsidiaries on and
after the 45th day after the Merger Date from that existing immediately prior to
such transaction, (ii) cause or result in the sale of any asset of the Company
other than FMT-Related Assets, (iii) cause or result in the imposition of any
Lien on any property or assets of the Company or any of its Restricted
Subsidiaries other than solely upon an FMT-Related Asset, (iv) cause or result
in the imposition of any encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company (other than FMT Ltd. or any Subsidiary
thereof) to pay dividends or make other distributions on the Capital Stock of
any Restricted Subsidiary of the Company or pay or satisfy any obligation to the
Company or any of its Restricted Subsidiaries or otherwise transfer assets or
make or pay loans or advances to the Company or any of its Restricted
Subsidiaries, (v) cause or result in any dividend or distribution by the Company
or any Investment in any Person except a Restricted Subsidiary or a Subsidiary
of FMT Ltd., (vi) cause or result in the Incurrence of any Indebtedness of the
Company ranking senior to the Notes but junior to any Senior Indebtedness;
provided, however, that prior to the 45th day after the Merger Date the
Company's consolidated Indebtedness may increase as a result of such transaction
by no more than $169 million (plus accrued interest thereon). Notwithstanding
the foregoing provisions of this Section 4.01, neither
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the Company nor any of its Restricted Subsidiaries (other than FMT Ltd. or any
of its Subsidiaries) shall make any Investment in FMT Ltd. or any of its
Subsidiaries. In addition, the Merger shall not constitute a Change of Control
and no transaction described in Section 4.01(b) shall be taken into account in
any calculation under Section 4.04.
SECTION 4.02. Payment of Securities. The Company shall pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities. An installment of principal of or interest on the
Securities shall be considered paid on the date it is due if the Trustee or
Paying Agent (other than the Company or an Affiliate of the Company) holds for
the benefit of the Holders, on or before 10:00 a.m. New York City time on that
date, cash deposited and designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest at the rate specified in the Securities compounded
semi-annually, to the extent lawful.
SECTION 4.03. Maintenance of Office or Agency. The Company shall
maintain in the Borough of Manhattan, The City of New York, an office or agency
where Securities may be presented or surrendered for payment, where Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Company in respect of the Securities and this
Indenture may be served. The Company shall give prompt written notice to the
Trustee of the location, and any change in the location, of such office or
agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 13.02.
The Company may also from time to time designate one or more other
offices or agencies where the Securities 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 initially designates the Corporate Trust Office of the Trustee as
such office.
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SECTION 4.04. Limitation on Restricted Payments. The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, directly or
indirectly after the Issue Date, make any Restricted Payment, if, immediately
prior or after giving effect thereto (a) a Default or an Event of Default would
exist, (b) the Company's Annualized Operating Cash Flow Ratio for the Reference
Period would exceed 8.5 to 1, or (c) the aggregate amount of all Restricted
Payments made by the Company and its Restricted Subsidiaries, including such
proposed Restricted Payment (if not made in cash, then the fair market value of
any property used therefor, as determined in good faith by the Board of
Directors) from and after the Issue Date and on or prior to the date of such
Restricted Payment, shall exceed the sum of (i) 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 the Issue Date 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 (ii) the aggregate Net Proceeds
(other than with respect to the PCC Equity Contribution) received by the Company
from the sale (other than to a Subsidiary of the Company) of its Qualified
Capital Stock after the Issue Date and on or prior to the date of such
Restricted Payment, plus (iii) to the extent not otherwise included in clause
(i) or (ii), above, an amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from payments of dividends, repayments of
loans or advances, or other transfers of assets, in each case to the Company or
any Wholly Owned Restricted Subsidiary of the Company from Unrestricted
Subsidiaries, or from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries (valued in each case as provided in the definition of
"Investments"), not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company and any Restricted
Subsidiary in such Unrestricted Subsidiary.
Notwithstanding the foregoing, the provisions set forth in clause (b)
or (c) of the immediately preceding paragraph will not prohibit (i) the use of
an aggregate of $10,000,000 for Restricted Payments not otherwise permitted by
this Section 4.04, (ii) the distribution of amounts to Holdings sufficient to
pay the scheduled interest or dividends, as applicable, owed by Holdings on the
Holdings Securities as such interest or dividends become due and payable and so
long as (A) Holdings is the direct Parent of the Company owning 100% of the
capital stock of the Company, and (B) such Holdings Securities contain no
scheduled requirement for the payment of cash interest or dividends, as
applicable, until at least five years from the date of their original issuance
and (iii) any dividend, distribution or other payment by any Restricted
Subsidiary on shares of its Capital Stock that is paid pro rata to all holders
of such Capital Stock, and notwithstanding the foregoing paragraph, the
provisions set forth in clause (a), (b)
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or (c) of the immediately preceding paragraph will not prohibit (iv) the payment
of any dividend within 60 days after the date of its declaration if such
dividend could have been made on the date of its declaration in compliance with
the foregoing provisions, or (v) the redemption, defeasance, repurchase or other
acquisition or retirement of any Indebtedness or Capital Stock of the Company or
its Restricted Subsidiaries either in exchange for or out of the Net Proceeds of
the substantially concurrent sale (other than to a Subsidiary of the Company) of
Qualified Capital Stock (in the case of any redemption, defeasance, repurchase
or other acquisition or retirement of any Junior Indebtedness or Capital Stock
of the Company or its Restricted Subsidiaries) or Junior Indebtedness (in the
case of any redemption, defeasance, repurchase or other acquisition or
retirement of any Indebtedness of the Company or its Restricted Subsidiaries) of
the Company.
In determining the aggregate amount expended for Restricted Payments in
accordance with clause (c) of the first paragraph of this Section 4.04, 100% of
the amounts expended under clauses (i) through (v) of the immediately preceding
paragraph shall be deducted.
None of the transactions described in Section 4.01(b) above, shall be
taken into account in any calculation under this Section 4.04.
SECTION 4.05. Corporate Existence. Subject to Article 5, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect its corporate existence and the corporate or other existence of
each of its Restricted Subsidiaries in accordance with the respective
organizational documents of each of them and the rights (charter and statutory)
and corporate franchises of the Company and each of the Company's Restricted
Subsidiaries; provided, however, that the Company shall not be required to
preserve, with respect to itself, any right or franchise, and with respect to
any Restricted Subsidiaries of the Company, any such existence, right or
franchise, if (a) the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
such entity and (b) the loss thereof is not disadvantageous in any material
respect to the Holders.
SECTION 4.06. Payment of Taxes and Other Claims. Except with respect to
immaterial items, the Company shall, and shall cause each of its Restricted
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all taxes, assessments and governmental
charges (including withholding taxes and any penalties, interest and additions
to taxes) levied or imposed upon the Company or any of its Restricted
Subsidiaries or any of their respective properties and assets and (ii) all
lawful claims, whether for labor, materials, supplies, services or anything
else, which have become due
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and payable and which by law have or may become a Lien upon the property and
assets of the Company or any of its Restricted Subsidiaries; provided, however,
that the Company shall not be required to pay or discharge or cause to be paid
or discharged any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings and for which disputed amounts adequate reserves have been
established in accordance with GAAP.
SECTION 4.07. Maintenance of Properties and Insurance. The Company
shall cause all material properties used or useful to the conduct of its
business and the business of each of its Restricted Subsidiaries to be
maintained and kept in good condition, repair and working order (reasonable wear
and tear excepted) and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in its reasonable
judgment may be necessary, so that the business carried on in connection
therewith may be properly conducted at all times; provided, however, that
nothing in this Section 4.07 shall prevent the Company from discontinuing any
operation or maintenance of any of such properties, or disposing of any of them,
if such discontinuance or disposal is (a), in the judgment of the Board of
Directors of the Company, desirable in the conduct of the business of such
entity and (b) not disadvantageous in any material respect to the Holders.
The Company shall provide, or cause to be provided, for itself and each
of its Restricted Subsidiaries, insurance (including appropriate self-insurance)
against loss or damage of the kinds that, in the reasonable, good faith opinion
of the Company is adequate and appropriate for the conduct of the business of
the Company and such Restricted Subsidiaries in a prudent manner, with (except
for self-insurance) reputable insurers or with the government of the United
States of America or an agency or instrumentality thereof, in such amounts, with
such deductibles, and by such methods as shall be customary, in the reasonable,
good faith opinion of the Company and adequate and appropriate for the conduct
of the business of the Company and such Restricted Subsidiaries in a prudent
manner for entities similarly situated in the industry, unless failure to
provide such insurance (together with all other such failures) would not have a
material adverse effect on the financial condition or results of operations of
the Company or such Restricted Subsidiary.
SECTION 4.08. Compliance Certificate; Notice of Default. The Company
shall deliver to the Trustee within 120 days after the end of its fiscal year an
Officers' Certificate complying with Section 314(a)(4) of the TIA and stating
that a review of its activities and the activities of its Subsidiaries during
the preceding fiscal year has been made under the supervision of the signing
Officers with a
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view to determining whether the Company has kept, observed, performed and
fulfilled their obligations under this Indenture and further stating, as to each
such Officer signing such certificate, whether or not the signer knows of any
failure by the Company or any Subsidiary of the Company to comply with any
conditions or covenants in this Indenture and, if such signor does know of such
a failure to comply, the certificate shall describe such failure with
particularity. The Officers' Certificate shall also notify the Trustee should
the relevant fiscal year end on any date other than the current fiscal year end
date.
The Company shall, so long as any of the Securities are outstanding,
deliver to the Trustee, promptly upon becoming aware of any Default, Event of
Default or fact which would prohibit the making of any payment to or by the
Trustee in respect of the Securities, an Officers' Certificate specifying such
Default, Event of Default or fact and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
knowledge of any Default, any Event of Default or any such fact unless one of
its Trust Officers receives notice thereof from the Company or any of the
Holders.
SECTION 4.09. Reports. Whether or not the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall deliver to the Trustee and to each Holder and to prospective purchasers of
Securities identified to the Company by an Initial Purchaser, within 15 days
after it files or would have been required to file such with the SEC, annual and
quarterly financial statements substantially equivalent to financial statements
that the Company would have been required to file with the SEC if the Company
were subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required in
such reports to the SEC, and, in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required.
SECTION 4.10. Limitation on Status as Investment Company. The Company
shall not become, nor shall it permit any of its Restricted Subsidiaries to
become an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or otherwise become subject to regulation
under the Investment Company Act.
SECTION 4.11. Limitation on Transactions with Related Persons. The
Company will not, and will not permit any of its Restricted Subsidiaries or
Unrestricted Subsidiaries to, after the Issue Date, enter into any contract,
agreement, arrangement or transaction with any Related Person (each a "Related
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Person Transaction"), or any series of Related Person Transactions, except for
transactions made in good faith, the terms of which are (i) fair and reasonable
to the Company or such Subsidiary, as the case may be, and (ii) are at least as
favorable as the terms which could be obtained by the Company or such
Subsidiary, as the case may be, in a comparable transaction made on an arm's
length basis with Persons who are not Related Persons.
Without limiting the foregoing, (a) any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$1,000,000 must first be approved by a majority of the Board of Directors of the
Company who are disinterested in the subject matter of the transaction pursuant
to a Board Resolution, and (b) with respect to any Related Person Transaction or
series of Related Person Transactions with an aggregate value in excess of
$5,000,000, the Company must first obtain a favorable written opinion from an
independent financial advisor of national reputation as to the fairness from a
financial point of view of such transaction to the Company or such Subsidiary,
as the case may be.
Notwithstanding the foregoing, the following shall not constitute
Related Person Transactions: (i) reasonable and customary payments on behalf of
directors, officers or employees of the Company or any of its Restricted
Subsidiaries, or in reimbursement of reasonable and customary payments or
reasonable and customary expenditures made or incurred by such Persons as
directors, officers or employees, (ii) any contract, agreement, arrangement, or
transaction solely between or among the Company and any of its Restricted
Subsidiaries or between or among Restricted Subsidiaries of the Company, (iii)
any Restricted Payment of the type described by clauses (i) and (ii) of the
definition thereof made to all stockholders on a pro rata basis and not
prohibited by Section 4.04, (iv) any loan or advance by the Company or a
Restricted Subsidiary to employees of the Company or a Restricted Subsidiary in
the ordinary course of business, in an aggregate amount at any one time
outstanding not to exceed $500,000 and (v) any payment pursuant to a tax-sharing
agreement between the Company and any other Person with which the Company is
required or permitted to file a consolidated tax return or with which the
Company is or could be part of a consolidated group for tax purposes, which
payments are not in excess of the tax liabilities attributable solely to the
Company and its Restricted Subsidiaries (as a consolidated group).
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
after the Issue Date, directly or indirectly, issue, create, incur, assume,
guarantee or otherwise directly or indirectly become liable for (including as a
result of an
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acquisition), or otherwise become responsible for, contingently or otherwise
(individually or collectively, to "Incur" or, as appropriate, an "Incurrence"),
any Indebtedness. Neither the accrual of interest (including the issuance of
"pay in kind" securities or similar instruments in respect of such accrued
interest) pursuant to the terms of Indebtedness Incurred in compliance with this
covenant, nor the accretion of original issue discount, nor the mere extension
of the maturity of any Indebtedness shall be deemed to be an Incurrence of
Indebtedness.
Notwithstanding the foregoing, if there exists no Default or Event of
Default immediately prior and subsequent thereto, the Company may incur
Indebtedness if the Company's Annualized Operating Cash Flow Ratio, after giving
effect to the Incurrence of such Indebtedness, would have been less than 8
to 1.
In addition, if there exists no Default or Event of Default immediately
prior and subsequent thereto, the foregoing limitations will not apply to the
Incurrence of (i) Indebtedness by the Company or any of its Restricted
Subsidiaries constituting Existing Indebtedness, reduced by repayments of and
permanent reductions in commitments in satisfaction of the Net Cash Proceeds
application requirement set forth in Section 4.15 and by repayments and
permanent reductions in amounts outstanding pursuant to scheduled amortizations
and mandatory prepayments in accordance with the terms thereof, (ii)
Indebtedness, in an aggregate principal amount not in excess of $525,000,000,
permitted under the Credit Agreement, reduced by (a) repayments of and permanent
reductions in commitments in satisfaction of the Net Cash Proceeds application
requirement set forth in Section 4.15 and (b) an amount equal to the aggregate
amount of Indebtedness Incurred pursuant to clause (x), below, so long as such
amounts Incurred pursuant to clause (x) remain outstanding; provided that, if
there exists a Default or an Event of Default immediately prior or subsequent
thereto, the Company and its Restricted Subsidiaries may Incur Indebtedness
pursuant to this clause (ii) so long as the proceeds from such Incurrence are
not used directly to pay any amounts owing in respect of any Indebtedness,
including, without limitation, principal, interest and commitment fees, other
than with respect to the Notes and the Holdings Securities, (iii) Indebtedness
of the Company evidenced by the Securities, (iv)(A) Permitted Acquisition
Indebtedness by the Company that satisfies the provisions of clause (x) of the
definition thereof or (B) Permitted Acquisition Indebtedness by any Restricted
Subsidiary that satisfies the provisions of clause (y) of the definition
thereof, (v) Indebtedness between the Company and any Restricted Subsidiary of
the Company or between Restricted Subsidiaries of the Company, provided that, in
the case of Indebtedness of the Company, such obligations shall be unsecured and
subordinated in all respects to the Holders' rights pursuant to the Securities,
and the date of any event that causes
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a Restricted Subsidiary no longer to be a Restricted Subsidiary shall be an
Incurrence Date with respect to such Indebtedness, (vi) Capitalized Lease
Obligations and Purchase Money Indebtedness in an aggregate amount or aggregate
principal amount, as the case may be, outstanding at any time not to exceed in
the aggregate $15,000,000, provided that in the case of Purchase Money Indebt-
edness, such Indebtedness shall not constitute less than 75% nor more than 100%
of the cost (determined in accordance with GAAP) to the Company or such
Restricted Subsidiary of the property purchased or leased with the proceeds
thereof, (vii) Indebtedness of the Company or any Restricted Subsidiary arising
from agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or its Restricted
Subsidiaries pursuant to such agreements, in any case Incurred in connection
with the disposition of any business, assets or Restricted Subsidiary of the
Company to the extent none of the foregoing results in the obligation to repay
an obligation for money borrowed by any Person and are limited in aggregate
amount to no greater than 10% of the fair market value of such business, assets
or Restricted Subsidiary so disposed of, (viii) any guarantee by any Restricted
Subsidiary of any Senior Indebtedness Incurred in compliance with this Section
4.12, (ix) Indebtedness of the Company or any Restricted Subsidiary under
standby letters of credit or reimbursement obligations with respect thereto
issued in the ordinary course of business and consistent with industry
practices limited in aggregate amount to $5,000,000 at any one time outstanding,
(x) Indebtedness of the Company (other than Indebtedness permitted by clauses
(i) through (ix) or (xi) hereof) not to exceed $100,000,000 at any one time
outstanding and (xi) Refinancing Indebted ness Incurred to extend, renew,
replace or refund Indebtedness permitted under clauses (i) (as so reduced in
amount), (ii) (as so reduced in amount), (iii), (iv) and (xi) of this paragraph.
Indebtedness of any Person that is not a Restricted Subsidiary of the
Company (or that is a Non-Recourse Restricted Subsidiary designated to be a
Restricted Subsidiary, but no longer a Non-Recourse Restricted Subsidiary),
which Indebtedness is outstanding at the time such Person becomes such a
Restricted Subsidiary of the Company or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred, as the case may be, at the time such Person becomes such a
Restricted Subsidiary of the Company, or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company.
SECTION 4.13. Limitations on Restricting Subsidiary Dividends. The
Company will not, and will not permit any of its Restricted Subsidiaries to,
with respect to securities issued directly thereby or with respect to which they
are
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obligors, directly or indirectly, create, assume or suffer to exist any
consensual encumbrance or restriction on the ability of any Restricted
Subsidiary of the Company to pay dividends or make other distributions on the
Capital Stock of any Restricted Subsidiary of the Company or pay or satisfy any
obligation to the Company or any of its Restricted Subsidiaries or otherwise
transfer assets or make or pay loans or advances to the Company or any of its
Restricted Subsidiaries, except encumbrances and restrictions existing under (i)
the Indenture and the Securities, (ii) any Existing Indebtedness, (iii) the
Credit Agreement, (iv) any applicable law or any governmental or administrative
regulation or order, (v) Refinancing Indebtedness permitted under the Indenture,
provided that the restrictions contained in the instruments governing such
Refinancing Indebtedness are no more restrictive in the aggregate than those
contained in the instruments governing the Indebtedness being refinanced
immediately prior to such refinancing, (vi) restrictions with respect solely to
a Restricted Subsidiary of the Company imposed pursuant to a binding agreement
which has been entered into for the sale or disposition of all or substantially
all of the Capital Stock or assets of such Restricted Subsidiary, provided such
restrictions apply solely to the Capital Stock or assets being sold of such
Restricted Subsidiary, (vii) restrictions contained in any agreement relating to
the financing of the acquisition of a Person or real or tangible personal
property after the Issue Date which are not applicable to any Person or
property, other than the Person or property so acquired and which either (A)
were not put in place in anticipation of or in connection with such acquisition
or (B) constituted Permitted Acquisition Indebtedness of a Person satisfying the
provisions of clause (y) of the definition thereof or (viii) any agreement
(other than those referred to in clause (vii)) of a Person acquired by the
Company or a Restricted Subsidiary of the Company, which restrictions existed at
the time of acquisition and were not put in place in anticipation of or in
connection with such acquisition. Notwithstanding the foregoing, neither (a)
customary provisions restricting subletting or assignment of any lease entered
into the ordinary course of business, consistent with past practices nor (b)
Liens on assets securing Senior Indebtedness, shall in and of themselves be
considered a restriction on the ability of the applicable Restricted Subsidiary
to transfer such agreement or assets, as the case may be.
SECTION 4.14. Limitations on Layering of Indebtedness; Liens. The Company
will not incur or suffer to exist any Indebtedness that is subordinate in right
of payment to any other Indebtedness of the Company, unless, by its terms, such
Indebtedness is subordinate in right of payment to, or ranks pari passu with,
the Securities. The Company will not and will not permit any Restricted
Subsidiary to, directly or indirectly, Incur, or suffer to exist any Lien (other
than Permitted Liens) upon any of its property or assets, whether now owned or
hereafter acquired.
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SECTION 4.15. Limitation on Asset Sales and Sales of Subsidiary Stock.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, after the Issue Date, in one or a series of related
transactions, convey, sell, transfer, assign or otherwise dispose of, directly
or indirectly, any of its property, businesses or assets, including by merger or
consolidation, and including any sale or other transfer or issuance of any
Capital Stock of any Restricted Subsidiary of the Company, whether by the
Company or a Restricted Subsidiary (an "Asset Sale"), unless (1)(a) within 360
days after the date of such Asset Sale, an amount equal to the Net Cash Proceeds
therefrom (the "Asset Sale Offer Amount") are applied to the optional redemption
of the Securities in accordance with the terms of Article 3 of this Indenture
and Paragraph 5(a) of the Securities and other Indebtedness of the Company
ranking on a parity with the Securities from time to time outstanding with
similar provisions requiring the Company to make an offer to purchase or to
redeem such Indebtedness with the proceeds from asset sales, pro rata in
proportion to the respective principal amounts (or accreted values in the case
of Indebtedness issued with an original issue discount) of the Securities and
such other Indebtedness then outstanding or to the repurchase of the Securities
and such other Indebtedness pursuant to an irrevocable, unconditional offer (pro
rata in proportion to the respective principal amounts (or accreted values in
the case of Indebtedness issued with an original issue discount) of the
Securities and such other Indebtedness then outstanding) (the "Asset Sale
Offer") to repurchase such Indebtedness at a purchase price (the "Asset Sale
Offer Price") of 100% of the principal amount thereof in the case of the
Securities or 100% of the principal amount of such other Indebtedness (or
accreted value in the case of Indebtedness issued with an original issue
discount) plus, in each case, accrued interest to the date of payment made
within 330 days of such Asset Sale, or (b) within 330 days of such Asset Sale,
the Asset Sale Offer Amount is (i) invested (or committed, pursuant to a binding
commitment subject only to reasonable, customary closing conditions, to be
invested, and in fact is so invested, within an additional 90 days) in tangible
assets and property (other than notes, obligations or securities), which in the
good faith reasonable judgment of the Board of Directors of the Company are of a
type used in a Related Business, or Capital Stock of a Person (which, if such
Person becomes a Subsidiary of the Company by virtue of such Asset Sale, shall
initially be designated a Restricted Subsidiary) all or substantially all of
whose assets and property (in the good faith reasonable judgment of the Board of
Directors of the Company) are of a type used in a Related Business (provided
that, with respect to such Capital Stock, all of the requirements of the last
proviso of clause (v) of the following paragraph shall have been satisfied) or
(ii) used to retire permanently Senior Indebtedness or Indebtedness of a
Restricted Subsidiary, (2) with respect to any transaction or related series of
transactions of securities, property or assets with an aggregate fair
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market value in excess of $1,000,000, at least 75% of the value of consideration
for the assets disposed of in such Asset Sale (excluding (a) Senior Indebtedness
(and any Refinancing Indebtedness issued to refinance any such Indebtedness) or
the Indebtedness of any Restricted Subsidiary assumed by a transferee which
assumption permanently reduces the amount of Indebtedness outstanding on the
Issue Date and permitted to have been Incurred pursuant to Section 4.12 (includ
ing that in the case of a revolver or similar arrangement that makes credit
available, such commitment is permanently reduced by such amount), (b) Pur chase
Money Indebtedness secured exclusively by the assets subject to such Asset Sale
which is assumed by a transferee and (c) marketable securities that are promptly
converted into cash or Cash Equivalents) consists of cash or Cash Equivalents,
provided that any cash or Cash Equivalents received within 12 months following
any such Asset Sale upon conversion of any property or assets (other than in the
form of cash or Cash Equivalents) received in consideration of such Asset Sale
shall be applied promptly in the manner required of Net Cash Proceeds of any
such Asset Sale as set forth above, (3) no Default or Event of De fault shall
occur or be continuing after giving effect to, on a pro forma basis, such Asset
Sale, unless such Asset Sale is in consideration solely of cash or Cash
Equivalents and such consideration is applied immediately to the permanent
reduction of the principal amount of Indebtedness outstanding pursuant to the
Credit Agreement, and (4) the Board of Directors of the Company determines in
good faith that the Company or such Restricted Subsidiary, as applicable, would
receive fair market value in consideration of such Asset Sale.
An Asset Sale Offer may be deferred until the accumulated Net Cash Proceeds
from Asset Sales not applied to the uses set forth in (1)(b) above exceeds
$5,000,000 and each Asset Sale Offer shall remain open for 20 Business Days
following its commencement and no longer, except as otherwise required by
applicable law (the "Asset Sale Offer Period"). Upon expiration of the Asset
Sale Offer Period, the Company shall apply the Asset Sale Offer Amount, plus an
amount equal to accrued interest to the purchase of all Indebtedness properly
tendered (on a pro rata basis as described above if the Asset Sale Offer Amount
is insufficient to purchase all Indebtedness so tendered) at the Asset Sale
Offer Price (together with accrued interest).
Notwithstanding the foregoing provisions of the prior paragraph:
(i) the Company and its Restricted Subsidiaries may, in the ordinary
course of business, convey, sell, lease, transfer, assign or otherwise
dispose of assets acquired and held for resale in the ordinary course of
business;
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(ii) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets pursuant to and in
accordance with Section 5.01;
(iii) the Company and its Restricted Subsidiaries may sell or dispose
of damaged, worn out or other obsolete property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Restricted Subsidiary, as
applicable;
(iv) the Company and its Restricted Subsidiaries may convey, sell,
lease, transfer, assign or otherwise dispose of assets to the Company or
any of its Restricted Subsidiaries; and
(v) the Company and its Restricted Subsidiaries may, in the ordinary
course of business (or, if otherwise than in the ordinary course of
business, upon receipt of a favorable written opinion by an independent
financial advisor of national reputation as to the fairness from a
financial point of view to the Company or such Restricted Subsidiary of the
proposed transaction), exchange all or a portion of its property,
businesses or assets for property, businesses or assets which, or Capital
Stock of a Person all or substantially all of whose assets, are of a type
used in a Related Business (provided that such Person shall initially be
designated a Restricted Subsidiary if such Person becomes a Subsidiary of
the Company by virtue of such Asset Sale), or a combination of any such
property, businesses, or assets, or Capital Stock of such a Person and cash
or Cash Equivalents; provided that (i) there shall not exist immediately
prior or subsequent thereto a Default or an Event of Default, (ii) a
majority of the independent directors of the Board of Directors of the
Company shall have approved a resolution of the Board of Directors that
such exchange is fair to the Company or such Restricted Subsidiary, as the
case may be, and (iii) any cash or Cash Equivalents received pursuant to
any such exchange shall be applied in the manner applicable to Net Cash
Proceeds from an Asset Sale as set forth pursuant to the provisions of the
immediately preceding paragraph of this covenant; and provided, further,
that any Capital Stock of a Person received in an Asset Sale pursuant to
this clause (v) shall be owned directly by the Company or a Restricted
Subsidiary and, when combined with the Capital Stock of such Person already
owned by the Company and its Restricted Subsidiaries, shall constitute a
majority of the voting power and Capital Stock of such Person, unless
(A)(i) the Company has received a binding commitment from such Person (or
the direct or indirect parent of such Person) that such
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Person (or the direct or indirect parent of such Person) will distribute to
the Company in cash an amount equal to the Company's Annualized Operating
Cash Flow (determined as of the date of such Asset Sale) attributable to
the property, business, or assets of the Company and its Restricted
Subsidiaries exchanged in connection with such Asset Sale during each
consecutive 12-month period subsequent to such Asset Sale (unless and until
the Company shall have sold all of such Capital Stock, provided that the
provisions of clause (B) below, if applicable, shall have been satisfied),
(ii) immediately after such Asset Sale the aggregate number of Net Pops of
the wireless communications systems in which the Company or any of its
Restricted Subsidiaries has ownership interests ("Company Systems") that
are owned directly by a Person or Persons a majority of whose voting power
and Capital Stock is owned directly or indirectly by the Company is no less
than 80% of the aggregate number of Net Pops of Company Systems immediately
prior to such Asset Sale and (iii) upon consummation of such Asset Sale, on
a pro forma basis, the ratio of such Person's Annualized Operating Cash
Flow to the product of Consolidated Interest Expense for the Reference
Period multiplied by four (but excluding from Consolidated Interest Expense
all amounts that are not required to be paid in cash on a current basis)
shall be at least 1 to 1, or (B) in the case of Capital Stock of a Person
that is not a Subsidiary of the Company owned by the Company or a
Restricted Subsidiary that is exchanged (the "Exchanged Capital Stock") for
Capital Stock of another Person all or substantially all of whose assets
are of a type used in a Related Business, either (i) the Exchanged Capital
Stock shall not have been acquired prior to such Asset Sale in reliance
upon clause (A) of this proviso or (ii) the requirements of subclauses
(A)(i) (based on the original guaranteed cash flow) and (A)(iii) shall be
satisfied with respect to any Capital Stock acquired in consideration of
the Exchanged Capital Stock.
Restricted Payments that are made in compliance with, and are counted
against amounts available to be made as Restricted Payments pursuant to clause
(c) of Section 4.04, without giving effect to clause (i) of the second paragraph
thereof, shall not be deemed to be Asset Sales.
The Company shall accumulate all Net Cash Proceeds and the aggregate amount
of such accumulated Net Cash Proceeds not used for the purposes permitted and
within the time provided by this Section 4.15 is referred to as the "Accumulated
Amount."
For purposes of this Section 4.15, "Minimum Accumulation Date" means each
date on which the Accumulated Amount exceeds $5,000,000. Not later than
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10 Business Days after each Minimum Accumulation Date, the Company will commence
an Asset Sale Offer to the Holders and holders of other Indebtedness of the
Company ranking pari passu in right of payment with the Securities from time to
time outstanding with similar provisions requiring the Company to make an offer
to purchase or to redeem such Indebtedness with the proceeds from asset sales to
purchase, on a pro rata basis in proportion to the respective principal amounts
(or accreted values in the case of Indebtedness issued with an original issue
discount) of the Securities and such other Indebtedness then outstanding, for
cash, Securities and such other Indebtedness that will have an aggregate
principal amount (and accreted value, as applicable) (the "Asset Sale Offer
Amount") on the purchase date equal to the Accumulated Amount, at a purchase
price equal to the Asset Sale Offer Price, plus accrued but unpaid interest, if
any, to, and including, the date of purchase (the "Asset Sale Purchase Date"),
which date shall be no later than 30 Business Days after the first date on which
the Asset Sale Offer is required to be made. Notice of an Asset Sale Offer will
be sent 20 Business Days prior to the close of business on the earlier of (a)
the third Business Day prior to the Asset Sale Purchase Date and (b) the third
Business Day following the expiration of the Asset Sale Offer (such earlier date
being the "Final Put Date"), by first-class mail, by the Company to each Holder
at its registered address, with a copy to the Trustee. The notice to the Holders
will contain all information, instructions and materials required by applicable
law or otherwise material to such Holders' decision to tender Securities
pursuant to the Asset Sale Offer. The notice to Holders, which (to the extent
consistent with the Indenture) shall govern the terms of the Asset Sale Offer,
shall state:
(1) that the Asset Sale Offer is being made pursuant to
such notice and this Section 4.15;
(2) the Asset Sale Offer Amount, the Asset Sale Offer
Price (including the amount of accrued and unpaid interest), the
Final Put Date, and the Asset Sale Purchase Date, which Asset
Sale Purchase Date shall be on or prior to 40 Business Days
following the Minimum Accumulation Date;
(3) that any Security or portion thereof not tendered or
accepted for payment will continue to accrue interest;
(4) that, unless the Company defaults in depositing cash
with the Paying Agent in accordance with the penultimate
paragraph of this Section 4.15 or such
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payment is otherwise prevented, any Security, or portion
thereof, accepted for payment pursuant to the Asset Sale Offer
shall cease to accrue interest after the Asset Sale Purchase
Date;
(5) that Holders electing to have a Security, or portion
thereof, purchased pursuant to an Asset Sale Offer will be
required to surrender the Security, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent (which may not for
purposes of this Section 4.15, notwithstanding anything this
Indenture to the contrary, be the Company or any Affiliate of
the Company) at the address specified in the notice prior to the
close of business on the Final Put Date;
(6) that Holders will be entitled to withdraw their
elections, in whole or in part, if the Paying Agent (which may
not for purposes of this Section, notwithstanding any other
provision of this Indenture, be the Company or any Affiliate of
the Company) receives, up to the close of business on the Final
Put Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of
the Securities the Holder is withdrawing and a statement that
such Holder is withdrawing his election to have such principal
amount of Securities purchased;
(7) that if Indebtedness in a principal amount in excess
of the principal amount of Securities to be acquired pursuant to
the Asset Sale Offer is tendered and not withdrawn, the Company
shall purchase Indebtedness on a pro rata basis in proportion to
the respective principal amounts (or accreted values in the case
of Indebtedness issued with an original issue discount) thereof
(with such adjustments as may be deemed appropriate by the
Company so that only Securities in denominations of $1,000 or
integral multiples of $1,000 shall be acquired);
(8) that Holders whose Securities were purchased only in
part will be issued new Securities equal in principal
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amount to the unpurchased portion of the Securities surrendered;
and
(9) a brief description of the circumstances and relevant
facts regarding such Asset Sales.
Any such Asset Sale Offer shall comply with all applicable provisions of
applicable Federal and state laws, rules and regulations, including those
regulating tender offers, if applicable, and any provisions of this Indenture
that conflict with such laws shall be deemed to be superseded by the provisions
of such laws.
On or before an Asset Sale Purchase Date, the Company shall (i) accept for
payment Securities or portions thereof properly tendered and not properly
withdrawn pursuant to the Asset Sale Offer on or before the Final Put Date (on a
pro rata basis if required pursuant to paragraph (7) hereof), (ii) deposit with
the Paying Agent cash sufficient to pay the Asset Sale Offer Price for all
Securities or portions thereof so tendered and accepted and (iii) deliver to the
Trustee Securities so accepted together with an Officers' Certificate stating
the Securities or portions thereof being purchased by the Company. The Paying
Agent shall on each Asset Sale Purchase Date mail or deliver to Holders of
Securities so accepted payment in an amount equal to the Asset Sale Offer Price
for such Securities, and the Trustee shall promptly authenticate and mail or
deliver to such Holders a new Security equal in principal amount to any
unpurchased portion of the Security surrendered. Any Security not so accepted
shall be promptly mailed or delivered by the Company to the Holder thereof.
If the amount required to acquire all Indebtedness properly tendered by
Holders pursuant to the Asset Sale Offer (the "Acceptance Amount") made pursuant
to this Section 4.15 is less than the Asset Sale Offer Amount, the excess of the
Asset Sale Offer Amount over the Acceptance Amount may be used by the Company
for general corporate purposes without restriction, unless otherwise restricted
by the other provisions of the Indenture. Upon consummation of any Asset Sale
Offer made in accordance with the terms of the Indenture, the Accumulated Amount
will be reduced to zero irrespective of the amount of Indebtedness tendered
pursuant to the Asset Sale Offer.
SECTION 4.16. Waiver of Stay, Extension or Usury Laws. The Company
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law or any usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of, premium of, or interest on the Securities as contemplated herein,
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wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit or advantage of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
SECTION 4.17. Rule 144A Information Requirement. The Company shall
furnish to the Holders of the Securities and prospective purchasers of
Securities designated by the Holders of Transfer Restricted Securities, upon
their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act until such time as the Company either
concluded an offer to exchange the Exchange Securities for the Initial
Securities or a registration statement relating to resales of the Securities has
become effective under the Securities Act. The Company shall also furnish such
information during the pendency of any suspension of effectiveness of the resale
registration statement.
SECTION 4.18. Limitation on Lines of Business. The Company shall not, nor
shall it permit any of its Restricted Subsidiaries to, directly or indirectly
engage in any line or lines of business activity other than that which, in the
reasonable, good faith judgment of the Board of Directors of the Company, is a
Related Business.
SECTION 4.19. Restriction on Sale and Issuance of Subsidiary Stock. The
Company will not sell, and will not permit any of its Restricted Subsidiaries to
issue or sell, any shares of Capital Stock of any Restricted Subsidiary of the
Company to any Person other than the Company or a Wholly Owned Restricted
Subsidiary of the Company, except for shares of common stock with no preferences
or special rights or privileges and with no redemption or prepayment provisions
("Special Rights"); provided that, in the case of a Restricted Subsidiary that
is a partnership or joint venture partnership (a "Restricted Partnership") the
Company or any of its Restricted Subsidiaries may sell or such Restricted
Partnership may issue or sell Capital Stock of such Restricted Partnership with
Special Rights no more favorable than those held by the Company or such
Restricted Subsidiary in such Restricted Partnership.
SECTION 4.20. Deposit of Proceeds with Trustee Pending Consummation of the
Merger.
On the Issue Date, the Company shall pay to the Trustee for deposit in the
Collateral Account the net proceeds from the issuance of the Securities (the
"Net Offering Proceeds") and such additional amount as, when added to the Net
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Offering Proceeds, equals $186,517,187.50, representing 101% of the aggregate
principal amount of the Securities plus the interest that would accrue up to and
including December 31, 1997 were all $175,000,000 aggregate principal amount of
the Securities to be outstanding from the Issue Date to such date (the "Special
Redemption Amount"), as set forth in Article 10.
ARTICLE 5
Successor Corporation
SECTION 5.01. Limitation on Merger, Sale or Consolidation. (a) The
Company will not consolidate with or merge with or into another Person or sell,
lease, convey, transfer or otherwise dispose of all or substantially all of its
assets (computed on a consolidated basis), whether in a single transaction or a
series of related transactions, to another Person or group of affiliated
Persons, unless (i) either (a) the Company is the continuing entity or (b) the
resulting, surviving or transferee entity is a corporation organized under the
laws of the United States, any state thereof or the District of Columbia and
expressly assumes by supplemental indenture all of the obligations of the
Company in connection with the Securities and the Indenture; (ii) no Default or
Event of Default shall exist or shall occur immediately after giving effect on a
pro forma basis to such transaction; (iii) (A) immediately after giving effect
to such transaction on a pro forma basis, the consolidated resulting, surviving
or transferee entity would immediately thereafter be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Annualized Operating Cash Flow
Ratio provision set forth in the second paragraph of Section 4.12 or (B), if the
requirement of clause (A) is not satisfied, (x) any Indebtedness of the
resulting surviving or transferee entity in excess of the amount of the
Company's Indebtedness immediately prior to such transaction is Permitted
Acquisition Indebtedness and (y) the requirement of clause (A) is not satisfied
solely due to the Incurrence of such Permitted Acquisition Indebtedness; and
(iv) the Company shall have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, if applicable, confirming compliance with the
requirements of this Section 5.01.
(b) For purposes of clause (a), the sale, lease, conveyance, assignment,
transfer, or other disposition of all or substantially all of the properties and
assets of one or more Restricted Subsidiaries of the Company, which properties
and assets, if held by the Company instead of such Restricted Subsidiaries,
would constitute all or substantially all of the properties and assets of the
Company on a consolidated basis, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
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SECTION 5.02. Successor Corporation Substituted. Upon any consolidation or
merger or any transfer of all or substantially all of the assets of the Company
in accordance with the foregoing, the successor corporation formed by such
consolidation or into which the Company is merged or to which such transfer is
made, shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under the Indenture with the same effect as if such
successor corporation had been named therein as the Company, and when a
successor corporation duly assumes all of the obligations of the Company
pursuant hereto and pursuant to the Securities, the predecessor shall be
released from such obligations.
ARTICLE 6
Events of Default and Remedies
SECTION 6.01. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) failure to pay any installment of interest on the Securities as and
when the same becomes due and payable, and the continuance of such failure for a
period of 30 days;
(b) failure to pay all or any part of the principal of, or premium, if
any, on the Securities when and as the same becomes due and payable at maturity,
redemption, by acceleration, or otherwise, including, without limitation,
payment of the Change of Control Purchase Price in accordance with Article 11 or
the Asset Sale Offer Price in accordance with Section 4.15;
(c) failure by the Company to observe or perform any covenant, agreement
or warranty contained in the Securities or this Indenture (other than a default
in the performance of any covenant, agreement or warranty which is specifically
dealt with elsewhere in this Section 6.01), or failure by the Company to cause
each Unrestricted Subsidiary to comply with clause (c) of the definition of
"Unrestricted Subsidiary," and continuance of such failure for a period of 30
days after (subject to the following paragraph) there has been given, by
registered
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or certified mail, to the Company by the Trustee, or to the Company and the
Trustee by Holders of at least 25% in aggregate principal amount of the
outstanding Securities, a written notice specifying such default or breach,
requiring it to be remedied and stating that such notice is a "Notice of
Default" hereunder;
(d) the failure to pay at final stated maturity (giving effect to any
applicable grace periods and any extensions thereof) the principal amount of any
Indebtedness of the Company or any Restricted Subsidiary of the Company or the
acceleration of the final stated maturity of any Indebtedness if the aggregate
principal amount of such Indebtedness together with the principal amount of any
other such Indebtedness in default for failure to pay principal at final
maturity or which has been accelerated, aggregates $15,000,000 or more at any
time;
(e) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudging the Company or any of its Significant
Restricted Subsidiaries as bankrupt or insolvent, or approving as properly filed
a petition seeking reorganization of the Company or any of its Significant
Restricted Subsidiaries under any bankruptcy or similar law, and such decree or
order shall have continued undischarged and unstayed for a period of 60 days; or
a decree or order of a court of competent jurisdiction over the appointment of a
receiver, liquidator, trustee, or assignee in bankruptcy or insolvency of the
Company, any of its Significant Restricted Subsidiaries, or of the property of
any such Person, or for the winding up or liquidation of the affairs of any such
Person, shall have been entered, and such decree, judgment, or order shall have
remained in force undischarged and unstayed for a period of 60 days;
(f) the Company or any of its Significant Restricted Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under any bankruptcy or similar law or
similar statute, or shall consent to the filing of any such petition, or shall
consent to the appointment of a Custodian, receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of it or any of its assets or property, or
shall make a general assignment for the benefit of creditors, or shall admit in
writing its inability to pay its debts generally as they become due, or shall,
within the meaning of any Bankruptcy Law, become insolvent, fails generally to
pay its debts as they become due, or takes any corporate action in furtherance
of or to facilitate, conditionally or otherwise, any of the foregoing; or
(g) final unsatisfied judgments not covered by insurance, or the issuance
of any warrant of attachment against any portion of the property or assets of
the
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Company or any of its Restricted Subsidiaries, aggregating in excess of
$5,000,000 at any one time rendered against the Company or any of its Restricted
Subsidiaries and not stayed, bonded or discharged for a period (during which
execution shall not be effectively stayed) of 60 days (or, in the case of any
such final judgment which provides for payment over time, which shall so remain
unstayed, unbonded or undischarged beyond any applicable payment date provided
therein).
If a Default occurs and is continuing, the Trustee must, within 90 days
after the occurrence of such default, give to the Holders notice of such
default.
SECTION 6.02. Acceleration of Maturity Date; Rescission and Annulment. If
an Event of Default (other than an Event of Default specified in Section 6.01(e)
or (f) relating to the Company or any of its Restricted Subsidiaries) occurs and
is continuing, then, and in every such case, unless the principal of all of the
Securities shall have already become due and payable, either the Trustee or the
Holders of not less than 25% in aggregate principal amount of then outstanding
Securities, by notice in writing to the Company (and to the Trustee if given by
Holders) (an "Acceleration Notice"), may declare all of the principal of the
Securities (or the Change of Control Purchase Price if the Event of Default
includes failure to pay the Change of Control Purchase Price), determined as set
forth below, including in each case accrued interest thereon, to be due and
payable and the same (i) shall become immediately due and payable or (ii) if
there are any amounts outstanding under the Credit Agreement and the Company has
guaranteed the repayment of principal and interest on the Credit Agreement,
shall become immediately due and payable upon the first to occur of an
acceleration under the Credit Agreement or five business days after receipt by
the Company and the representative of the holders of the Indebtedness under the
Credit Agreement of the Acceleration Notice, but only if such Event of Default
is then continuing. If an Event of Default specified in Section 6.01(e) or (f)
relating to the Company or any Significant Restricted Subsidiary occurs, all
principal (or the Change of Control Purchase Price, as applicable) and accrued
interest thereon will be immediately due and payable on all outstanding
Securities without any declaration or other act on the part of Trustee or the
Holders.
At any time after such a declaration of acceleration being made and before
a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter provided in this Article 6, the Holders of a majority in
aggregate principal amount of then outstanding Securities, by written notice to
the Company and the Trustee, may rescind, on behalf of all Holders, any such
declaration of acceleration if:
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(1) the Company has paid or deposited with the Trustee
cash sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, applicable
to) any Securities which would become due otherwise than by
such declaration of acceleration, and interest thereon at
the rate borne by the Securities,
(C) to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities,
(D) all sums paid or advanced by the Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and
counsel, and
(2) all Events of Default, other than the non-payment of
the principal of, premium, if any, and interest on Securities
which have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section
6.12, including, if applicable, any Event of Default relating to
the covenants contained in Section 11.01.
Notwithstanding the previous sentence of this Section 6.02, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Security affected thereby, unless all such
affected Holders agree, in writing, to waive such Event of Default or other
event. No such waiver shall cure or waive any subsequent default or impair any
right consequent thereon.
In the event of a declaration of acceleration of the Securities because an
Event of Default has occurred and is continuing as a result of the acceleration
of any Indebtedness described in Section 6.01(d), the declaration of
acceleration of the Securities shall be automatically annulled if the holders of
all Indebtedness described in Section 6.01(d) (without any payment of any
holders of any such
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Indebtedness) have rescinded the declaration of acceleration in respect of such
Indebtedness within 30 days of the date of such declaration and if (i) the
annulment of the acceleration of the Securities would not conflict with any
judgment or decree of a court of competent jurisdiction and (ii) all Events of
Default, except nonpayment of principal or interest on the Securities that
became due solely because of the acceleration of the Securities, have been cured
or waived.
SECTION 6.03. Collection of Indebtedness and Suits for Enforcement by
Trustee. The Company covenants that if an Event of Default in payment of
principal, premium, or interest specified in clause (a) or (b) of Section 6.01
occurs and is continuing, the Company shall, upon demand of the Trustee, pay to
it, for the benefit of the Holders of such Securities, the whole amount then due
and payable on such Securities for principal, premium (if any) and interest,
and, to the extent that payment of such interest shall be legally enforceable,
interest on any overdue principal (and premium, if any) and on any overdue
interest, at the rate borne by the Securities, and, in addition thereto, such
further amount as shall be sufficient to cover the reasonable costs and expenses
of collection, including compensation to, and expenses, disbursements and
advances of the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon the Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 6.04. Trustee May File Proofs of Claim. In case of the pendency
of any receivership, insolvency, liquidation, bankruptcy, reorganization,
arrangement, adjustment, composition or other judicial proceeding relative to
the Company or any other obligor upon the Securities or the property of the
Company or of such other obligor or their creditors, the Trustee (irrespective
of whether the
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principal of the Securities shall then be due and payable as therein expressed
or by declaration or otherwise and irrespective of whether the Trustee shall
have made any demand on the Company for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA, including
(1) to file and prove a claim for the whole
amount of principal (and premium, if any) and
interest owing and unpaid in respect of the
Securities and to file such 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 agent and counsel) and
of the Holders allowed in such judicial proceeding,
and
(2) to collect and receive any moneys or other
property payable or deliverable on any such claims
and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 7.07.
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 Securities
or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.05. Trustee May Enforce Claims Without Possession of
Securities. All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust in favor of the Holders, and any
recovery of judgment shall, after provision for the payment of compensation to,
and expenses, disbursements and advances of the Trustee, its agents and counsel,
be for the
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ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 6.06. Priorities. Any money collected by the Trustee pursuant
to this Article 6 shall be applied in the following order, at the date or dates
fixed by the Trustee and, in case of the distribution of such money on account
of principal, premium (if any) or interest, upon presentation of the Securities
and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to
Section 7.07;
SECOND: To the Holders in payment of the amounts then due and unpaid
for principal of, premium (if any) and interest on, the Securities in respect of
which or for the benefit of which such money has been collected, ratably,
without preference or priority of any kind, according to the amounts due and
payable on such Securities for principal, premium (if any) and interest,
respectively; and
THIRD: To whomsoever may be lawfully entitled thereto, the remainder,
if any.
SECTION 6.07. Limitation on Suits. No Holder of any Security shall have
any right to order or direct the Trustee to institute any proceeding, judicial
or otherwise, with respect to this Indenture, or for the appointment of a
receiver or trustee, or for any other remedy hereunder, unless
(A) such Holder has previously given written notice to
the Trustee of a continuing Event of Default;
(B) the Holders of not less than 25% in principal amount
of then outstanding Securities shall have made written request
to the Trustee to institute proceedings in respect of such
Event of Default in its own name as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee
reasonable security or indemnity against the costs, expenses
and liabilities to be incurred or reasonably probable to be
incurred in compliance with such request;
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(D) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity has failed to institute
any such proceeding; and
(E) no direction inconsistent with such written request
has been given to the Trustee during such 60-day period by the
Holders of a majority in principal amount of the outstanding
Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 6.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest. Notwithstanding any other provision of this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of, and premium (if any) and
accrued interest on, such Security on the Maturity Date of such payments as
expressed in such Security (in the case of redemption, the Redemption Price on
the applicable Redemption Date, in the case of the Change of Control Payment, on
the applicable Change of Control Payment Date, and, in the case of an Asset Sale
Offer, the Asset Sale Offer Price on the Asset Sale Purchase Date) and to
institute suit for the enforcement of any such payment after such respective
dates, and such rights shall not be impaired without the consent of such Holder.
SECTION 6.09. Rights and Remedies Cumulative. Except as otherwise
provided with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Securities in Section 2.07, no right or remedy herein conferred
upon or reserved to the Trustee or to the Holders is intended to be exclusive of
any other right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right and remedy
given hereunder or now or hereafter existing at law or in equity or otherwise.
The assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver. No delay or omission by the
Trustee or by any Holder of any Security to exercise any right or remedy arising
upon any Event of Default shall impair the exercise of any such right or remedy
or constitute a waiver of any such Event of Default. Every right and remedy
given by this Article 6 or by law to the Trustee or to the Holders may be
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exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 6.11. Control by Holders. The Holder or Holders of a majority
in aggregate principal amount of then outstanding Securities will have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee, provided that
(1) such direction shall not be in conflict with
any rule of law or with this Indenture,
(2) the Trustee shall not determine that the
action so directed would be unjustly prejudicial to
the Holders not taking part in such direction, and
(3) the Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with
such direction.
SECTION 6.12. Waiver of past Default. Subject to Section 6.08, the
Holder or Holders of not less than a majority in aggregate principal amount of
the outstanding Securities may, on behalf of all Holders, prior to the
declaration of the acceleration of the maturity of the Securities, waive any
past default hereunder and its consequences, except a default
(A) in the payment of the principal of, premium, if any,
or interest on, any Security as specified in clauses (a) and
(b) of Section 6.01, or
(B) in respect of a covenant or provision hereof which,
under Article 9, cannot be modified or amended without the
consent of the Holder of each outstanding Security affected.
Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair the exercise of any right arising therefrom.
SECTION 6.13. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Security by his acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the
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enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted to be taken by it as
Trustee, the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion assess
reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; but the provisions of this
Section 6.13 shall not apply to any suit instituted by the Company, to any suit
instituted by the Trustee, to any suit instituted by any Holder, or group of
Holders, holding in the aggregate more than 10% in aggregate principal amount of
the outstanding Securities, or to any suit instituted by any Holder for
enforcement of the payment of principal of, or premium (if any) or interest on,
any Security on or after the Maturity Date expressed in such Security
(including, in the case of redemption, on or after the Redemption Date).
SECTION 6.14. Restoration of Rights and Remedies. If the Trustee or any
Holder has instituted any proceeding to enforce any right or remedy under this
Indenture and such proceeding has been discontinued or abandoned for any reason,
or has been determined adversely to the Trustee or to such Holder, then and in
every case, subject to any determination in such proceeding, the Company, the
Trustee and the Holders shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of the Trustee
and the Holders shall continue as though no such proceeding had been instituted.
ARTICLE 7
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture
and covenants and agrees to perform the same, as herein expressed.
SECTION 7.01. Duties of Trustee. (a) If a Default or 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 their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of a Default or an Event of
Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no
covenants or
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obligations shall be implied in or read into this Indenture which are
adverse to the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11.
(d) No provision of this Indenture shall require the trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any action
under this Indenture or at the request, order or direction of the Holders or in
the exercise of any of its rights or powers if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section
7.01.
(f) The Trustee shall not be liable for interest on any assets received
by it except as the Trustee may agree in writing with the Company. Assets held
in trust by the Trustee need not be segregated from other assets except to the
extent required by law.
SECTION 7.02. Rights of Trustee. Subject to Section 7.01:
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(a) The Trustee may rely on 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 consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
which shall conform to Sections 13.04 and 13.05. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee will not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers conferred upon it by this Indenture.
(e) The Trustee will not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture, or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(f) The Trustee will be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Unless otherwise specifically provided for in this Indenture, any
demand, request, direction or notice from the Company shall be sufficient if
signed by an Officer of the Company.
(h) The Trustee shall have no duty to inquire as to the performance of
the covenants in Article 4 hereof. In addition, the Trustee shall not be deemed
to have knowledge of any Default or Event of Default except (i) any Event of
Default occurring pursuant to Sections 6.01(a), 6.01(b) and 4.02, or (ii) any
Default or Event of Default of which the Trustee shall have received written
notification or obtained actual knowledge.
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SECTION 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or any of the Company's Subsidiaries, or
their respective Affiliates with the same rights it would have if it were not
Trustee. Any Agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee makes no representation
as to the validity or adequacy of this Indenture or the Securities and it shall
not be accountable for the Company's use of the proceeds from the Securities,
and it shall not be responsible for any statement in the Securities, other than
the Trustee's certificate of authentication, or the use or application of any
funds received by a Paying Agent other than the Trustee.
SECTION 7.05. Notice of Default. If a Default or an Event of Default
occurs and is continuing and if it is known to the Trustee, the Trustee shall
mail to each Securityholder notice of the uncured Default or Event of Default
within 90 days after such Default or Event of Default occurs. Except in the case
of a Default or an Event of Default in payment of principal (or premium, if any)
of, or interest on, any Security (including the payment of the Change of Control
Purchase Price on the Change of Control Payment Date, the payment of the
Redemption Price on the Redemption Date and the payment of the Offer Price on
the Purchase Date), the Trustee may withhold the notice if and so long as a
Trust Officer in good faith determines that withholding the notice is in the
interest of the Securityholders.
SECTION 7.06. Reports by Trustee to Holders. Within 60 days after each
February 15 beginning with the February 15 following the date of this Indenture,
the Trustee shall, if required by law, mail to each Securityholder a brief
report dated as of such February 15 that complies with TIA (S) 313(a). The
Trustee also shall comply with TIA (S)(S) 313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Securityholders
shall be mailed to the Company and filed with the SEC and each stock exchange,
if any, on which the Securities are listed.
SECTION 7.07. Compensation and Indemnity. The Company agrees to pay
to the Trustee from time to time reasonable compensation for its services. The
Trustee's compensation shall not be limited by any law on compensation of a
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trustee of an express trust. The Company shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances incurred or made
by it. Such expenses shall include the reasonable compensation, disbursements
and expenses of the Trustee's agents, accountants, experts and counsel.
The Company agrees to indemnify the Trustee (in its capacity as
Trustee) and each of its officers, directors, attorneys-in-fact and agents for,
and hold it harmless against, any claim, demand, expense (including but not
limited to reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel), loss or liability incurred by it without negligence or bad
faith on its part, arising out of or in connection with the administration of
this trust and its rights or duties hereunder including the reasonable costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder. The
Trustee shall notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. The Company shall defend the claim and
the Trustee shall provide reasonable cooperation at the Company's expense in the
defense. The Trustee may have separate counsel and the Company shall pay the
reasonable fees and expenses of such counsel; provided that the Company will not
be required to pay such fees and expenses if they assume the Trustee's defense
and there is no conflict of interest between the Company and the Trustee in
connection with such defense. The Company need not pay for any settlement made
without their written consent. The Company need not reimburse any expense or
indemnify against any loss or liability to the extent incurred by the Trustee
through its negligence, bad faith or willful misconduct.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all assets held or
collected by the Trustee, in its capacity as Trustee, except assets held in
trust to pay principal and premium, if any, of or interest on particular
Securities, including, without limitation, assets held in the Collateral
Account.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(e) or (f) occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
The Company's obligations under this Section 7.07 and any lien arising
hereunder shall survive the resignation or removal of the Trustee, the discharge
of the Company's obligations pursuant to Article 8 of this Indenture and any
rejection or termination of this Indenture under any Bankruptcy Law.
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SECTION 7.08. Replacement of Trustee. The Trustee may resign by so
notifying the Company in writing. The Holder or Holders of a majority in
principal amount of the outstanding Securities may remove the Trustee by so
notifying the Company and the Trustee in writing and may appoint a successor
trustee with the Company's consent. The Company may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, Custodian, or other public officer takes charge of
the Trustee or its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of the Securities may appoint a
successor Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the trustee provided for in Section 7.07
have been paid, the retiring Trustee shall transfer all property held by it as
trustee (including the Collateral Account) to the successor Trustee, subject to
the lien provided in Section 7.07, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall have all the
rights, powers and duties of the Trustee under this Indenture. A successor
Trustee shall mail notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding
Securities may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
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Notwithstanding replacement of the Trustee pursuant to this Section
7.08, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all of its corporate trust business to, another corporation, the resulting,
surviving or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise eligible hereunder,
be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA (S) 310(a)(1), (2) and (5). The Trustee
shall have a combined capital and surplus of at least $10,000,000 as set forth
in its most recent published annual report of condition. The Trustee shall
comply with TIA (S) 310(b).
SECTION 7.11. Preferential Collection of Claims Against Company. The
Trustee shall comply with 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.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. Option to Effect Legal Defeasance or Covenant Defeasance.
The Company may, at its option at any time, elect to have Section 8.02 or
Section 8.03 applied to all outstanding Securities upon compliance with the
conditions set forth below in this Article 8.
SECTION 8.02. Legal Defeasance and Discharge. Upon the Company's
exercise under Section 8.01 of the option applicable to this Section 8.02, the
Company shall be deemed to have been discharged from its obligations with
respect to all outstanding Securities on the date the conditions set forth below
are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Securities, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section 8.05
and the other Sections of this Indenture referred to in (a) and (b) below, and
to have satisfied all its other obligations under such Securities and this
Indenture (and the Trustee, on demand of and at the expense of the Company,
shall execute
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proper instruments acknowledging the same), except for the following which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Securities to receive solely from the trust fund
described in Section 8.04, and as more fully set forth in such Section 8.04,
payments in respect of the principal of, premium, if any, and interest on such
Securities when such payments are due, (b) the Company's obligations with
respect to such Securities under Sections 2.04, 2.06, 2.07, 2.10 and 4.03, (c)
the rights, powers, trusts, duties and immunities of the Trustee hereunder and
the Company's obligations in connection therewith and (d) this Article 8.
Subject to compliance with this Article 8, the Company may exercise its option
under this Section 8.02 notwithstanding the prior exercise of its option under
Section 8.03 with respect to the Securities.
SECTION 8.03. Covenant Defeasance. Upon the Company's exercise under
Section 8.01 of the option applicable to this Section 8.03, the Company shall be
released from its obligations under the covenants contained in Sections 4.04,
4.06, 4.07, 4.08, 4.09, 4.11, 4.12, 4.13, 4.14, 4.15, 4.18, 4.19 and Article 5
(other than the obligation of any successor to assume the obligations of the
Company hereunder) with respect to the outstanding Securities on and after the
date the conditions set forth below are satisfied (hereinafter, "Covenant
Defeasance"), and the Securities 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.
For this purpose, such Covenant Defeasance means that, with respect to the
outstanding Securities, the Company need not 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, but, except as specified
above, the remainder of this Indenture and such Securities shall be unaffected
thereby.
SECTION 8.04. Conditions to Legal or Covenant Defeasance. The
following shall be the conditions to the application of either Section 8.02 or
Section 8.03 to the outstanding Securities:
(a) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 who shall agree to comply with the provisions of this Article 8
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated solely
to, the benefit
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of the Holders of such Securities, (a) cash, or (b) U.S. Government Obligations
or U.S. Legal Tender Equivalents, or (c) a combination thereof, in such amounts,
as in each case will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge and which shall be
applied by the Trustee (or other qualifying trustee) to pay and discharge (i)
the principal of, premium, if any, and interest on the outstanding Securities on
the Stated Maturity or on the applicable Redemption Date, as the case may be, of
such principal or installment of principal, premium, if any, or interest and the
Holders of Securities shall have a valid, perfected, exclusive security interest
in the assets of such trust; provided that the Trustee shall have been
irrevocably instructed to apply such cash and the proceeds of such U.S.
Government Obligations or U.S. Legal Tender Equivalents to said payments with
respect to the Securities;
(b) In the case of an election under Section 8.02, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably satisfactory to the Trustee confirming that (i) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (ii) since the date hereof, there has been a change in the applicable
Federal income tax law, in either case to the effect that, and based thereon
such opinion shall confirm that, the Holders of the outstanding Securities 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, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders of the
outstanding Securities 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 in the same amount, 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 with respect to the Securities
shall have occurred and be continuing on the date of such deposit or, in so far
as Section 6.01(e) or 6.01(f) is concerned, at any time during the period ending
on the 91st day after the date of such deposit (it being understood that this
condition is a condition subsequent which shall not be deemed satisfied until
the expiration of such period, but in the case of Covenant Defeasance, the
covenants which are defeased under Section 8.03 will cease to be in effect
unless an Event of Default under Section 6.01(e) or 6.01(f) occurs during such
period);
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(e) Such Legal Defeasance or Covenant Defeasance shall not result in a
breach or violation of, or constitute a default under this Indenture or any
other material agreement or instrument to which the Company or any of the
Company's Subsidiaries is a party or by which any of them is bound;
(f) In the case of an election under either Section 8.02 or 8.03, the
Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit made by the Company pursuant to its election under Section 8.02
or 8.03 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 creditors of the Company or others; and
(g) The Company shall have delivered to the Trustee an Officers'
Certificate stating that all conditions precedent provided for or relating to
either the Legal Defeasance under Section or the Covenant Defeasance under
Section 8.03 (as the case may be) have been complied with as contemplated by
this Section 8.04.
SECTION 8.05. Deposited U.S. Legal Tender Equivalents and U.S.
Government Obligations to be Held in Trust; Other Miscellaneous Provisions.
Subject to Section 8.06, all cash, U.S. Legal Tender Equivalents and U.S.
Government Obligations (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 in respect of the outstanding
Securities shall be held in trust and applied by the Trustee, in accordance with
the provisions of such Securities and this Indenture, to the payment, either
directly or through any Paying Agent as the Trustee may determine, to the
Holders of such Securities of all sums due and to become due thereon in respect
of principal, premium, if any, and interest, but such money need not be
segregated from other funds except to the extent required by law.
SECTION 8.06. Repayment to the Company. Subject to any applicable
escheat or abandoned property laws, 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 Security 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; and the
Holder of such Security shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease.
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SECTION 8.07. Reinstatement. If the Trustee or Paying Agent is unable
to apply any cash, U.S. Legal Tender Equivalents or U.S. Government Obligations
in accordance with Section 8.02 or 8.03, 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 Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 until such time as the
Trustee or Paying Agent is permitted to apply such money in accordance with
Sections 8.02 and 8.03, as the case may be; provided, however, that, if the
Company makes any payment of principal of, premium, if any, or interest on any
Security following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the cash held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.01. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Company, when authorized by Board
Resolutions, and the Trustee, at any time and from time to time, may enter into
one or more indentures supplemental hereto, in form satisfactory to the Trustee,
for any of the following purposes:
(1) to cure any ambiguity, defect, or
inconsistency, or to make any other provisions with
respect to matters or questions arising under this
Indenture which shall not be inconsistent with the
provisions of this Indenture, provided such action
pursuant to this clause (1) shall not adversely
affect the interests of any Holder in any respect;
(2) to add to the covenants of the Company for
the benefit of the Holders, or to surrender any right
or power herein conferred upon the Company or to make
any other change that does not adversely affect the
rights of any Holder, provided that the Company has
delivered to the Trustee an Opinion of Counsel
stating that such change does not adversely affect
the rights of any Holder;
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(3) to provide for collateral or guarantors for
the Securities;
(4) to evidence the succession of another Person
to the Company, and the assumption by any such
successor of the obligations of the Company, herein
and in the Securities in accordance with Article 5;
(5) to comply with the TIA; or
(6) to provide for the issuance and
authorization of the Exchange Securities.
SECTION 9.02. Amendments, Supplemental Indentures and Waivers with
Consent of Holders. Subject to Section 6.08, with the consent of the Holders of
not less than a majority in aggregate principal amount of then outstanding
Securities, by written act of said Holders delivered to the Company and the
Trustee, the Company, when authorized by Board Resolutions, and the Trustee may
amend or supplement this Indenture or the Securities or enter into an indenture
or indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
the Securities or of modifying in any manner the rights of the Holders under
this Indenture or the Securities. Subject to Section 6.08, the Holder or Holders
of not less than a majority, in principal amount of then outstanding Securities
may waive compliance by the Company with any provision of this Indenture or the
Securities. Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, without the consent of the Holder of
each outstanding Security affected thereby:
(1) reduce the percentage of principal amount of
Securities whose Holders must consent to an
amendment, supplement or waiver of any provision of
this Indenture or the Securities;
(2) reduce the rate or extend the time for
payment of interest on any Security;
(3) reduce the principal amount of any Security,
the Change of Control Purchase Price, the Asset Sale
Offer Price or the Redemption Price;
(4) change the Stated Maturity of any Security;
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(5) alter the security provisions of Section
4.20 or the redemption provisions of Article 3 or
paragraph 5 of the Securities or the terms or
provisions of Section 4.15 or the terms or provisions
of Article 11, in any case, in a manner adverse to
any Holder;
(6) make any changes in the provisions
concerning waivers of Defaults or Events of Default
by Holders of the Securities or the rights of Holders
to recover the principal or premium of, interest on,
or redemption payment with respect to, any Security,
including without limitation any changes in Section
6.08, 6.12 or this third sentence of this Section
9.02;
(7) make the principal of, or the interest on,
any Security payable with anything or in any manner
other than as provided for in this Indenture
(including changing the place of payment where, or
the coin or currency in which, any Security or any
premium or the interest thereon is payable) and the
Securities as in effect on the date hereof; or
(8) make the Securities subordinated in right of
payment to any extent or under any circumstances to
any other indebtedness.
With the consent of Holders of two-thirds of the outstanding aggregate
principal amount of the Securities, the Company and the Trustee may change the
Change of Control Purchase Date and the Asset Sale Offer Period.
It shall not be necessary for the consent of the Holders under this
Section 9.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture or
waiver.
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After an amendment, supplement or waiver under this Section 9.02 or
Section 9.4 becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this
Article 9, the Company may, but shall not be obligated to, offer to any Holder
who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.03. Compliance with TIA. Every amendment, waiver or
supplement of this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents. Until an amendment,
waiver or supplement becomes effective, a consent to it by a Holder is a
continuing consent by the Holder and every subsequent Holder of a Security or
portion of a Security that evidences the same debt as the consenting Holder's
Security, even if notation of the consent is not made on any Security. However,
any such Holder or subsequent Holder may revoke the consent as to his Security
or portion of his Security by written notice to the Company or the Person
designated by the Company as the Person to whom consents should be sent if such
revocation is received by the Company or such Person before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Securities have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 90 days
after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(1) through (8) of Section 9.02, in which case, the amendment, supplement or
waiver shall bind only each Holder of a Security who has consented to it and
every subsequent Holder of a Security or portion of a Security that evidences
the
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same debt as the consenting Holder's Security; provided that any such waiver
shall not impair or affect the right of any Holder to receive payment of
principal and premium of and interest on a Security, on or after the respective
dates set for such amounts to become due and payable expressed in such Security,
or to bring suit for the enforcement of any such payment on or after such
respective dates.
SECTION 9.05. Notation on or Exchange of Securities. If an amendment,
supplement or waiver changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver it to the Trustee or require the Holder to
put an appropriate notation on the Security. The Trustee may place an
appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Any failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment, supplement or waiver.
SECTION 9.06. Trustee to Sign Amendments, Etc. The Trustee shall
execute any amendment, supplement or waiver authorized pursuant to this Article
9; provided that the Trustee may, but shall not be obligated to, execute any
such amendment, supplement or waiver which affects the Trustee's own rights,
duties or immunities under this Indenture. The Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of any amendment, supplement or waiver authorized
pursuant to this Article 9 is authorized or permitted by this Indenture.
ARTICLE 10
COLLATERAL ACCOUNT AND RELEASES
SECTION 10.01. Collateral Account.
(a) Prior to the Issue Date of the Securities, the Trustee shall open
with Harris Trust and Savings Bank (the "Bank") and shall require the Bank to
establish on its books and maintain, a trust account (the "Collateral Account")
into which the Trustee shall deposit the Special Redemption Amount when received
from the Company pursuant to Section 4.20. In order to secure the full and
punctual payment of the Securities in accordance with the terms hereof (but
subject to the provisions of this Article 10 governing release of funds held in
the Collateral Account), the Company hereby grants to the Trustee a continuing
security interest in and to all of its right, title and interest in and to the
Collateral
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Account, all cash deposited therein and the Treasury Bills held therein pursuant
to Section 10.02 and all proceeds of any of the foregoing, whether now existing
or hereafter acquired or arising. The Collateral Account shall relate solely to
the Securities and the Collateral securing the Securities, and funds in such
account shall not be commingled with any other moneys or properties, tangible or
intangible. All payments to be made from time to time by the Trustee to the
Holders of Securities out of funds in the Collateral Account as payment of the
Redemption Price in connection with a Special Redemption shall be made by the
Trustee as Paying Agent. All moneys deposited from time to time in the
Collateral Account pursuant to this Indenture shall be held by the Trustee in
trust hereunder as Collateral as herein provided. Any payments of principal of
or interest on, or proceeds from the sale of, Treasury Bills held in the
Collateral Account shall be credited and deposited into the Collateral Account.
The Collateral Account shall be titled "Bank of Montreal Trust Company, Trustee
for benefit of holders of securities of Price Communications Wireless, Inc.,
under an Indenture dated July 10, 1997 Collateral Account."
(b) The Collateral Account shall be maintained with the Bank until
release by the Trustee contemporaneously with the earliest of (i), (ii) or (iii)
of this subparagraph (b) to occur: (i)(A) the closing of the Merger, (B) the
borrowing by the Company of an aggregate of at least $325.0 million pursuant to
the Credit Agreement and (C) the receipt by the Company of the PCC Equity
Contribution, and (D) receipt by the Trustee of an order from the Company
requesting that the Trustee release the Collateral to the order of the Company;
or (ii) the Business Day prior to the Special Redemption Date or (iii) the date
of which no Securities remain outstanding.
SECTION 10.02. Eligible Investments. Upon order from the Company, the
Trustee shall invest any funds in the Collateral Account in Treasury Bills,
provided that;
(a) any such investment and the proceeds therefrom are held through
the Collateral Account, and
(b) concurrently with making such investment, the Trustee ensures
that (i) the Bank credits the Treasury Bills to the Collateral
Account and (ii) the Bank causes a corresponding position to be
credited to its securities account (A) at the Federal Reserve
Bank of New York or (B) at a securities intermediary (as defined
in 31 C.F.R.(S)357.2) that has a Participant's Securities
Account with the Federal Reserve Bank of New York and also
credited to such Participant's Securities Account, in each case
pursuant to Treasury Regulations and the New
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York Uniform Commercial Code (the "UCC"), to the extent such
laws are applicable.
The Trustee shall not be liable for any loss incurred on any funds
invested in Treasury Bills pursuant to the provisions of this Section 10.02.
SECTION 10.03. Release of Collateral.
Upon order from the Company to the Trustee pursuant to clause (i) of
Section 10.01(b), all properties in the Collateral Account shall be released to
the Company and the security interests in the Collateral created under Section
10.01 shall terminate; and upon the Special Redemption, the Trustee shall apply
all funds in the Collateral Account (i) first, to pay the Redemption Price on
the Special Redemption Date in respect of the Special Redemption and (ii)
immediately after the Special Redemption Date, to return any remaining funds in
the Collateral Account to the Company. The Trustee, when required by the
provisions of the foregoing sentence, shall execute instruments to release the
Collateral from the lien of this Indenture, or convey the Trustee's interest in
the same, in a manner and under circumstances which are not inconsistent with
the provisions of this Indenture, and shall have the power to effect any sale of
the Treasury Bills or any portion thereof at such time. The Trustee shall not be
liable for any loss incurred upon the sale of Treasury Bills prior to maturity
in accordance with this Section and Section 3.06. No party relying upon an
instrument executed by the Trustee as provided in this Article 10 shall be bound
to ascertain the Trustee's authority, inquire into the satisfaction of any
conditions precedent or see to the application of any moneys.
ARTICLE 11
RIGHT TO REQUIRE REPURCHASE
SECTION 11.01. Repurchase of Securities at Option of the Holder Upon a
Change of Control.
(a) In the event that a Change of Control occurs, each Holder will
have the right, at such Holder's option, to require the Company to repurchase
all or any part of such Holder's Securities (provided that the principal amount
of such Securities at stated maturity must be $1,000 or an integral multiple
thereof) pursuant to an unconditional, irrevocable offer by the Company (the
"Change of Control Offer") on a date that is no later than 45 Business Days
after the occurrence of such Change of Control (the "Change of Control Purchase
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Date"), at a cash price (the "Change of Control Purchase Price") equal to 101%
of the aggregate principal amount thereof, plus accrued and unpaid interest, if
any, to and including the Change of Control Purchase Date.
(b) Prior to the commencement of a Change of Control Offer, but in any
event within 30 days following any Change of Control, the Company covenants to,
if at such time the terms of the Credit Agreement require repayment upon a
Change of Control, (i) repay in full and terminate all commitments and
Indebtedness under the Credit Agreement or, (ii)(A) offer to repay in full and
terminate all commitments and Indebtedness under the Credit Agreement and (B)
repay the Indebtedness owed to each such lender that has accepted such offer or
(iii) obtain the requisite consents under the Credit Agreement to waive the
provisions of this sentence. The Company's failure to comply with the preceding
sentence shall constitute an Event of Default described in Section 6.01(c) and
not in Section 6.01(b).
(c) In the event that, pursuant to this Section 11.01, the Company
shall be required to commence a Change of Control Offer, the Company shall
follow the procedures set forth in this Section 11.01 as follows:
(1) the Change of Control Offer shall commence within 20 Business
Days following the Change of Control date;
(2) the Change of Control Offer shall remain open for 20 Business
Days, except to the extent that a longer period is required by
applicable law (the "Change of Control Offer Period");
(3) upon the expiration of a Change of Control Offer Period, the
Company shall purchase all of the properly tendered and not properly
withdrawn Securities in response to the Change of Control Offer;
(4) the Company shall provide the Trustee with notice of the
Change of Control Offer at least 5 Business Days before the
commencement of any Change of Control Offer; and
(5) on or before the commencement of any Change of Control Offer,
the Company or the Trustee (upon the request and at the expense of the
Company) shall send, by first-class mail, a notice to each of the
Securityholders, which (to the extent consistent with this Indenture)
shall govern the terms of the Change of Control Offer and shall state:
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(i) that the Change of Control Offer is being made pursuant to
such notice and this Section 11.01 and that all Securities, or portions
thereof, tendered will be accepted for payment;
(ii) the Change of Control Purchase Price (including the amount
of accrued and unpaid interest), the Change of Control Purchase Date
and the Change of Control Put Date (as defined below);
(iii) that any Security, or portion thereof, not tendered or
accepted for payment will continue to accrue interest;
(iv) that, unless the Company defaults in depositing cash with
the Paying Agent in accordance with the last paragraph of this clause
(b) or such payment is prevented, any Security, or portion thereof,
accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Purchase Date;
(v) that Holders electing to have a Security, or portion
thereof, purchased pursuant to a Change of Control Offer will be
required to surrender the Security, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Security completed, to
the Paying Agent (which may not for purposes of this Section 11.01,
notwithstanding anything in this Indenture to the contrary, be the
Company or any Affiliate of the Company) at the address specified in
the notice prior to the close of business on the earlier of (a) the
third Business Day prior to the Change of Control Purchase Date and (b)
the third Business Day following the expiration of the Change of
Control Offer (such earlier date being the "Change of Control Put
Date");
(vi) that Holders will be entitled to withdraw their election,
in whole or in part, if the Paying Agent (which may not for purposes of
this Section 11.01, notwithstanding anything in this Indenture to the
contrary, be the Company or any Affiliate of the Company) receives, up
to the close of business on the Change of Control Put Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Securities the Holder is
withdrawing and a statement that such Holder is withdrawing his
election to have such principal amount of Securities purchased; and
(vii) a brief description of the events resulting in such Change
of Control.
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Any such Change of Control Offer shall comply with all applicable
provisions of Federal and state securities laws, rules and regulations,
including those regulating tender offers, if applicable, and any provisions of
this Indenture which conflict with such laws shall be deemed to be superseded by
the provisions of such laws.
On or before the Change of Control Purchase Date, the Company will (i)
accept for payment Securities or portions thereof properly tendered and not
properly withdrawn pursuant to the Change of Control Offer, (ii) deposit with
the Paying Agent cash sufficient to pay the Change of Control Purchase Price
(including accrued and unpaid interest) for all Securities or portions thereof
so tendered and (iii) deliver to the Trustee Securities so accepted together
with an Officers' Certificate listing the Securities or portions thereof being
purchased by the Company. The Paying Agent will on the Change of Control
Purchase Date promptly deliver to Holders of Securities so accepted payment in
an amount equal to the Change of Control Purchase Price for such Securities,
together with any accrued but unpaid interest, and the Trustee shall promptly
authenticate and mail or deliver to such Holders a new Security equal in
principal amount to any unpurchased portion of the Security surrendered. Any
Securities not so accepted shall be promptly mailed or delivered by the Company
to the Holder thereof. The Company will announce publicly the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Purchase Date.
ARTICLE 12
SUBORDINATION
SECTION 12.01. Securities Subordinated to Senior Indebtedness.
The Company and each Holder, by its acceptance of Securities, agree
that (a) the payment of the principal of and interest on the Securities and (b)
any other payment in respect of the Securities, including on account of the
acquisition or redemption of the Securities by the Company (including, without
limitation, pursuant to Section 4.15 or 11.01) is subordinated, to the extent
and in the manner provided in this Article 12, to the prior payment of Senior
Indebtedness of the Company and that these subordination provisions are for the
benefit of the holders of Senior Indebtedness. Notwithstanding anything
contained in this Article 12, no payments to any holders of Senior Indebtedness
shall be made out of investments or proceeds held in the Collateral Account,
which shall be applied solely as provided in Article 10 hereof.
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This Article 12 shall constitute a continuing offer to all Persons who,
in reliance upon such provisions, become holders of, or continue to hold, Senior
Indebtedness, and such provisions are made for the benefit of the holders of
Senior Indebtedness, and such holders are made obligees hereunder and any one or
more of them may enforce such provisions.
SECTION 12.02. No Payment on Securities in Certain Circumstances.
(a) No payment may be made by or on behalf of the Company on account
of the principal of, premium, if any, or interest on the Securities (including
any repurchases of Securities) or on account of any other monetary obligation
for the payment of money due on the Securities, including the redemption
provisions of the Securities, for cash or property (other than Junior Securities
issued in connection with a reorganization pursuant to the Bankruptcy Laws of
any jurisdiction), (i) upon the maturity of any Senior Indebtedness by lapse of
time, acceleration (unless waived) or otherwise, unless and until all principal
of, premium, if any, and interest (and with respect to the Credit Agreement, any
other Obligations) on such Senior Indebtedness are first paid in full in cash or
Cash Equivalents (or, with respect to Senior Indebtedness other than the Credit
Agreement, such payment is duly provided for), or otherwise to the extent such
holders expressly acknowledge satisfaction of amounts due by settlement other
than in cash or Cash Equivalents, or (ii) in the event of default in the payment
of any principal of, premium, if any, or interest on Senior Indebted ness of the
Company when it becomes due and payable, whether at maturity or at a date fixed
for prepayment or by declaration or otherwise (a "Payment De fault"), unless and
until such Payment Default has been cured or waived or otherwise has ceased to
exist.
(b) Upon (i) the happening of an event of default (other than a
Payment Default) that permits the holders of Senior Indebtedness (or a trustee
or agent on behalf of such holders) to declare such Senior Indebtedness to be
due and payable and (ii) written notice of such event of default given to the
Trustee by the holders (or a trustee, agent or other representative of such
holders) of an aggregate of at least $25 million principal amount outstanding of
any Designated Senior Indebtedness (a "Payment Notice"), then, unless and until
such event of default has been cured or waived or otherwise has ceased to exist,
no payment may be made by or on behalf of the Company on account of the
principal of, premium, if any, or interest on the Securities, or to repurchase
any of the Securities, or on account of any other obligation for the payment of
money in respect of the Securities, including the redemption provisions of the
Securities, in any such case (other than payments made with Junior Securities
issued in connection with a reorganization pursuant to the Bankruptcy Laws of
any jurisdiction).
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Notwithstanding the foregoing, unless the Senior Indebtedness in respect of
which such event of default exists has been declared due and payable in its
entirety within 179 days after the Payment Notice is delivered as set forth
above (the "Payment Blockage Period") and such declaration has not been
rescinded or waived, at the end of the Payment Blockage Period, the Company
shall be required, unless the provisions described in Section 12.02(a) are then
applicable, to pay all sums not paid to the Holders of the Securities during the
Payment Blockage Period, due to the foregoing prohibitions and to resume all
other payments as and when due on the Securities. Any number of Payment Notices
may be given; provided, however, that (i) not more than one Payment Notice shall
be given within a period of any 360 consecutive days, and (ii) no default that
existed upon the date of such Payment Notice or the commencement of such Payment
Blockage Period (whether or not such event of default relates to the same issue
of Senior Indebtedness) shall be made the basis for the commencement of any
other Payment Blockage Period (it being acknowledged that any subsequent action,
or any breach of any financial covenant for a period commencing after the
expiration of such Payment Blockage Period that, in either case, would give rise
to a new event of default, even though it is a breach pursuant to any provision
under which a prior event of default previously existed, shall constitute a new
event of default for this purpose).
(c) In furtherance of the provisions of Section 12.01, in the event
that, notwithstanding the foregoing provisions of this Section 12.02, any
payment or distribution of assets of the Company (other than Junior Securities
issued in connection with a reorganization pursuant to the Bankruptcy Laws of
any juris diction) shall be received by the Trustee or the Holders at a time
when such payment or distribution is prohibited by the foregoing provisions,
such payment or distribution shall be held in trust for the benefit of the
holders of such Senior Indebtedness, and shall be paid or delivered by the
Trustee or such Holders, as the case may be, to the holders of such Senior
Indebtedness remaining unpaid (or, with respect to Senior Indebtedness other
than the Credit Agreement, unprovided for) or to their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate principal amounts remaining unpaid on
account of such Senior Indebtedness held or represented by each, for
application to the payment of all such Senior Indebtedness remaining unpaid, to
the extent necessary to pay (or, with respect to Senior Indebtedness other than
the Credit Agreement to provide for the payment) of all such Senior Indebtedness
in full, or otherwise to the extent holders expressly acknowledge satisfaction
of amounts due after giving effect to any concurrent payment or distribution to
the holders of such Senior Indebtedness.
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SECTION 12.03. Securities Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or
similar proceeding or upon assignment for the benefit of creditors or any
marshalling of assets or liabilities:
(a) the holders of all Senior Indebtedness of the Company will first be
entitled to receive payment in full in cash or Cash Equivalents (or, with
respect to Senior Indebtedness other than the Credit Agreement to have such
payment duly provided for), or with respect to any holder, otherwise to the
extent such holders expressly acknowledge satisfaction of amounts due in
settlement other than in cash or Cash Equivalents (it being acknowledged that
approval of a plan of reorganization in a bankruptcy proceeding shall not
constitute satisfaction of amounts due in settlement), before the Holders are
entitled to receive any payment on account of the principal of, premium, if any,
and interest on the Securities (other than Junior Securities issued in
connection with a reorganization pursuant to the Bankruptcy Laws of any
jurisdiction);
(b) any payment or distribution of assets of the Company of any kind or
character from any source, whether in cash, property or securities (other than
with Junior Securities issued in connection with a reorganization pursuant to
the Bankruptcy Laws of any jurisdiction) to which the Holders or the Trustee on
behalf of the Holders would be entitled, except for the provisions of this
Article 12, will be paid by the liquidating trustee or agent or other Person
making such a payment or distribution directly to the holders of such Senior
Indebtedness or their representative to the extent necessary to make payment in
full on all such Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company of any kind or character from any source,
whether in cash, property or securities (excluding payments made with Junior
Securities issued in connection with a reorganization pursuant to the Bankruptcy
Laws of any jurisdiction), shall be received by the Trustee or the Holders or
any Paying Agent (or, if the Company is acting as its own Paying Agent, money
for any such payment or distribution shall be segregated or held in trust) on
account of any principal, premium, interest, or other obligation for the payment
of money in respect of the Securities, before all Senior Indebtedness of the
Company is paid in full in cash or Cash Equivalents, such payment or
distribution (subject to the
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provisions of Section 12.07) shall be received and held in trust by the Trustee
or such Holder or Paying Agent for the benefit of the holders of such Senior
Indebtedness, or their respective representatives, ratably according to the
respective amounts of such Senior Indebtedness held or represented by each, to
the extent necessary to make payment as provided herein of all such Senior
Indebted ness remaining unpaid after giving effect to all concurrent payments
and distributions and all provisions therefor to or for the holders of such
Senior Indebtedness, but only to the extent that as to any holder of such Senior
Indebtedness, as promptly as practical following notice from the Trustee to the
holders of such Senior Indebtedness that such prohibited payment has been
received by the Trustee, Holder(s) or Paying Agent (or has been segregated as
provided above), such holder (or a representative therefor) notifies the Trustee
of the amounts then due and owing on such Senior Indebtedness, if any, held by
such holder and only the amounts specified in such notices to the Trustee shall
be paid to the holders of such Senior Indebtedness.
SECTION 12.04. Securityholders to Be Subrogated to Rights of Holders
of Senior Indebtedness.
Subject to the payment in full in cash or Cash Equivalents of all
Senior Indebtedness as provided herein, the Holders of Securities shall be
subrogated to the rights of the holders of such Senior Indebtedness to receive
payments or distributions of assets of the Company applicable to the Senior
Indebtedness until all amounts owing on the Securities shall be paid in full,
and for the purpose of such subrogation no such payments or distributions to the
holders of such Senior Indebtedness by or on behalf of the Company, or by or on
behalf of the Holders by virtue of this Article 12, which otherwise would have
been made to the Holders shall, as between the Company and the Holders, be
deemed to be payment by the Company or on account of such Senior Indebtedness,
it being understood that the provisions of this Article 12 are and are intended
solely for the purpose of defining the relative rights of the Holders, on the
one hand, and the holders of such Senior Indebtedness, on the other hand.
If any payment or distribution to which the Holders would otherwise
have been entitled but for the provisions of this Article 12 shall have been
applied, pursuant to the provisions of this Article 12, to the payment of
amounts payable under Senior Indebtedness of the Company, then the Holders shall
be entitled to receive from the holders of such Senior Indebtedness any payments
or distributions received by such holders of Senior Indebtedness in excess of
the amount sufficient to pay all amounts payable under or in respect of such
Senior Indebtedness in full in cash or Cash Equivalents.
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SECTION 12.05. Obligations of the Company Unconditional.
Nothing contained in this Article 12 or elsewhere in this Indenture or
in the Securities is intended to or shall impair, as between the Company and the
Holders, the obligation of each such Person, which is absolute and
unconditional, to pay to the Holders the principal of, premium, if any, and
interest on the Securities as and when the same shall become due and payable in
accordance with their terms, or is intended to or shall affect the relative
rights of the Holders and creditors of the Company other than the holders of the
Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or
any Holder from exercising all remedies otherwise permitted by applicable law
upon default under this Indenture, subject to the rights, if any, under this
Article 12, of the holders of Senior Indebtedness in respect of cash, property
or securities of the Company received upon the exercise of any such remedy.
Notwithstanding anything to the contrary in this Article 12 or elsewhere in this
Indenture or in the Securities, upon any distribution of assets of the Company
referred to in this Article 12, the Trustee, subject to the provisions of
Sections 7.01 and 7.02, and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding up, liquidation or reorganization proceedings are pending,
or a certificate of the liquidating trustee or agent or other Person making any
distribution to the Trustee or to the Holders for the purpose of ascertaining
the Persons entitled to participate in such distribution, the holders of the
Senior Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 12 so long as such court has been
apprised of the provisions of, or the order, decree or certificate makes
reference to, the provisions of this Article 12. Nothing in this Section 12.05
shall apply to the claims of, or payments to, the Trustee under or pursuant to
Section 7.07.
SECTION 12.06. Trustee Entitled to Assume Payments Not Prohibited in
Absence of Notice.
The Trustee shall not at any time be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or by
the Trustee unless and until a Trust Officer of the Trustee or any Paying Agent
shall have received, no later than one Business Day prior to such payment,
written notice thereof from the Company or from one or more holders of Senior
Indebtedness or from any representative therefor and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Sections 7.01
and 7.02, shall be entitled in all respects conclusively to assume that no such
fact exists.
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SECTION 12.07. Application by Trustee of Assets Deposited with It.
Amounts deposited in trust with the Trustee pursuant to and in
accordance with Article 8 shall be for the sole benefit of the Holders and shall
not be subject to the subordination provisions of this Article 12. Otherwise,
any deposit of assets with the Trustee or the Paying Agent (whether or not in
trust) for the payment of principal of or interest on any Securities shall be
subject to the provisions of Sections 12.01, 12.02, 12.03 and 12.04; provided,
that, if prior to one Business Day preceding the date on which by the terms of
this Indenture any such assets may become distributable for any purpose
(including without limitation, the payment of either principal of or interest on
any Security) the Trustee or such Paying Agent shall not have received with
respect to such assets the written notice provided for in Section 12.06, then
the Trustee or such Paying Agent shall have full power and authority to receive
such assets and to apply the same to the purpose for which they were received,
and shall not be affected by any notice to the contrary which may be received by
it on or after such date.
SECTION 12.08. Subordination Rights Not Impaired by Acts or Omissions
of the Company or Holders of Senior Indebtedness.
No right of any present or future holders of any Senior Indebtedness to
enforce subordination provisions contained in this Article 12 shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms of this Indenture,
regardless of any knowledge thereof which any such holder may have or be
otherwise charged with. The holders of Senior Indebtedness may extend, renew,
modify or amend the terms of the Senior Indebtedness or any security therefor
and release, sell or exchange such security and otherwise deal freely with the
Company, all without affecting the liabilities and obligations of the parties to
this Indenture or the Holders.
SECTION 12.09. Securityholders Authorize Trustee to Effectuate Subor-
dination of Securities.
Each Holder of the Securities by his acceptance thereof authorizes and
expressly directs the Trustee on his behalf to take such action as may be
necessary or appropriate to effectuate the subordination provisions contained in
this Article 12 and to protect the rights of the Holders pursuant to this
Indenture, and appoints the Trustee his attorney-in-fact for such purpose,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or receivership
proceedings or upon an assignment for the
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benefit of creditors or any other marshalling of assets and liabilities of the
Company), the immediate filing of a claim for the unpaid balance of his
Securities in the form required in said proceedings and cause said claim to be
approved. If the Trustee does not file a proper claim or proof of debt in the
form required in such proceeding prior to 30 days before the expiration of the
time to file such claim or claims, then the holders of the Senior Indebtedness
or their representative are or is hereby authorized to have the right to file
and are or is hereby authorized to file an appropriate claim for and on behalf
of the Holders of said Securities. Nothing herein contained shall be deemed to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to authorize or consent to or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee or the holders of Senior Indebtedness or their
representative to vote in respect of the claim of any Securityholder in any such
proceeding.
SECTION 12.10. Right of Trustee to Hold Senior Indebtedness.
The Trustee shall be entitled to all of the rights set forth in this
Article 12 in respect of any Senior Indebtedness at any time held by it to the
same extent as any other holder of Senior Indebtedness, and nothing in this
Indenture shall be construed to deprive the Trustee of any of its rights as such
holder.
SECTION 12.11. Article 12 Not to Prevent Events of Default.
The failure to make a payment on account of principal of, premium, if
any, or interest or any other monetary obligation for the payment of money on
the Securities by reason of any provision of this Article 12 shall not be
construed as preventing the occurrence of a Default or an Event of Default under
Section 6.01 or in any way prevent the Trustee or the Holders from exercising
any right hereunder, subject to the rights, if any, under this Article of the
holders of Senior Indebtedness in respect of cash, property, securities or other
assets received upon the exercise of any such right.
SECTION 12.12. No Fiduciary Duty of Trustee to Holders of Senior
Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness, and shall not be liable to any such holders
(other than for its willful misconduct or negligence) if it shall in good faith
mistakenly pay over or distribute to the Holders of Securities or the Company or
any other Person, cash, property or securities to which any holders of Senior
Indebtedness shall be
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entitled by virtue of this Article 12 or otherwise. Nothing in this Section
12.12 shall affect the obligation of any other such Person to hold such payment
for the benefit of, and to pay such payment over to, the holders of Senior
Indebtedness or their representative.
ARTICLE 13
MISCELLANEOUS
SECTION 13.01. TIA Controls. If any provision of this Indenture limits,
qualifies, or conflicts with the duties imposed by operation of the TIA, the
imposed duties, upon qualification of this Indenture under the TIA, shall
control.
SECTION 13.02. Notices. Any notices or other communications to the
Company or the Trustee required or permitted hereunder shall be in writing, and
shall be sufficiently given if made by hand delivery, by telex, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company:
Price Communications Wireless, Inc.
45 Rockefeller Plaza
New York, New York 10020
Attention: Chief Financial Officer
Telecopy: (212) 397-3755
if to the Trustee:
Bank of Montreal Trust Company
77 Water Street
4th Floor
New York, New York 10005
Attention: Corporate Trust Department
Telecopy: (212) 701-7684
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when answered back, if telexed;
when receipt is acknowledged, if telecopied; and five Business Days after
mailing if
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sent by registered or certified mail, postage prepaid (except that a notice of
change of address shall not be deemed to have been given until actually received
by the addressee).
Any notice or communication mailed to a Securityholder shall be mailed
to him by first class mail or other equivalent means at his address as it
appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.03. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA ss. 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and any other Person shall
have the protection of TIA (S)312(c).
SECTION 13.04. 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, such Person shall furnish to the Trustee:
(1) an Officers' Certificate (in form and
substance reasonably satisfactory to the Trustee)
stating that, in the opinion of the signers, all
conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been
complied with; and
(2) an Opinion of Counsel (in form and substance
reasonably satisfactory to the Trustee) stating that,
in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a condition or covenant
provided for in this Indenture shall include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or
condition;
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(2) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certificate
or opinion are based;
(3) a statement that, in the opinion of such
Person, he has made such examination or investigation
as is necessary to enable him to express an informed
opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the
opinion of each such Person, such condition or
covenant has been complied with; provided, however,
that with respect to matters of fact an Opinion of
Counsel may rely on an Officers' Certificate or
certificates of public officials.
SECTION 13.06. Rules by Trustee, Paying Agent, Registrar. The Trustee
may make reasonable rules for action by or at a meeting of Securityholders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 13.07. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close. If a payment date is
a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 13.08. Governing Law. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK.
THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL
COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF
ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND
THE SECURITIES, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS.
THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT
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MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY SECURITYHOLDER TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY IN ANY OTHER JURISDICTION.
SECTION 13.09. No Adverse Interpretation of Other Agreements. This
Indenture may not be used to interpret another indenture, loan or debt agreement
of the Company or any of its respective Subsidiaries. Any such indenture, loan
or debt agreement may not be used to interpret this Indenture.
SECTION 13.10. No Recourse Against Others. No direct or indirect
employee, stockholder, director or officer, as such, past, present or future of
the Company, or any successor entity, shall have any personal liability in
respect of the obligations of the Company under the Securities or this Indenture
by reason of his or its status as such stockholder, employee, director or
officer. Each Securityholder by accepting a Security waives and releases all
such liability. Such waiver and release are part of the consideration for the
issuance of the Securities.
SECTION 13.11. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 13.12. Duplicate Originals. All parties may sign any number
of copies or counterparts of this Indenture. Each signed copy or counterpart
shall be an original, but all of them together shall represent the same
agreement.
SECTION 13.13. Severability. In case any one or more of the provisions
in this Indenture or in the Securities shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.
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SECTION 13.14. Table of Contents, Headings, Etc. The Table of Contents,
Cross-Reference Table and headings of the Articles and the Sections of this
Indenture have been inserted for convenience of reference only, are not to be
considered a part hereof and shall in no way modify or restrict any of the terms
or provisions hereof.
SECTION 13.15. Qualification of Indenture. The Company shall qualify
this Indenture under the TIA in accordance with the terms and conditions of the
Registration Rights Agreement and shall pay all costs and expenses (including
attorneys' fees for the Company and the Trustee) incurred in connection
therewith, including, but not limited to, costs and expenses of qualification of
the Indenture and the Securities and printing this Indenture and the Securities.
The Trustee shall be entitled to receive from the Company any such Officers'
Certificates, Opinions of Counsel or other documentation as it may reasonably
request in connection with any such qualification of this Indenture under the
TIA.
SECTION 13.16. Registration Rights. Certain Holders of the Securities
are entitled to certain registration rights with respect to such Securities
pursuant to, and subject to the terms of, the Registration Rights Agreement.
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SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
PRICE COMMUNICATIONS WIRELESS,
INC., a Delaware corporation
By:
------------------------------------
Name:
Title:
Attest:
---------------------------------
Secretary
BANK OF MONTREAL TRUST
COMPANY, Trustee
By:
------------------------------------
Name:
Title:
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<PAGE>
Exhibit A
[FORM OF SECURITY]
11 3/4% SERIES [A/B] SENIOR SUBORDINATED NOTE DUE 2007
No.
CUSIP No.
Price Communications Wireless, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), for value received, hereby promises to pay
to Cede & Co., or registered assigns, the principal sum of $___________ Dollars,
on July 15, 2007.
Interest Payment Dates: January 15 and July 15; commencing
January 15, 1998.
Record Dates: January 1 and July 1
Reference is made to the further provisions of this Security on the
reverse side, which will, for all purposes, have the same effect as if set forth
at this place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed.
Dated:
PRICE COMMUNICATIONS WIRELESS,
INC., a Delaware corporation
By:
-------------------------------------
Name:
Title:
A-1
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Securities described in the within-mentioned Indenture.
[Name of Trustee]
as Trustee
By:
-------------------------------------
Authorized Signatory
Dated:
A-2
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
11 3/4% Series [A/B] Senior Subordinated Note due 2007
Unless and until it is exchanged in whole or in part for Securities in
definitive form, this Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository or by the Depository or any
such nominee to a successor Depository or a nominee of such successor
Depository. Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation, ("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 in such other name
as is requested by an authorized representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is 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./1/
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 FOLLOWING 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"), OR (B) IT
IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT OF A
U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH REGULATION S UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT, WITHIN
THE TIME PERIOD REFERRED TO UNDER RULE 144(k) (TAKING INTO ACCOUNT THE
PROVISIONS OF RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE
SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS NOTE, RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY BELIEVES IS A QIB PURCHASING
FOR ITS OWN
- -------------------------
/1/ This paragraph should only be added if the Security is issued in
global form.
A-3
<PAGE>
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH RULE 144A UNDER THE
SECURITIES ACT, (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE,
AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY), (E) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (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)
AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, 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," "UNITED STATES" AND "U.S. PERSON"
HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATIONS UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO
REGISTER A TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS./2/
1. Interest.
Price Communications Wireless, Inc., a Delaware corporation
(hereinafter called the "Company," which term includes any successors under the
Indenture hereinafter referred to), promises to pay interest on the principal
amount of this Security at the rate and in the manner specified below. Interest
will accrue at 11 3/4% per annum and will be payable semi-annually in cash on
each January 15 and July 15, commencing January 15, 1998, or if any such day is
not a Business Day on the next succeeding Business Day (each an "Interest
Payment Date") to Holders of record of the Securities at the close of business
on the immediately preceding January 1 or July 1, whether or not a Business Day.
Interest will be computed on the basis of a 360-day year consisting of twelve
30-day months. Interest shall accrue from the most recent date to which interest
has been paid or, if no interest has been paid, from the date of issuance. To
the extent lawful, the Company shall pay interest on overdue principal at the
rate of the then applicable interest rate on the Securities; it shall pay
interest on overdue installments of interest (without regard to any applicable
grace periods) at the same rate to the extent lawful.
- -------------------------
/2/ This paragraph should be included only for the Initial Securities.
A-4
<PAGE>
2. Method of Payment.
The Company shall pay interest on the Securities (except defaulted
interest) to the Persons who are the registered Holders at the close of business
on the Record Date immediately preceding the Interest Payment Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. Except as
provided below, the Company shall pay principal and interest in such coin or
currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Company may pay principal and interest by wire transfer of Federal
funds, or interest by its check payable in such U.S. Legal Tender. The Company
may deliver any such interest payment to the Paying Agent or the Company may
mail any such interest payment to a Holder at the Holder's registered address.
3. Paying Agent and Registrar.
Initially, Bank of Montreal Trust Company (the "Trustee") will act as
Paying Agent and Registrar. The Company may change any Paying Agent, Registrar
or co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. Indenture.
The Company issued the Securities under an Indenture, dated as of July
10, 1997 (the "Indenture"), between the Company and the Trustee. Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust Indenture Act, as in
effect on the date of the Indenture. The Securities are subject to all such
terms, and Holders of Securities are referred to the Indenture and said Act for
a statement of them. The Securities are general unsecured obligations of the
Company limited in aggregate principal amount to $175,000,000.
5. Redemption. (a) The Company will not have the right to redeem
any Securities prior to July 15, 2002. On or after July 15, 2002, the Company
will have the right to redeem all or any part of the Securities in cash at the
redemption prices (expressed as a percentage of the aggregate principal amount
thereof) set forth below, in each case including accrued and unpaid interest, if
any, to the applicable Redemption Date (subject to the right of Holders of
record on the relevant Regular Record Date to receive interest due on an
Interest Payment Date
A-5
<PAGE>
that is on or prior to the Redemption Date) if redeemed during the 12-month
period beginning July 15 of the years indicated below:
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2002 105.875%
2003 104.406%
2004 102.938%
2005 101.469%
2006 and thereafter 100.000%
</TABLE>
Notwithstanding the optional redemption provisions described in the
preceding paragraph (a), prior to July 10, 2002, in the event that the Company
or Parent consummates one or more offerings of their Qualified Capital Stock on
or before the third anniversary of the date of the issuance of the Securities,
the Company may at its option, use all or a portion of the cash contributed to
it from such offerings to redeem up to 35% of the original aggregate principal
amount of the Securities at a cash redemption price equal to 111.75% of the
principal amount of the Securities, plus accrued and unpaid interest thereon, if
any, to the redemption date; provided that at least $113,750,000 aggregate
principal amount of Securities remains outstanding thereafter.
In the case of a partial redemption, the Trustee shall select the
Securities or portions thereof for redemption on a pro rata basis or in such
other manner as it deems appropriate and fair. The Securities may be redeemed in
part in multiples of $1,000 only.
The Securities will not have the benefit of a sinking fund.
Any such redemption will comply with Article III of the Indenture.
(b) The Securities must be redeemed (the "Special Redemption") on,
or at any time prior to, December 31, 1997 at a redemption price of 101% of the
principal amount of the Securities, plus accrued interest to the date of the
Special Redemption, if the Merger is not consummated on or before December 31,
1997 or if it appears, in the sole judgment of the Company, that the Merger will
not be consummated by December 31, 1997.
6. Notice of Redemption.
Notice of redemption will be sent by first class mail, at least 30 days
and not more than 60 days prior to a Redemption Date other than the Special
A-6
<PAGE>
Redemption Date, and with respect to the Special Redemption Date, not less than
5 business days prior to the Special Redemption Date, to the Holder of each
Security to be redeemed at such Holder's last address as then shown upon the
registry books of the Registrar.
Any notice which relates to a Security to be redeemed in part only must
state the portion of the principal amount to be redeemed and must state that on
and after the date fixed for redemption, upon surrender of such Security, a new
Security or Securities in a principal amount equal to the unredeemed portion
thereof will be issued. On and after the date fixed for redemption, interest
will cease to accrue on the portions of the Securities called for redemption.
7. Denominations; Transfer; Exchange.
The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder may register
the transfer of, or exchange Securities in accordance with, the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not register the transfer
of or exchange any Securities selected for redemption prior to 15 days after the
notice of redemption.
8. Persons Deemed Owners.
The registered Holder of a Security may be treated as the owner of it
for all purposes.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed for
two years, the Trustee and the Paying Agent(s) will pay the money back to the
Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, cash, U.S.
Legal Tender Equivalents, U.S. Government Obligations or a combination thereof,
in such amounts as will be sufficient in the opinion of a nationally recognized
firm of independent public accountants selected by the Trustee, to pay the
principal of, premium, if any, and interest on the Securities to redemption or
maturity and
A-7
<PAGE>
comply with the other provisions of the Indenture relating thereto, the Company
will be discharged from certain provisions of the Indenture and the Securities
(including the financial covenants, but excluding their obligation to pay the
principal of and interest on the Securities). Upon satisfaction of certain
additional conditions set forth in the Indenture, the Company may elect to have
its obligations discharged with respect to outstanding Securities.
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Securities may be
amended or supplemented with the written consent of the Holders of at least a
majority in aggregate principal amount of the Securities then outstanding, and
any existing Default or Event of Default or compliance with any provision may be
waived with the consent of the Holders of a majority in aggregate principal
amount of the Securities then outstanding. Without notice to or consent of any
Holder, the parties thereto may amend or supplement the Indenture or the
Securities to, among other things, cure any ambiguity, defect or inconsistency,
or make any other change that does not adversely affect the rights of any Holder
of a Security.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries to, among other things, incur additional
Indebtedness and Disqualified Capital Stock, pay dividends or make certain other
restricted payments, enter into certain transactions with Affiliates, incur
Liens, sell assets, merge or consolidate with any other Person or transfer (by
lease, assignment or otherwise) substantially all of the properties and assets
of the Company. The limitations are subject to a number of important
qualifications and exceptions. The Company must periodically report to the
Trustee on compliance with such limitations.
13. Ranking.
Payment of principal, premium, if any, and interest on the Securities
is subordinated, in the manner and to the extent set forth in the Indenture, to
the prior payment in full of all Senior Indebtedness.
14. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required
to offer to purchase on the Change of Control Payment Date all outstanding
A-8
<PAGE>
Securities at a purchase price equal to 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the Change of Control Payment Date.
Holders of Securities will receive a Change of Control Offer from the Company
prior to any related Change of Control Payment Date and may elect to have such
Securities purchased by completing the form entitled "Option of Holder to Elect
Purchase" appearing below.
(b) The Indenture imposes certain limitations on the ability of
the Company and its Restricted Subsidiaries to sell assets. In the event the
proceeds from a permitted Asset Sale exceed certain amounts, as specified in the
Indenture, the Company will be required either to reinvest the proceeds of such
Asset Sale as described in the Indenture or to make an offer to purchase each
Holder's Securities at 100% of the principal amount thereof, plus accrued
interest, if any, to the purchase date.
15. Successors.
When a successor assumes all the obligations of its predecessor under
the Securities and the Indenture, the predecessor will be released from those
obligations.
16. Defaults and Remedies.
If an Event of Default occurs and is continuing (other than as Event of
Default relating to certain events of bankruptcy, insolvency or reorganization),
then in every such case, unless the principal of all of the Securities shall
have already become due and payable, either the Trustee or the Holders of 25% in
aggregate principal amount of Securities then outstanding may declare all the
Securities to be due and payable immediately in the manner and with the effect
provided in the Indenture. The Holders of Securities may not enforce the
Indenture or the Securities except as provided in the Indenture. The Trustee may
require indemnity satisfactory to it before it enforces the Indenture or the
Securities. Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities then outstanding may direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest), if it determines that withholding
notice is in their interest.
17. Trustee Dealings with Company.
A-9
<PAGE>
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company or its Affiliates, and may otherwise deal with the Company or its
Affiliates as if it were not the Trustee.
18. No Recourse Against Others.
No stockholder, director, officer or employee, as such, past, present
or future, of the Company or any successor corporation shall have any personal
liability in respect of the obligations of the Company under the Securities or
the Indenture by reason of his or its status as such stockholder, director,
officer or employee. Each Holder of a Security by accepting a Security waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
19. Authentication.
This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this
Security.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a
Security 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).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.
22. Additional Rights of Holders of Transfer Restricted
Securities.
In addition to the rights provided to Holders of Securities under the
Indenture, Holders of Securities shall have all the rights set forth in the
Registration Rights Agreement.
A-10
<PAGE>
[FORM OF] ASSIGNMENT
I or we assign this Security to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
- --------------------------------------------------------------------------------
and irrevocably appoint __________ agent to transfer this Security on the books
of the Company. The agent may substitute another to act for him.
Date: Signed:
------------------------------ ------------------------------------
- --------------------------------------------------------------------------------
(Sign exactly as name appears on the other side of this Security)
A-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.15 or Article 11 of the Indenture, check the appropriate
box:
[_] Section 4.15 [_] Article XI
If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.15 or Article XI of the Indenture, as the case
may be, state the principal amount you want to be purchased: $________
Date: Signature:
--------------------------- -----------------------------------
(Sign exactly as your name appears
on the other side of this Security)
A-12
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE SECURITIES/3/
The following exchanges of a part of this Global Security for
Definitive Securities have been made:
<TABLE>
<CAPTION>
Amount of
decrease in Amount of Principal Amount Signature of
Principal increase in of this Global authorized officer
Amount Principal Amount Security following of Trustee or
Date of of this Global of this Global such decrease (or Securities
Exchange Security Security increase) Custodian
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- -------------------------
/3/ This schedule should only be added if the Security is issued in
global form.
A-13
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF SECURITIES/4/
Re: 11 3/4% SERIES A SENIOR SUBORDINATED NOTES DUE 2007 OF
PRICE COMMUNICATIONS WIRELESS, INC.
This Certificate relates to $______ principal amount of Securities held in
*_____ book-entry or * ______ definitive form by _____ (the "Transferor").
1. The Transferor:*
[_] (a) has requested the Trustee by written order to deliver in exchange
for its beneficial interest in the Global Security held by the Depository a
Security or Securities in definitive, registered form of authorized
denominations and an aggregate principal amount equal to its beneficial interest
in such Global Security (or the portion thereof indicated above); or
[_] (b) has requested the Trustee by written order to exchange or register
the transfer of a Security or Securities.
2. In connection with any such request prior to the date which is two
years after the later of the issuance of this Security (or any predecessor
Security) and the sale hereof by an Affiliate (as defined in Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act")) of the Company
(computed in accordance with paragraph (d) of Rule 144 under the Securities Act)
or by a Transferor that was at the date of such transfer or during the three
months preceding such date of transfer an Affiliate of the Company, and in
respect of each such Security, the Transferor does hereby certify that
Transferor is familiar with the Indenture relating to the above-captioned
Securities and as provided in Section 2.06 of such Indenture, the transfer of
this Security does not require registration under the Securities Act because:*
[_] (a) Such Security is being acquired for the Transferor's own account,
without transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section
2.06(d)(i)(A) of the Indenture).
[_] (b) Such Security is being transferred to a person who the Transferor
reasonably believes is a "qualified institutional buyer" (as defined in Rule
144A under the Securities Act) purchasing for its own account or for the account
of a qualified institutional buyer over which it exercises sole investment
discretion that
- -------------------------
/4/ The following should be included only for Initial Securities.
*Check applicable box.
A-14
<PAGE>
is aware that the transfer is being made in reliance on Rule 144A (in
satisfaction of Section 2.06(a)(ii)(B), Section 2.06(b)(i) or Section
2.06(d)(i)(B) of the Indenture).
[_] (c) Such Security is being transferred pursuant to an exemption from
registration in accordance with Regulation S under the Securities Act (in
satisfaction of Section 2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the
Indenture).
[_] (d) Such Security is being transferred to an institutional investor
that is an "accredited investor" within the meaning of Rule 501(a)(1),(2),(3) or
(7) under the Securities Act which delivers a certificate in the form of Exhibit
B to the Indenture to the Trustee (in satisfaction of Section 2.06(a)(ii)(D) or
Section 2.06(d)(i)(D) of the Indenture).
[_] (e) Such Security is being transferred in reliance on and in compliance
with another exemption from the registration requirements of the Securities Act.
An Opinion of Counsel to the effect that such transfer does not require
registration under the Securities Act accompanies this Certificate (in
satisfaction of Section 2.06(a)(ii)(E) or Section 2.06(d)(i)(E) of the
Indenture).
-----------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
--------------------------------------
Date:
---------------------------
3. Affiliation with the Company [check if applicable]
[_] (a) The undersigned represents and warrants that it is, or at some time
during which it held this Security was, an Affiliate of the
Company.
(b) If 3(a) above is checked and if the undersigned was not an
Affiliate of the Company at all times during which it held this
Security, indicate the periods during which the undersigned was an
Affiliate of the Company:
.
--------------------------------
(c) If 3(a) above is checked and if the Transferee will not pay the
full purchase price for the transfer of this Security on or prior
to the date of transfer indicate when such purchase price will be
paid:
.
--------------------------------
A-15
<PAGE>
TO BE COMPLETED BY TRANSFEREE IF 2(b) ABOVE IS CHECKED AND THE TRANSFEROR IS NOT
A QUALIFIED INSTITUTIONAL BUYER:
The undersigned represents and warrants that it is a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act of 1933,
as amended, and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information.
Dated:
-------------------------- ------------------------------------------
NOTICE: To be executed by an officer.
TO BE COMPLETED BY TRANSFEREE IF 2(c) ABOVE IS CHECKED:
The undersigned represents and warrants that it is not a "U.S. Person"
(as defined in Regulation S under the Securities Act of 1933, as amended).
Dated:
-------------------------- ------------------------------------------
NOTICE: To be executed by an officer.
If none of the boxes under Section 2 of this certificate is checked or if any of
the above representations required to be made by the Transferee is not made, the
Registrar shall not be obligated to register this Security in the name of any
person other than the Holder hereof.
THE UNDERSIGNED HEREBY AGREES THAT, UNLESS THE BOX ABOVE UNDER ITEM 3(a) IS
CHECKED, THE UNDERSIGNED SHALL BE DEEMED TO HAVE REPRESENTED THAT IT IS NOT NOR
HAS IT BEEN AT ANY TIME DURING WHICH IT HELD THIS SECURITY AN AFFILIATE, AS
DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OF THE
COMPANY.
Dated:
-------------------------- ------------------------------------------
NOTICE: The signature of the Holder to
this assignment must correspond with the
name as written upon the face of this
Security particular, without alteration or
enlargement or any change whatsoever.
A-16
<PAGE>
EXHIBIT B
Bank of Montreal Trust Company
Dear Sirs:
In connection with our proposed purchase of $_______ principal amount
of 11 3/4% Senior Subordinated Notes due 2007 (the "Notes") of Price
Communications Wireless, Inc. (the "Issuer"), we confirm that:
1. We acknowledge that we have been informed that the Notes were
originally issued and sold to purchasers who have received a copy of the
Offering Memorandum dated July 2, 1997, relating to the Notes and understand
that the Notes have not been, and will not be, registered under the Securities
Act of 1933, as amended (the "Securities Act") and may not be 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, pledge or otherwise transfer any Notes prior to the second anniversary of
the later of the original issuance of the Notes or the sale thereof by the
Issuer or an affiliate (within the meaning of Rule 144 under the Securities Act
or any successor rule thereto, an "Affiliate") of the Issuer (computed in
accordance with paragraph (d) of Rule 144 under the Securities Act) or if we are
at the proposed date of such transfer or were during the three months preceding
such proposed date of transfer an Affiliate of the Issuer, we will do so in
compliance with any applicable state securities or "Blue Sky" laws and only (A)
to Issuer, (B) in accordance with Rule 144A under the Securities Act (as
indicated by the box checked by the transferor on the form of assignment on the
reverse of the Note), (C) pursuant to any exemption from registration in
accordance with Regulation S under the Securities Act (as indicated by the box
checked by the transferor on the form of assignment on the reverse of the Note),
(D) to an institutional investor that is an "accredited investor" within the
meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act which
delivers a certificate in the form hereof to the trustee under the Indenture
dated as of July 10, 1997 between Issuer and Bank of Montreal Trust Company, as
trustee (the "Indenture Trustee"), or (E) pursuant to any other applicable
exemption under the securities laws, and we further agree, in the capacities
stated above, to provide to any person purchasing any of the Notes from us a
notice advising such purchaser that resales of the Notes are restricted as
stated herein.
In addition, we understand that, upon any proposed resale of any Note
prior to the second anniversary of the later of the original issuance of such
Note (or any predecessor Note thereof) or the sale of such Note (or any
predecessor Note thereof) by Issuer or an Affiliate of Issuer (computed in
accordance with paragraph (d) of Rule 144 under the Securities Act) or if we are
at the proposed
B-1
<PAGE>
date of such transfer or were during the three months preceding such proposed
date of transfer an Affiliate of the Issuer, we will be required to furnish to
the Indenture Trustee, such certification and other information (including,
without limitation, an opinion of counsel) as the Indenture Trustee, or Issuer
may reasonably require to confirm that the proposed sale complies with the
foregoing restrictions. We further understand that certificates evidencing Notes
purchased by us will bear a legend to the foregoing effect until the second
anniversary of the later of the original issuance of the Notes (or any
predecessor Notes thereof) or the sale thereof by Issuer or an Affiliate of
Issuer (computed in accordance with paragraph (d) of Rule 144 under the
Securities Act) and for so long as we are or during the preceding three months
have been an Affiliate of the Issuer.
2. We are an institutional investor and an "accredited investor"
(within the meaning of Rule 501(a)(1), (2), (3) or (7) 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 account for which we are acting are each able to bear the
economic risk of our or its investment and can afford the complete loss of such
investment.
3. We are acquiring the Notes 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 and for
each of which we are acquiring not less than $250,000 aggregate principal amount
of Notes.
4. We have received such information as we deem necessary in order to
make our investment decision.
You and the Issuer 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 proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[Purchaser]
By:
-------------------------------------
Name:
Title:
B-2
<PAGE>
EXHIBIT 4.2
11 3/4% SENIOR SUBORDINATED NOTES DUE 2007
REGISTRATION RIGHTS AGREEMENT
Dated July 10, 1997
by and among
PRICE COMMUNICATIONS WIRELESS, INC.,
as the Company,
and
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION,
WASSERSTEIN PERELLA SECURITIES, INC.,
NATWEST CAPITAL MARKETS LIMITED,
LEHMAN BROTHERS, INC.,
and
PAINEWEBBER INCORPORATED
as Purchasers
<PAGE>
This Registration Rights Agreement is made and entered into this July 10,
1997, by and between Price Communications Wireless, Inc., a Delaware corporation
(the "Company"), and Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ"), on behalf of itself and Wasserstein Perella Securities, Inc.
("Wasserstein"), NatWest Capital Markets Limited ("NatWest"), Lehman Brothers
("Lehman"), and PaineWebber Incorporated (together with DLJ, Wasserstein,
NatWest, and Lehman, the "Purchasers").
This Agreement is made pursuant to the Purchase Agreement, dated July 3,
1997, among the Company, Price Communications Corporation and the Purchasers
(the "Purchase Agreement"), relating to the Notes. In order to induce the
Purchasers to enter into the Purchase Agreement, the Company has agreed to
provide the registration rights provided for in this Agreement to the Purchasers
and their respective direct and indirect transferees. The execution of this
Agreement is a condition to the closing of the transactions contemplated by the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
-----------
As used in this Agreement, the following terms shall have the following
meanings:
Advice: As defined in the last paragraph of Section 5 hereof.
------
Affiliate of any specified person shall mean any other person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified person. For the purposes of this definition,
"control," when used with respect to any person, means the power to direct the
management and policies of such person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise, and the terms
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing.
2
<PAGE>
Agreement: This Registration Rights Agreement, as the same may be amended,
---------
supplemented or modified from time to time in accordance with the terms hereof.
Business Day: Any day except Saturday, Sunday and any day which shall be a
------------
legal holiday or a day on which banking institutions in the State of New York
generally are authorized or required by law or other government actions to
close.
Company: Price Communications Wireless, Inc., a Delaware corporation, and
-------
any successor corporation thereto.
Consummate or consummate: When used to qualify the term "Exchange Offer"
------------------------
shall mean validly and lawfully to issue and deliver the Exchange Notes pursuant
to the Exchange Offer for all Transfer Restricted Securities validly tendered
and not validly withdrawn pursuant thereto in accordance with the terms of this
Agreement.
Consummation Date: The date that is 30 days immediately following the date
-----------------
that a Registration Statement relative to an Exchange Offer, commenced pursuant
to this Agreement, shall have been declared effective by the SEC.
Effective Date: The date that is 150 days immediately following the date
--------------
of this Agreement.
Effectiveness Period: As defined in Section 3 hereof.
--------------------
Event Date: As defined in Section 4(a) hereof.
----------
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
------------
rules and regulations promulgated by the SEC pursuant thereto.
Exchange Date: As defined in Section 2(d) hereof.
-------------
Exchange Notes: The 11 3/4% Senior Subordinated Notes due 2007 of the
--------------
Company that are identical to the Notes in all material respects, except that
the provisions regarding restrictions on transfer shall be modified, as
appropriate, and the issuance thereof pursuant.
3
<PAGE>
to the Exchange Offer shall have been registered pursuant to an effective
Registration Statement in compliance with the Securities Act.
Exchange Offer: An offer to issue, in exchange for any and all of the
--------------
Transfer Restricted Securities, a like aggregate principal amount of Exchange
Notes, which offer shall be made by the Company pursuant to Section 2 hereof.
Holder: Each registered holder of any Transfer Restricted Securities.
------
Indemnified Person: As defined in Section 7(a) hereof.
------------------
Indenture: The Indenture, dated the date hereof, between the Company and
---------
the Trustee thereunder, pursuant to which the Notes are being issued, as amended
or supplemented from time to time in accordance with the terms thereof.
Liquidated Damages: As defined in Section 4(a) hereof.
------------------
Notes: The $175,000,000 aggregate principal amount of 11 3/4% Senior
-----
Subordinated Notes due 2007 of the Company being issued pursuant to the
Indenture.
Participating Broker-Dealer: As defined in Section 2(d) hereof.
---------------------------
Paying Agent: As defined in the Indenture.
------------
Proceeding: An action, claim, suit or proceeding (including, without
----------
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
Prospectus: The prospectus included in any Registration Statement
----------
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Transfer.
4
<PAGE>
Restricted Securities or the Exchange Notes covered by such Registration
Statement, and all other amendments and supplements to any such prospectus,
including post-effective amendments, and all material incorporated by refer
ence or deemed to be incorporated by reference, if any, in such prospectus.
Purchasers: As defined in the preamble hereof.
----------
Registration Statement: Any registration statement of the Company that
----------------------
covers any of the Notes or the Exchange Notes pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement.
Rule 144: Rule 144 promulgated by the SEC pursuant to the Securities Act,
--------
as such Rule may be amended from time to time, or any similar rule or regula
tion hereafter adopted by the SEC as a replacement thereto having substantially
the same effect as such Rule.
Rule 144A: Rule 144A promulgated by the SEC pursuant to the Securities
---------
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC as a replacement thereto having
substantially the same effect as such Rule.
Rule 158: Rule 158 promulgated by the SEC pursuant to the Securities Act,
--------
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC as a replacement thereto having substantially the
same effect as such Rule.
Rule 174: Rule 174 promulgated by the SEC pursuant to the Securities Act,
--------
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC as a replacement thereto having substantially the
same effect as such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities Act,
--------
as such Rule may be amended from time to time, or any similar rule or regula-
5
<PAGE>
tion hereafter adopted by the SEC as a replacement thereto having substantially
the same effect as such Rule.
Rule 424: Rule 424 promulgated by the SEC pursuant to the Securities Act,
--------
as such Rule may be amended form time to time, or any similar rule or regulation
hereafter adopted by the SEC as a replacement thereto having substantially the
same effect as such Rule.
SEC: The Securities and Exchange Commission.
---
Securities Act: The Securities Act of 1933, as amended, and the rules and
--------------
regulations promulgated by the SEC thereunder.
Shelf Registration: As defined in Section 3 hereof.
------------------
Special Counsel: Any special counsel to the Holders of Transfer Restricted
---------------
Securities, for which Holders of Transfer Restricted Securities will be
reimbursed pursuant to Section 6.
TIA: The Trust Indenture Act of 1939, as amended.
---
Transfer Restricted Securities: The Notes, upon original issuance thereof,
------------------------------
and at all times subsequent thereto, until, in the case of any such Note, (i)
the date on which such Note has been exchanged for an Exchange Note pursuant to
the Exchange Offer, (ii) the date on which such Note has been registered
effectively pursuant to the Securities Act and disposed of in accordance with
the Registration Statement relating to it, (iii) the date on which such Note is
distributed to the public pursuant to Rule 144 (or any similar provisions then
in effect) or is saleable pursuant to Rule 144(k) promulgated by the SEC
pursuant to the Securities Act or (iv) the date on which such Note ceases to be
outstanding.
Trustee: Bank of Montreal Trust Company, the trustee under the Indenture.
-------
Underwritten registration or underwritten offering: A registration in
--------------------------------------------------
connection with which secu rities of the Company are sold to an underwriter for
6
<PAGE>
reoffering to the public pursuant to an effective Registration Statement.
2. Exchange Offer
--------------
(a) To the extent not prohibited by applicable law or interpretation
of the Staff of the SEC, the Company shall use its reasonable best efforts to
file with the SEC a Registration Statement relating to the Exchange Offer and
have declared effective by the SEC such Registration Statement no later than on
or prior to the Effective Date. The offer and sale of the Exchange Notes
pursuant to the Exchange Offer shall be registered pursuant to the Securities
Act on the appropriate form and duly registered or qualified under all
applicable state securities or Blue Sky laws and will comply with all applicable
tender offer rules and regulations of the Exchange Act and state securities or
Blue Sky laws. The Exchange Offer shall not be subject to any condition, other
than that the Exchange Offer does not violate any applicable law or
interpretation of the Staff of the SEC. No securities shall be included in the
Registration Statement covering the Exchange Offer other than the Notes and the
Exchange Notes.
(b) The Company may require each Holder of Transfer Restricted
Securities as a condition to its participation in the Exchange Offer to
represent to the Company and its counsel in writing (which may be contained in
the applicable letter of transmittal) that at the time of the consummation of
the Exchange Offer (i) any Exchange Notes received by such holder will be
acquired in the ordinary course of its business, (ii) such holder will have no
arrangement or understanding with any person to participate in the distribution
of the Notes or the Exchange Notes within the meaning of the Securities Act,
(iii) if the holder is not a broker-dealer or is a broker-dealer but will not
receive Exchange Notes for its own account in exchange for Notes, neither the
holder nor any such other person is engaged in or intends to participate in a
distribution of the Exchange Notes and (iv) that such holder is not an Affiliate
of the Company. If the Holder is a broker-dealer that will receive Exchange
Notes for its own account in exchange for Notes, it will represent that the
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
7
<PAGE>
that it will deliver a prospectus meeting the requirements of the Act in
connection with any resale of such Exchange Notes. It is understood that by
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Act in connection with any resale of such Exchange Notes,
the Holder is not admitting that it is an "underwriter" within the meaning of
the Act.
(c) Unless the Exchange Offer would not be permitted by any applicable
law or interpretation of the Staff of the SEC, the Company shall commence the
Exchange Offer (within the time periods set forth herein) by mailing the related
Exchange Offer Prospectus and appropriate accompanying documents to each Holder
of Transfer Restricted Securities providing, in addition to such other
disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this Agreement
and that all Notes validly tendered will be accepted for exchange;
(ii) the dates of acceptance for exchange (the "Exchange Date"),
which date shall in no event be later than the Consummation Date;
(iii) that Holders of Transfer Restricted Securities electing to have
a Note exchanged pursuant to the Exchange Offer will be required to sur
render such Note or $1,000 integral multiple portion thereof, together with
the enclosed letters of transmittal, to the institution and at the address
(located in the Borough of Manhattan, The City of New York) specified in
the notice prior to the close of business on the Exchange Date; and
(iv) that Holders of Transfer Restricted Securities that do not
tender all such securities pursuant to the Exchange Offer will no longer
have any registration rights hereunder with respect to securities not
tendered.
Promptly after the Exchange Date, the Company shall:
8
<PAGE>
(i) accept for exchange all Notes or portions thereof validly
tendered and not validly withdrawn pursuant to the Exchange Offer; and
(ii) deliver, or cause to be delivered, to the Trustee for
cancellation all Notes or portions thereof so accepted for exchange by the
Company, and issue, or cause the Trustee under the Indenture to
authenticate and mail to each holder, an Exchange Note equal in principal
amount to the principal amount of the Notes surrendered by such holder.
(d) The Company and each Purchaser acknowledges that the Staff of
the SEC has taken the position that any broker-dealer that owns Exchange Notes
that were received by such broker-dealer for its own account in the Exchange
Offer (a "Participating Broker-Dealer") may be deemed to be an "underwriter"
within the meaning of the Securities Act and must deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such
Exchange Notes (other than a resale of an unsold allotment resulting from the
original placement of the Notes).
The Company and each Purchaser also acknowledges that it is the SEC
Staff's position that if the Prospectus contained in the Registration Statement
includes a plan of distribution containing a statement to the above effect and
the means by which Participating Broker-Dealers may resell the Exchange Notes,
without naming the Participating Broker-Dealers or specifying the amount of
Exchange Notes owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligations under the
Securities Act in connection with resales of Exchange Notes for their own
accounts, so long as the Prospectus otherwise meets the requirements of the
Securities Act.
In light of the above, notwithstanding the other provisions of this
Agreement, the Company agrees that the provisions of this Agreement as they
relate to a Shelf Registration shall also apply to an Exchange Offer to the
extent, and with such reasonable modifications thereto as may be reasonably
requested by any Participating Broker-Dealer or the Company, in each case as
provid ed in clause (ii) below, as appropriate to expedite or facilitate the
disposition of any Exchange Notes by
9
<PAGE>
Participating Broker-Dealers consistent with the positions of the Staff recited
in this Section 2(d); provided that:
-------- ----
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Registration Statement, as would otherwise be
contemplated by this Agreement, for a period exceeding 90 days after the
Consummation Date (as such period may be extended pursuant to the terms of
this Agreement relating to a Shelf Registration) and Participating Broker-
Dealers shall not be authorized by the Company to deliver and shall not
deliver such Prospectus after such period in connection with the resales
contemplated by this Section 2(d); and
(ii) the application of the Shelf Registration procedures set forth in
this Section 2(d) of this Agreement to an Exchange Offer, to the extent not
otherwise required by the positions of the Staff of the SEC or the
Securities Act, will be in conformity with the reasonable request to the
Company by anyone who certifies to the Company in writing in a reasonably
timely manner that they anticipate that they will be a Participating
Broker-Dealer; and provided, further, that in connection with such
-------- --------
application of the Shelf Registration procedures set forth in Section 3 to
an Exchange Offer, the Company shall be obliged (x) to deal only with one
entity representing the Participating Broker-Dealers, which shall be DLJ
unless it elects not to act as such representative, (y) to pay the fees
and expenses of only one counsel representing the Participating Broker-
Dealers and (z) to cause to be delivered, if requested, customary "cold
comfort" letters with respect to the Prospectus in the form existing on the
Exchange Date and with respect to any subsequent amendment or supplement,
if any, effected during the period specified in clause (i) above.
(e) The Purchasers shall have no liability to any person with respect
to any request made pursuant to Section 2(d).
10
<PAGE>
3. Shelf Registration
------------------
(a) If the Company determines not to effect the Exchange Offer as
contemplated by Section 2 hereof or if, prior to the 90th day after the date of
this Agreement, any Holder of Transfer Restricted Securities shall notify the
Company in writing that, based on the advice of counsel, it is not eligible to
participate in the Exchange Offer (other than because it has an understanding
or arrangement with any person to participate in a distribution of the Exchange
Notes) and such Holder has not received a written opinion from counsel to the
Company, reasonably acceptable to such Holder, to the effect that such Holder
is legally permitted to participate in the Exchange Offer, the Company shall
cause to be filed with the SEC pursuant to Rule 415 a shelf registration
statement, which may be an amendment to a registration statement filed in
connection with the Exchange Offer, relating to all such Transfer Restricted
Securities the Holders of which have provided the information required pursuant
to Section 3(b) hereof, and shall use its best efforts to have such Registration
Statement declared effective by the SEC on or prior to the Effective Date. In
such circumstances, the Company shall use its reasonable best efforts to keep
the Shelf Registration continuously effective under the Securities Act, until
(A) 36 months following the date on which the Shelf Registration was initially
declared effective (subject to extension pursuant to the last paragraph of
Section 5 hereof) or (B) if sooner, the date immediately following the date that
all Transfer Restricted Securities covered by the Shelf Registration have been
sold pursuant thereto (the "Effectiveness Period"); provided that the
--------
Effectiveness Period shall be extended to the extent required to permit dealers
to comply with the applicable prospectus delivery requirements of Rule 174 and
as otherwise provided here in.
(b) 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 Business Days after receipt of a request therefor, such
information as the Company may reasonably request for use in connection with any
Shelf Registration Statement or Prospectus or preliminary prospectus included
therein. No Holder of Transfer
11
<PAGE>
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 4 hereof unless and until such Holder shall have provided all such
reasonably requested information. Each Holder as to which any Shelf
Registration Statement is being effected agrees to furnish promptly to the
Company all information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
4. Liquidated Damages
------------------
(a) The parties hereto agree that the Holders of Transfer Restricted
Securities will suffer damages if the Company fails to fulfill its obligations
pursuant to Section 2 or Section 3, as applicable, and that it would not be
feasible to ascertain the extent of such damages. Accordingly, if (i) the
applicable Registration Statement referred to in either Section 2 or Section 3
has not been declared effective by the SEC on or prior to the Effective Date or
(ii) either (A) the Exchange Offer has not been consummated on or prior to the
later of the Consummation Date or 180 days immediately following the date of
this Agreement, or (B) at any time prior to the end of the Effectiveness Period
the Shelf Registration shall have ceased to be continuously effective without
being succeeded within 30 days by an additional Shelf Registration having been
filed with and declared effective by the SEC (each such event referred to in
clauses (i) and (ii), an "Event Date"), then the Company agrees to pay, as
liquidated damages, and not as a penalty, to each Holder of a Transfer
Restricted Security, an additional amount (the "Liquidated Damages") equal to
(a) during the first 90-day period beginning on, and including, the Event Date,
$0.05 per calendar week (or partial calendar week), per $1,000 principal amount
of Transfer Restricted Secu rities held by such Holder and (b) during each
subsequent 90-day period immediately following the final day of the prior 90-day
period, an additional $0.05 per calendar week (or partial calendar week) per
$1,000 principal amount of Transfer Restricted Securities held by such Holder,
up to a maximum amount of Liquidated Damages of $0.25 per calendar week (or
partial calendar week) per $1,000 principal amount of Transfer Restricted Securi
ties, and, in all cases, ending on, but excluding, (x) in the case of clause (i)
above, the date on which the Registration Statement is declared effective, (y)
in the
12
<PAGE>
case of clause (ii)(A) above, the date on which the Exchange Offer is
consummated and (z) in the case of clause (ii)(B) above, the date the Shelf
Registration again becomes effective under the Securities Act.
(b) The Company shall notify the Trustee and Paying Agent under the
Indenture immediately upon the happening of each and every Event Date. The
Company shall pay the Liquidated Damages due on the Transfer Restricted
Securities by depositing with the Paying Agent (which shall not be the Company
for these purposes), in trust, for the benefit of the holders thereof, at least
one Business Day prior to the next interest payment date specified by the
Indenture, sums sufficient to pay the Liquidated Damages then due. The
Liquidated Damages due shall be payable on each interest payment date specified
by the Indenture to the record holder entitled to receive the interest payment
to be made on such date. Each obligation to pay Liquidated Damages shall be
deemed to accrue from and including the applicable Event Date.
(c) The parties hereto agree that the Liquidated Damages provided for
in this Section 4 constitute a reasonable estimate of the damages that will be
suffered by Holders of Transfer Restricted Securities by reason of the failure
of the Exchange Offer to be consummated or the Shelf Registration to remain
effective, as the case may be, in accordance with this Agreement.
5. Registration Procedures
-----------------------
In connection with the Company's registration obligations hereunder,
the Company shall effect such registrations on the appropriate form available
for the sale of the Transfer Restricted Securities or Exchange Notes, as
applicable, to (i) permit the sale of Exchange Notes and (ii) in the case of a
Shelf Registration, permit the sale of Transfer Restricted Securities in
accordance with the method or methods of disposition thereof specified by the
Holders of a majority in aggregate principal amount of Transfer Restricted
Securities, and pursuant thereto the Company shall as expeditiously as possible:
(a) In the case of a Shelf Registration, no fewer than five Business
Days prior to the initial filing of a Registration Statement or Prospectus and
no fewer
13
<PAGE>
than two Business Days prior to the filing of any amendment or supplement
thereto (including any document that would be incorporated or deemed to be
incorporated therein by reference), furnish to the Holders of the Transfer
Restricted Securities, their Special Counsel and the managing underwriters, if
any, copies of all such documents proposed to be filed, which documents (other
than those incorporated or deemed to be incorporated by reference) will be
subject to the review of such Holders, their Special Counsel and such
underwriters, if any, and cause the officers and directors of the Company,
counsel to the Company and independent certified public accountants to the
Company to respond to such inquiries as shall be necessary, in the opinion of
respective counsel to such Holders and such underwriters, to conduct a
reasonable investigation within the meaning of the Securities Act; provided,
--------
however, that the Company shall not be deemed to have kept a Registration
- -------
Statement effective during the applicable period if it voluntarily takes or
fails to take any action that results in selling Holders of the Transfer
Restricted Securities covered thereby not being able to sell such Transfer
Restricted Securities pursuant to Federal securities laws during that period
(and the time period during which such Registration Statement is required to
remain effective hereunder shall be extended by the number of days during which
such selling Holders of Transfer Restricted Securities are not able to sell
Transfer Restricted Securities). The Company shall not file any such Shelf
Registration Statement or related Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the Transfer Restricted
Securities, their Special Counsel, or the managing underwriters, if any, shall
reasonably object on a timely basis;
(b) Prepare and file with the SEC such amend ments, including post-
effective amendments, to each Registration Statement as may be necessary to keep
such Registration Statement continuously effective for the applicable time
period; cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all securities covered by such Registration Statement during
such period in accordance with the
14
<PAGE>
intended methods of disposition by the sellers thereof set forth in such
Registration Statement as so amended or in such Prospectus as so supplemented;
(c) Notify the Holders of Transfer Restricted Securities to be sold
or, in the case of an Exchange Offer, tendered for, their Special Counsel and
the managing underwriters, if any, promptly (and in the case of an event
specified by clause (i)(A) of this paragraph in no event fewer than two Business
Days prior to such filing), and (if requested by any such Person), confirm such
notice in writing, (i)(A) when a Prospectus or any Prospectus supplement or
post-effective amendment is proposed to be filed, and, (B) with respect to a
Registration Statement or any post-effective amendment, when the same has
become effective, (ii) in the case of a Shelf Registration, of any request by
the SEC or any other Federal or state governmental authority for amendments or
supplements to a Registration Statement or related Prospectus or for additional
information, (iii) of the issuance by the SEC, any state securities commission,
any other governmental agency or any court of any stop order, order or
injunction suspending or enjoining the use or the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) if at any time any of the representations and warranties of either the
Company contained in any agreement (including any underwriting agreement)
contemplated hereby cease to be true and correct in all material respects, (v)
of the receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Transfer
Restricted Securities or Exchange Notes for sale in any jurisdiction, or the
initiation or threatening of any proceeding for such purpose, and (vi) in the
case of a Shelf Registration, of the happening of any event that makes any
statement made in such Registration Statement or related Prospectus or any
document incorporated or deemed to be incorporated therein by reference untrue
in any material respect or that requires the making of any changes in such
Registration Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or neces
sary to make the statements therein, not misleading, and that in the case of the
Prospectus, it will not contain any untrue statement of a material fact or omit
to state
15
<PAGE>
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(d) Use its reasonable best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of any order enjoining or suspending the use or
effective ness of a Registration Statement or the lifting of any suspension of
the qualification (or exemption from qualification) of any of the Transfer
Restricted Securities or Exchange Notes for sale in any jurisdiction, at the
earliest practicable moment;
(e) If a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities being sold in
connection with such offering, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment such information as the managing
underwriters, if any, and such Holders agree should be included therein, and
(ii) make all required filings of such Prospectus supplement or such post-
effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment; provided, however, that the Company shall not be
-------- --------
required to take any action pursuant to this Section 5(e) that would, in the
opinion of counsel for the Company, violate applicable law;
(f) Furnish to each Holder of Transfer Restricted Securities and
Exchange Notes, their Special Counsel and each managing underwriter, if any,
without charge, at least one conformed copy of each Registration Statement and
each amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference, and
all exhibits to the extent requested by each Holder (including those previously
furnished or incorporated by reference) as soon as practicable after the filing
of such documents with the SEC;
(g) Deliver to each Holder of Transfer Restricted Securities and
Exchange Notes, their Special Counsel, and the underwriters, if any, without
charge, as many copies of the Prospectus or Prospectuses (including
16
<PAGE>
each form of prospectus) and each amendment or supplement thereto as such
Persons reasonably request; and the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders of Transfer Restricted Securities and the underwriters, if any, in
connection with the offering and sale of the Transfer Restricted Securities
covered by such Prospectus and any amendment or supplement thereto;
(h) Prior to any public offering of Transfer Restricted Securities and
prior to the consummation of the Exchange Offer, use its reasonable best efforts
to register or qualify or cooperate with the Holders of Transfer Restricted
Securities to be sold or tendered for, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualifica tion) of such Transfer Restricted
Securities or Exchange Notes for offer and sale under the securities or Blue Sky
laws of such jurisdictions within the United States as any Holder or underwriter
reasonably requests in writing; keep each such registration or qualification (or
exemp tion therefrom) effective during the period such Regis tration Statement
is required to be kept effective and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Transfer Restricted Securities or Exchange Notes covered by the applicable
Registration Statement; provided, however, that the Company shall not be
-------- -------
required to qualify generally to do business in any jurisdiction where they are
not then so qualified or to take any action that would subject them to general
service of process in any such jurisdiction where they are not then so subject
or subject the Company to any tax in any such jurisdiction where it is not then
so subject;
(i) In connection with any sale or transfer of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the Holders and the managing underwriters,
if any, to facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities or Exchange Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company and to enable such
Transfer Restricted Securities or Exchange Notes to be in such denominations and
registered
17
<PAGE>
in such names as the managing underwriters, if any, or Holders may request at
least two Business Days prior to any sale of Transfer Restricted Securities or
Exchange Notes;
(j) Use its reasonable best efforts to cause the offering of the
Transfer Restricted Securities and Exchange Notes covered by the Registration
Statement to be registered with or approved by such other governmental agencies
or authorities within the United States, except as may be required as a
consequence of the nature of such selling Holder's business, in which case the
Company will cooperate in all reasonable respects with the filing of such
Registration Statement and the granting of such approvals as may be necessary to
enable the seller or sellers thereof or the underwriters, if any, to consummate
the disposition of such Transfer Restricted Securities and Exchange Notes;
provided, however, that the Company shall not be required to register the
- -------- -------
Transfer Restricted Securities and Exchange Notes in any jurisdiction that
would subject them to general service of process in any such jurisdiction where
it is not then so subject or subject the Company to any tax in any such
jurisdiction where it is not then so subject or to require the Company to
qualify to do business in any jurisdiction where it is not then so qualified;
(k) Upon the occurrence of any event contemplated by Paragraph
5(c)(vi), as promptly as practicable, prepare a supplement or amendment,
including, if appropriate, a post-effective amendment, to each Registration
Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered, such Prospectus will not contain 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, in light of the
circumstances under which they were made, not misleading;
(l) Prior to the effective date of the first Registration Statement
relating to the Transfer Restricted Securities or Exchange Notes, as
applicable, to provide a CUSIP number for the Transfer Restricted Securities
and Exchange Notes, as applicable;
18
<PAGE>
(m) If a Shelf Registration is filed pursuant to Section 3, enter into
such agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such other
reasonable actions in connection therewith (including those reasonably
requested by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities being sold) in
order to expedite or facilitate the disposition of such Transfer Restricted
Securities, and in such connection, whether or not an underwriting agreement is
entered into and whether or not the registration is an underwritten
registration, (i) make such representations and warranties to the Holders of
such Transfer Restricted Securities and the underwriters, if any, with respect
to the business of the Company and its subsidiaries (including with respect to
businesses or assets acquired or to be acquired by any of them), and the
Registration Statement, Prospectus and documents, if any, incorporated or
deemed to be incorporated by reference therein, in each case, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings, and confirm the same if and when requested; (ii) obtain opinions of
counsel to the Company and updates thereof (which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the managing
underwriters, if any, and Special Counsel to the Holders of the Transfer
Restricted Securities being sold), addressed to each selling Holder of Transfer
Restricted Securities and each of the underwriters, if any, covering the matters
customarily covered in opinions requested in underwritten offerings and such
other mat ters as may be reasonably requested by such Special Counsel and
underwriters; (iii) use its best efforts to obtain customary "cold comfort"
letters and updates thereof from the independent certified public accountants of
the Company (and, if necessary, any other independent certified public
accountants of any business which may hereafter be acquired by the Company for
which financial statements and financial data are required to be included in the
Registration Statement), addressed (where reasonably possible) to each selling
Holder of Transfer Restricted Securities and each of the underwriters, if any,
such letters to be in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with underwritten
offerings; (iv) if an underwriting agreement is entered into, the same shall
19
<PAGE>
contain indemnification provisions and procedures no less favorable to the
selling holders and the underwriters, if any, than those set forth in Section 7
hereof (or such other provisions and procedures acceptable to Holders of a
majority in aggregate principal amount of Transfer Restricted Securities covered
by such Registration Statement and the managing underwriters); and (v) deliver
such documents and certificates as may be reasonably requested by the Holders of
a majority in aggregate principal amount of the Transfer Restricted Securities
being sold, their Special Counsel and the managing underwriters, if any, to
evidence the continued validity of the representations and warranties made
pursuant to clause 5(m)(i) above and to evidence compliance with any customary
conditions contained in the underwriting agreement or other agreement entered
into by the Company;
(n) In the case of a Shelf Registration, make available for inspection
by a representative of the Holders of Transfer Restricted Securities being sold,
any underwriter participating in any such disposition of Transfer Restricted
Securities, if any, and any attorney, consultant or accountant retained by such
selling Holders or underwriter, at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries (including with
respect to business and assets acquired or to be acquired to the extent that
such information is available to the Company, and cause the officers, directors,
agents and employees of the Company and its subsidiaries (including with respect
to business and assets acquired or to be acquired to the extent that such
information is available to the Company) to supply all information in each case
reasonably requested by any such representative, underwriter, attorney,
consultant or accountant in connection with such Shelf Registration, provided,
--------
however, that such Persons shall first agree in writing with the Company that
- -------
any information that is reasonably and in good faith designated by the Company
in writing as confidential at the time of delivery of such information shall be
kept confidential by such Persons, unless (i) disclosure of such information is
required by court or administrative order or is necessary to respond to
inquiries of regula tory authorities, (ii) disclosure of such information is
required by law (including any disclosure requirements pursuant to Federal
Securities Laws in connection with
20
<PAGE>
the filing of any Registration Statement or the use of any prospectus referred
to in this Agreement), (iii) such information becomes generally available to the
public other than as a result of a disclosure or failure to safeguard by such
Person or (iv) such information becomes available to such Person from a source
other than the Company and such source is not bound by a confidentiality
agreement;
(o) Provide an indenture trustee for the Transfer Restricted
Securities and the Exchange Notes, as the case may be, and cause the Indenture
to be qualified under the TIA not later than the effective date of the first
Registration Statement relating to the Transfer Restricted Securities or the
Exchange Notes, as applicable; and in connection therewith, cooperate with the
trustee under the Indenture and the Holders of the Transfer Restricted
Securities and the Exchange Notes, 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 reasonable efforts to cause such
trustee to execute, all customary documents as may be required to effect such
changes, and all other forms and documents required to be filed with the SEC to
enable the Indenture to be so qualified in a timely manner;
(p) Comply with all applicable rules and regulations of the SEC and
make generally available to their securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act), no later than 45
days after the end of any 12-month period (or 90 days after the end of any 12-
month period if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to underwriters
in a firm commitment or reasonable efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter after the effective date of a Registration Statement,
which statement shall cover said period, consistent with the requirements of
Rule 158; and
(q) If an Exchange Offer is to be consummated, upon delivery of the
Transfer Restricted Securities by such Holders to the Company in exchange for
the Exchange
21
<PAGE>
Notes, the Company shall mark, or caused to be marked, on such Transfer
Restricted Securities that such Transfer Restricted Securities are being
cancelled in exchange for the Exchange Notes; in no event shall such Transfer
Restricted Securities be marked as paid or otherwise satisfied.
The Company may require each seller of Transfer Restricted Securities
as to which any registration is being effected to furnish to the Company such
information regarding the distribution of such Transfer Restricted Securities as
is required by law to be disclosed in the applicable Registration Statement and
the Company may exclude from such registration the Transfer Restricted
Securities of any seller who unreasonably fails to furnish such information
within a reasonable time after receiving such request.
If any such Registration Statement refers to any holder by name or
otherwise as the holder of any securities of the Company, then such holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such holder, to the effect that the holding
by such holder of such securities is not to be construed as a recommendation by
such holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such holder will assist in
meeting any future financial requirements of the Company, or (ii) in the event
that such reference to such holder by name or otherwise is not required by the
Securities Act or any similar Federal statute then in force, the deletion of the
reference to such holder in any amendment or supplement to the Registration
Statement filed or prepared subsequent to the time that such reference ceases to
be required.
In the case of a Shelf Registration pursuant to Section 3 hereof, each
Holder of Transfer Restricted Securities agrees by acquisition of such Transfer
Restricted Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c)(ii), 5(c)(iii),
5(c)(v) or 5(c)(vi) hereof, such Holder will forthwith discontinue disposition
of such Transfer Restricted Securities covered by such Registration Statement
or Prospectus until such Holder's receipt of the copies of the supplemented
22
<PAGE>
or amended Prospectus contemplated by Section 5(k) here of, or until it is
advised in writing (the "Advice") by the Company that the use of the applicable
Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such Prospectus. If the Company shall give any
such notice, the Effectiveness Period shall be extended by the number of days
during such period from and including the date of the giving of such notice to
and including the date when each seller of Transfer Restricted Securities
covered by such Registration Statement shall have received (x) the copies of the
supplemented or amended Prospectus contemplated by Section 5(k) hereof or (y)
the Advice, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus.
6. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by them whether or not any
Registration Statement is filed or becomes effective and whether or not any
securities are issued or sold pursuant to any Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, (i) all registration and filing fees (including, without limitation,
fees and expenses (A) with respect to filings required to be made with the
National Association of Securities Dealers, Inc. and (B) in compliance with
securities or Blue Sky laws (including, without limitation and in addition to
that provided for in (b) below, fees and disbursements of counsel for the
underwriters or Holders in connection with Blue Sky qualifications of the
Transfer Restricted Securities or Exchange Notes and determination of the
eligibility of the Transfer Restricted Securities or Exchange Notes for
investment under the laws of such jurisdictions as the managing underwriters, if
any, or Holders of a majority in aggregate principal amount of Transfer
Restricted Securities may designate), (ii) printing expenses (in cluding,
without limitation, expenses of printing certificates for Transfer Restricted
Securities or Exchange Notes in a form eligible for deposit with The Depository
Trust Company and of printing Prospectuses if the printing of Prospectuses is
requested by the managing under-
23
<PAGE>
writers, if any, or by the Holders of a majority in principal amount of the
Transfer Restricted Securities included in or tendered for in connection with
any Registration Statement), (iii) messenger, telephone and delivery expenses,
(iv) fees and disbursements of counsel for the Company and Special Counsel for
the Holders (plus any local counsel, deemed appropriate by the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities),
in accordance with the provisions of Section 6(b) hereof, (v) fees and
disbursements of all independent certified public accountants referred to in
Section 5(m)(iii) (including, without limitation, the expenses of any special
audit and "cold comfort" letters required by or incident to such performance),
(vi) Securities Act liability insurance, if the Company so desires such
insurance, and (vii) fees and expenses of all other persons retained by the
Company. In addition, the Company shall pay its internal expenses (including,
without limitation, all salaries and expenses of their officers and employees
performing legal or accounting duties), the expense of any annual audit, and the
fees and expenses incurred in connection with the listing of the securities to
be registered on any securities exchange. Notwith standing the foregoing or
anything in this Agreement to the contrary, each Holder shall pay all
underwriting discounts and commissions of any underwriters with respect to any
Notes or Exchange Notes sold by it.
(b) In connection with any Registration hereunder, the Company shall
reimburse the Holders of the Transfer Restricted Securities being registered or
tendered for in such registration for the reasonable fees and disbursements of
not more than one firm of attorneys representing the selling Holders (in
addition to any local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities.
7. Indemnification
---------------
(a) The Company agrees to indemnify and hold harmless (i) each of the
Purchasers, each Holder of Transfer Restricted Securities, each holder of
Exchange Notes, each Participating Broker-Dealer and (ii) each person, if any,
who controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any of the foregoing (any of the persons referred to in
24
<PAGE>
this clause (ii) being hereinafter referred to as a "controlling person"), and
(iii) the respective officers, directors, partners, employees, representatives
and agents of the Purchasers, each Holder of Transfer Restricted Securities,
each holder of Exchange Notes, each Participating Broker-Dealer or any
controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Person"), from and against any and
------------------
all losses, claims, damages, liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement, Prospectus or form of Prospectus or in any amendment or
supplement thereto or in any preliminary Prospectus, 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 (in the case of any
Prospectus or form of Prospectus or supplement thereto, in light of the
circumstances under which they were made) 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 any Indemnified Person furnished in writing to the
Company by or on behalf of such Indemnified Person expressly for use therein;
provided that the foregoing indemnity with respect to any preliminary prospectus
- --------
shall not inure to the benefit of any Indemnified Person from whom the person
asserting such losses, claims, damages, liabilities and judgments purchased
securities if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary prospectus is eliminated or remedied in the
Prospectus and a copy of the Prospectus shall not have been furnished to such
person in a timely manner due to the wrongful action or wrongful inaction of
such Indemnified Person.
(b) In case any action shall be brought against any Indemnified
Person, based upon any Registration Statement or any such Prospectus or any
amendment or supplement thereto and with respect to which indemnity may be
sought against the Company, such Indemnified Person shall promptly notify the
Company in writing and the Company shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Person and
payment of all fees and expenses. Any Indemnified Person shall have the right
to employ
25
<PAGE>
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Person, unless (i) the employment of such counsel shall have been
specifically authorized in writing by the Company, (ii) the Company shall have
failed to assume the defense and employ counsel or (iii) the named parties to
any such action (including any impleaded parties) include both such Indemnified
Person and the Company and such Indemnified Person shall have been advised by
counsel that there may be one or more legal defenses available to it which are
different from or additional to those available to the Company (in which case
the Company shall not have the right to assume the defense of such action on
behalf of such Indemnified Person, it being understood, however, that the
Company shall not, in connection with any one such 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 reasonable fees
and expenses of more than one separate firm of attorneys (in addition to any
local counsel) for all such Indemnified Persons, which firm shall be designated
in writing by such Indemnified Persons, and that all such fees and expenses
shall be reimbursed as they are incurred). The Company shall not be liable for
any settlement of any such action effected without its written consent but if
settled with the written consent of the Company, the Company agrees to indemnify
and hold harmless any Indemnified Person from and against any loss or liability
by reason of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(c) In connection with any Registration State ment in which a Holder
of Transfer Restricted Securities is participating, such Holder of Transfer
Restricted Securities agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers and any person controlling the
Company within the meaning of Section 15 of the Act or Section 20 of the
26
<PAGE>
Exchange Act, to the same extent as the foregoing indemnity from the Company to
each Indemnified Person but only with reference to information relating to such
Idemnified Person furnished in writing by or on behalf of such Indemnified
Person expressly for use in such Registration Statement. In case any action
shall be brought against the Company, any of its directors, any such officer or
any person controlling the Company based on such Registration Statement and in
respect of which indemnity may be sought against any Indemnified Person, the
Indemnified Person shall have the rights and duties given to the Company (except
that if the Company shall have assumed the defense thereof, such Indemnified
Person shall not be required to do so, but may employ separate counsel there in
and participate in defense thereof but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person), and the Company, its
directors, any such officers and any person controlling the Company shall have
the rights and duties given to the Indemnified Person, by Section 7(b) hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party in respect of any losses, claims, damages,
liabilities or judgments referred to therein, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company on the one hand and each
Indemnified Person on the other hand from the offering of the Notes or (ii) if
the allocation provided by clause (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 (i) above but also the relative fault of the Company and
each such Indemnified Person 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 each such Indemnified Person shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied
by the Company or such Indemnified Person and the parties' relative intent,
knowledge, access to information
27
<PAGE>
and opportunity to correct or prevent such statement or omission. The Company
and the Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section 7(d) were determined by pro rata allocation (even if
the Indemnified Person were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Indemnified Person shall be
required to contribute any amount in excess of the amount by which the total net
profit received by it in connection with the sale of the Notes pursuant to this
Agreement exceeds the amount of any damages which such Indemnified Person 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 Indemnified Persons' obligations to contribute pursuant
to this Section 7(d) are several in proportion to the respective amount of Notes
included in any such Registration Statement by each Indemnified Person and not
joint.
8. Rules 144 and 144A
------------------
The Company shall use its best efforts to file the reports required to
be filed by it under the Securities Act and the Exchange Act in a timely manner
and, if at any time it is not required to file such reports but in the past had
been required to or did file such reports, it will, upon the request of any
Holder of Trans fer Restricted Securities, make available other information as
required by, and so long as necessary to permit, sales of its Transfer
Restricted Securities pursuant to Rule 144A. Notwithstanding the foregoing,
nothing in this Section 8 shall be deemed to require the Company to register any
of its securities pursuant to the Exchange Act.
28
<PAGE>
9. Underwritten Registrations
--------------------------
If any of the Transfer Restricted Securities covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banker
or investment bankers and manager or managers that will administer the offering
will be selected by the Holders of a majority in aggregate principal amount of
such Transfer Restricted Securities included in such offering, subject to the
consent of the Company (which will not be unreasonably withheld or delayed).
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
10. Miscellaneous
-------------
(a) Remedies. In the event of a breach by the Company, or by a Holder
--------
of Transfer Restricted Securities, of any of their obligations under this
Agreement, each Holder of Transfer Restricted Securities or the Company, as the
case may be, 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. Subject to Section 4 hereof, the Company and
each Holder of Transfer Restricted Securities agree that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach by it
of any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company will not enter into any
--------------------------
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders of Transfer Restricted Securities in this Agreement or
otherwise conflicts with the provisions hereof. The Company has not previously
entered into any
29
<PAGE>
agreement granting any registration rights with respect to any of its debt
securities to any person except for agreements with holders of registration
rights granted prior to the date hereof (from whom all necessary consents or
waivers have been obtained). Without limiting the generality of the foregoing,
without the written consent of the Holders of a majority in aggregate principal
amount of the then outstanding Transfer Restricted Securities, the Company shall
not grant to any person the right to request it to register any of its debt
securities under the Securities Act unless the rights so grant ed are subject
in all respects to the prior rights of the Holders of Transfer Restricted
Securities set forth herein, and are not otherwise in conflict or inconsistent
with the provisions of this Agreement.
(c) No Piggyback on Registrations. The Company shall not grant to
-----------------------------
any of its securityholders (other than the Holders of Transfer Restricted
Securities in such capacity) the right to include any securities of either of
them in any Shelf Registration or Exchange Offer other than Transfer Restricted
Securities.
(d) Amendments and Waivers. The provisions of this Agreement,
----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless they have obtained the written consent of the Holders
of a majority of the then outstanding aggregate principal amount of Transfer
Restricted Securities; provided, however, that, for the purposes of this
-------- -------
Agreement, Transfer Restricted Securities that are owned, directly or
indirectly, by either of them or an Affiliate of either of them are not deemed
outstanding. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders of Transfer Restricted Securities whose securities are being
sold pursuant to a Registration Statement and that does not directly or
indirectly affect the rights of other Holders of Transfer Restricted Securities
may be given by Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities being sold by such Holders pursuant to such
Registration Statement; provided, however, that the provisions of this sentence
-------- -------
may not be amended, modified, or supplemented
30
<PAGE>
except in accordance with the provisions of the immediately preceding sentence.
(e) Notices. All notices and other communications provided for
-------
herein shall be made in writing by hand-delivery, next-day air courier,
certified first-class mail, return receipt requested, telex or facsimile:
(i) if to the Company, as provided in the Purchase Agreement,
(ii) if to the Purchasers, as provided in the Purchase
Agreement, or
(iii) if to any other person who is then the registered Holder of
any Transfer Restricted Securities, to the address of such
Holder as it appears in the Note register of the Company.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered; one business day after being timely delivered to a
next-day air courier; five business days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; and when receipt is
acknowledged by the recipient's telecopier machine, if telecopied.
(f) Successors and Assigns. This Agreement shall inure to the benefit
----------------------
of and be binding upon the successors and permitted assigns of each of the
parties and shall inure to the benefit of each Holder of Transfer Restricted
Securities. The Company may not assign its rights or obligations hereunder
without the prior written consent of each Holder of any Transfer Restricted
Securities. Notwithstanding the foregoing, no transferee shall have any of the
rights granted under this Agreement until such transferee shall acknowledge its
rights and obligations hereunder by a signed written statement of such
transferee's acceptance of such rights and obligations.
(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
31
<PAGE>
which taken together shall constitute one and the same Agreement.
(h) Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
---------------------------------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK. THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT
OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF THE AFORESAID
COURTS.
(i) Severability. The remedies provided herein are cumulative and not
------------
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(j) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof. All
references made in this Agreement to "Section" and "paragraph" refer to such
Section or paragraph of this Agreement, unless expressly stated otherwise.
(k) Attorneys' Fees. In any action or pro ceeding brought to enforce
---------------
any provision of this Agreement,
32
<PAGE>
or where any provision hereof or thereof is validly asserted as a defense, the
prevailing party, as determined by the court, shall be entitled to recover
reasonable attorneys' fees in addition to any other available remedy.
33
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
PRICE COMMUNICATIONS WIRELESS INC.,
By: /s/
___________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION, on behalf of
and as Representative of the Purchasers
By:
___________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
PRICE COMMUNICATIONS WIRELESS INC.,
By:
___________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION, on behalf of
and as Representative of the Purchasers
By: /s/
___________________________
Name:
Title:
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Registration Rights
Agreement to be duly executed as of the date first written above.
PRICE COMMUNICATIONS WIRELESS INC.,
By: /s/
___________________________
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION, on behalf of
and as Representative of the Purchasers
By:
___________________________
Name:
Title:
<PAGE>
Exhibit 5.1
November 7, 1997
Price Communications Wireless, Inc.
45 Rockefeller Plaza
New York, New York 10020
Ladies and Gentlemen:
We have acted as special counsel to Price Communications Wireless, Inc.
(the "Company") in connection with the Company's offer (the "Exchange Offer") to
exchange its 11 3/4% Senior Subordinated Exchange Notes due 2007 (the "New
Notes") for any and all of its outstanding 11 3/4% Senior Subordinated Notes due
2007 (the "Old Notes").
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and other instruments as we have deemed necessary or advisable for the
purpose of rendering this opinion.
Upon the basis of the foregoing and assuming the due execution and delivery
of the New Notes, we are of the opinion that the New Notes, when executed,
authenticated and delivered in exchange for the Old Notes in accordance with the
Exchange Offer will be valid and binding obligations of the Company enforceable
in accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and similar laws affecting
creditors' rights generally and equitable principles.
We are members of the Bar of the State of New York and the foregoing
opinion is limited to the laws of the State of New York, the federal laws of the
United States of America and the General Corporation Law of the State of
Delaware.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement relating to the Exchange Offer. We also consent to the
reference to us under the caption "Legal Matters" in the Prospectus contained in
such Registration Statement.
<PAGE>
Price Communications
Wireless, Inc. 2 November 7, 1997
This opinion is rendered to you in connection with the above matter. This
opinion may not be relied upon by you for any other purpose. Bank of Montreal
Trust Company, as Exchange Agent for the Exchange Offer, may rely upon this
opinion as if it were addressed directly to it.
Very truly yours,
/s/ Davis Polk & Wardwell
<PAGE>
Exhibit 8.1
November 7, 1997
Price Communications Wireless, Inc
45 Rockefeller Plaza
New York, NY 10020
Ladies and Gentlemen:
We have acted as special tax counsel for you in connection
with the issuance of your $175,000,000 aggregate principal amount
11 3/4% Senior Subordinated Exchange Notes due 2007 (the "Notes"). You
have requested our opinion with respect to the federal income tax
consequences of the Merger to the Initial Holders. Capitalized terms
appearing herein and not defined have the meanings assigned to such
terms in the prospectus relating to the Notes (the "Prospectus").
There is no authority with respect to a transaction closely
comparable to the issuance of the Notes in anticipation of a merger of
the obligor into an unrelated entity pursuant to an acquisition
agreement between the obligor's indirect parent and such entity.
Accordingly, due to the absence of authorities that directly address the
proper characterization of the Notes, no assurance can be given that the
Internal Revenue Service will accept, or that a court will uphold, the
characterization and tax treatment described below. However, in our
opinion, a Note at the issuance should, for federal income tax purposes,
be characterized as an investment unit consisting of the following two
components: (i) a contract (the "Forward Contract") that obligates the
holder of the Note to purchase, and the Company to sell, for an amount
equal to the principal amount of the Note, a debt instrument of the
Company (with terms and conditions that are specified in the Prospectus)
upon the consummation of the Merger, and (ii) a loan to the Company
which bears semi-annual interest at a rate of 11 3/4% per annum and will
mature at the earlier of the consummation of the Merger or December 31,
1997. Under this characterization, upon the Merger an Initial Holder (i)
would not have recognized gain or loss, and (ii) would have a tax basis
equal to the principal amount of the Notes and a holding period that
commenced on the date of the Merger.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement relating to the offering of the Notes.
Very truly yours,
/s/ Davis Polk & Wardwell
<PAGE>
EXHIBIT 10.1
================================================================================
$525,000,000
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 30, 1997
AMONG
PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.,
PRICE COMMUNICATIONS WIRELESS, INC.,
as Borrower,
THE LENDERS LISTED HEREIN,
as Lenders,
DLJ CAPITAL FUNDING, INC.,
as Syndication Agent,
and
BANK OF MONTREAL, CHICAGO BRANCH
as Administrative Agent
ARRANGED BY:
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
================================================================================
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
$525,000,000
CREDIT AGREEMENT
TABLE OF CONTENTS
-----------------
Page
----
Section 1. DEFINITIONS.................................................... 2
1.1 Certain Defined Terms.......................................... 2
1.2 Accounting Terms; Utilization of GAAP for Purposes
of Calculations Under Agreement................................ 37
1.3 Other Definitional Provisions and Rules of Construction........ 37
Section 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS..................... 38
2.1 Commitments; Making of Loans; the Register; Notes.............. 38
2.2 Interest on the Loans.......................................... 46
2.3 Fees........................................................... 50
2.4 Repayments, Prepayments and Reductions in Revolving Loan
Commitments; General Provisions Regarding Payments; Application
of Proceeds of Collateral and Payments Under Guaranties........ 50
2.5 Use of Proceeds................................................ 61
2.6 Special Provisions Governing Eurodollar Rate Loans............. 62
2.7 Increased Costs; Taxes; Capital Adequacy....................... 64
2.8 Obligation of Lenders and Issuing Lenders to Mitigate;
Replacement of Lender.......................................... 69
Section 3. LETTERS OF CREDIT.............................................. 70
3.1 Issuance of Letters of Credit and Lenders' Purchase
of Participations Therein...................................... 70
3.2 Letter of Credit Fees.......................................... 72
3.3 Drawings and Reimbursement of Amounts Paid Under Letters of
Credit......................................................... 73
3.4 Obligations Absolute........................................... 76
3.5 Indemnification; Nature of Issuing Lenders' Duties............. 77
3.6 Increased Costs and Taxes Relating to Letters of Credit........ 78
Section 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT...................... 79
4.1 Conditions to Term Loans and Initial Revolving Loans
and Swing Line Loans........................................... 79
4.2 Conditions to All Loans........................................ 86
4.3 Conditions to Letters of Credit................................ 87
(i)
<PAGE>
Page
----
Section 5. REPRESENTATIONS AND WARRANTIES................................. 87
5.1 Organization, Powers, Qualification, Good Standing, Business
and Subsidiaries............................................... 87
5.2 Authorization of Borrowing, No Conflict, Consents, etc......... 89
5.3 Financial Condition............................................ 91
5.4 No Material Adverse Change; No Restricted Junior Payments...... 92
5.5 Title to Properties; Liens..................................... 92
5.6 Litigation; Compliance with Laws; Adverse Facts................ 92
5.7 Payment of Taxes............................................... 93
5.8 Performance of Agreements; Materially Adverse Agreements;
Material Contracts............................................. 93
5.9 Governmental Regulation........................................ 93
5.10 Securities Activities.......................................... 94
5.11 Employee Benefit Plans......................................... 94
5.12 Certain Fees................................................... 94
5.13 Employee Matters............................................... 95
5.14 Solvency....................................................... 95
5.15 Matters Relating to Collateral................................. 95
5.16 Related Agreements............................................. 96
5.17 Disclosure..................................................... 97
Section 6. AFFIRMATIVE COVENANTS.......................................... 97
6.1 Financial Statements and Other Reports......................... 97
6.2 Corporate Existence, etc.......................................102
6.3 Payment of Taxes and Claims; Tax Consolidation.................103
6.4 Maintenance of Properties; Insurance...........................103
6.5 Inspection Rights; Lender Meeting..............................104
6.6 Compliance with Laws, Maintenance of FCC Licenses, etc.........104
6.7 Execution of Subsidiary Guaranty and Personal Property
Collateral Documents by Certain Subsidiaries and
Future Subsidiaries............................................105
6.8 Interest Rate Protection.......................................106
Section 7. NEGATIVE COVENANTS.............................................106
7.1 Indebtedness...................................................106
7.2 Liens and Related Matters......................................108
7.3 Investments; Joint Ventures....................................109
7.4 Contingent Obligations.........................................110
7.5 Restricted Junior Payments.....................................111
7.6 Financial Covenants............................................111
7.7 Restriction on Fundamental Changes; Asset Sales and
Acquisitions...................................................118
7.8 Consolidated Capital Expenditures..............................121
7.9 Restriction on Leases..........................................121
7.10 Sales and Lease-Backs..........................................122
7.11 Sale or Discount of Receivables................................122
(ii)
<PAGE>
Page
----
7.12 Transactions with Shareholders and Affiliates..................122
7.13 Disposal of Subsidiary Stock...................................123
7.14 Conduct of Business............................................123
7.15 Amendments or Waivers of Certain Related Agreements;
Amendments of Documents Relating to Subordinated Indebtedness;
Designation of "Designated Senior Indebtedness"................123
7.16 Fiscal Year....................................................124
Section 8. EVENTS OF DEFAULT..............................................125
8.1 Failure to Make Payments When Due..............................125
8.2 Default in Other Agreements....................................125
8.3 Breach of Certain Covenants....................................125
8.4 Breach of Warranty.............................................125
8.5 Other Defaults Under Loan Documents............................126
8.6 Involuntary Bankruptcy; Appointment of Receiver, etc...........126
8.7 Voluntary Bankruptcy; Appointment of Receiver, etc.............126
8.8 Judgments and Attachments......................................127
8.9 Dissolution....................................................127
8.10 Employee Benefit Plans.........................................127
8.11 Change in Control..............................................127
8.12 Invalidity of Guaranties; Failure of Security; Repudiation of
Obligations....................................................127
8.13 Failure to Consummate Merger...................................128
8.14 FCC Licenses...................................................128
Section 9. AGENTS.........................................................129
9.1 Appointment....................................................129
9.2 Powers and Duties; General Immunity............................130
9.3 Representations and Warranties; No Responsibility For
Appraisal of Creditworthiness..................................132
9.4 Right to Indemnity.............................................132
9.5 Successor Agents and Swing Line Lender.........................132
9.6 Collateral Documents and Guaranties............................133
Section 10. MISCELLANEOUS..................................................134
10.1 Assignments and Participations in Loans and Letters of Credit..134
10.2 Expenses.......................................................137
10.3 Indemnity......................................................138
10.4 Set-Off; Security Interest in Deposit Accounts.................140
10.5 Ratable Sharing................................................141
10.6 Amendments and Waivers.........................................142
10.7 Successors and Assigns.........................................143
10.8 Notices........................................................143
10.9 Survival of Representations, Warranties and Agreements.........143
10.10 Failure or Indulgence Not Waiver; Remedies Cumulative..........144
(iii)
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Page
----
10.11 Marshalling; Payments Set Aside................................144
10.12 Severability...................................................144
10.13 Obligations Several; Independent Nature of Lenders' Rights.....145
10.14 Headings.......................................................145
10.15 Applicable Law.................................................145
10.16 Consent to Jurisdiction and Service of Process.................145
10.17 Waiver of Jury Trial...........................................146
10.18 Confidentiality................................................147
10.19 Counterparts; Effectiveness....................................147
Signature pages............................................S-1
(iv)
<PAGE>
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV-A FORM OF TRANCHE A TERM NOTE
IV-B FORM OF TRANCHE B TERM LOAN
V FORM OF REVOLVING NOTE
VI FORM OF SWING LINE NOTE
VII FORM OF COMPLIANCE CERTIFICATE
VIII-A FORM OF OPINION OF PROSKAUER ROSE LLP
VIII-B FORM OF OPINION OF K. PATRICK MEEHAN, ESQ.
VIII-C FORM OF OPINION OF DAVIS WRIGHT TREMAINE LLP
IX FORM OF OPINION OF O'MELVENY & MYERS LLP
X FORM OF ASSIGNMENT AGREEMENT
XI FORM OF CERTIFICATE RE NON-BANK STATUS
XII FORM OF FINANCIAL CONDITION CERTIFICATE
XIII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIV FORM OF HOLDINGS GUARANTY
XV FORM OF HOLDINGS PLEDGE AGREEMENT
XVI FORM OF COMPANY PLEDGE AGREEMENT
XVII FORM OF COMPANY SECURITY AGREEMENT
XVIII FORM OF SUBSIDIARY GUARANTY
XIX FORM OF SUBSIDIARY PLEDGE AGREEMENT
XX FORM OF SUBSIDIARY SECURITY AGREEMENT
(v)
<PAGE>
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
4.1B CORPORATE AND CAPITAL STRUCTURE; OWNERSHIP;
MANAGEMENT
5.1A JURISDICTIONS OF INCORPORATION
5.1D SUBSIDIARIES OF HOLDINGS
5.1E FCC LICENSES
5.2C GOVERNMENTAL CONSENTS
5.8C MATERIAL CONTRACTS
5.11 CERTAIN EMPLOYEE BENEFIT PLANS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
(vi)
<PAGE>
PRICE COMMUNICATIONS WIRELESS, INC.
$525,000,000
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of September 30, 1997 and entered
into by and among PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC., a Delaware
corporation, PRICE COMMUNICATIONS WIRELESS, INC., a Delaware corporation, THE
FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually
referred to herein as a "LENDER" and collectively as "LENDERS"), DONALDSON,
LUFKIN & JENRETTE SECURITIES CORPORATION, as arranger for Lenders (in such
capacity, the "ARRANGER"), DLJ CAPITAL FUNDING, INC. ("DLJ"), as syndication
agent for Lenders (in such capacity, the "SYNDICATION AGENT"), BANK OF MONTREAL,
CHICAGO BRANCH ("BMO"), as administrative agent for Lenders (in such capacity,
the "ADMINISTRATIVE AGENT"), and CORESTATES BANK, N.A., as documentation agent
for Lenders (in capacity, the "DOCUMENTATION AGENT").
R E C I T A L S
---------------
WHEREAS, Intermediary Holdings (this and other capitalized terms used
in these recitals without definition being used as defined in subsection 1.1),
Holdings and Merger Sub have been formed by PCC for the purpose of acquiring all
of the Palmer Shares;
WHEREAS, on July 10, 1997, Company issued $175,000,000 of Subordinated
Notes and on August 11, 1997, Holdings issued $153,400,000 of Holding Discount
Notes;
WHEREAS, on or before the Closing Date, PCC shall contribute or shall
cause to be contributed $80,000,000 to Company in the form of cash or common
stock of Palmer (valued at $17.50 per share) as common equity;
WHEREAS, on or before the Closing Date, Palmer will complete the sale
of the Fort Myers MSA Cellular System for net cash proceeds of approximately
$166,300,000 of Fort Myers Sale Proceeds;
WHEREAS, on the Closing Date, (i) Merger Sub will purchase all of the
Palmer Shares (other than Pre-Merger Acquired Palmer Shares) for the Purchase
Price pursuant to the Merger Agreement, (ii) all issued and outstanding Palmer
Class A Shares and Palmer Class B Shares not issued to and held by PCC or any of
its Subsidiaries shall be converted into the right to receive cash payments in
an amount not to exceed $17.50 per share, (iii) all options for the issuance of
or conversion to Palmer Class A Shares under any stock option or stock purchase
plan of Palmer shall be terminated and the holders of such
1
<PAGE>
options shall receive cash payments determined in accordance to the Merger
Agreement, and (iv) immediately upon the consummation of the Merger, Merger Sub
will be merged with and into Palmer pursuant to the Merger Agreement, with
Palmer being the surviving corporation in the Merger, and concurrently with or
subsequent to such Merger such surviving corporation shall change its name to
"Price Communications Wireless, Inc." in connection therewith;
WHEREAS, Lenders have agreed to extend certain credit facilities to
Company, the proceeds of which will be used, together with the proceeds of the
issuance and sale of the Subordinated Notes, a portion of the proceeds of the
Holdings Discount Notes contributed by Holdings to Company, the proceeds of the
issuance for cash of Company Common Stock to Holdings (and/or the contribution
of the Pre-Merger Acquired Palmer Shares) and the proceeds from the sale by
Palmer of the Fort Myers MSA Cellular System, each as described above, (i) to
pay the Purchase Price for the Palmer Shares (other than Pre-Merger Acquired
Palmer Shares), (ii) to refinance all outstanding Indebtedness of Palmer and its
Subsidiaries, (iii) to pay Transaction Costs, and (iv) to provide financing for
working capital and other general corporate purposes of Company and its
Subsidiaries;
WHEREAS, Company desires to secure all of the Obligations hereunder
and under the other Loan Documents by granting to Administrative Agent, on
behalf of Lenders, a First Priority Lien on substantially all of its personal
property, including without limitation a pledge of all of the capital stock of
each of its Subsidiaries; and
WHEREAS, Holdings and all of the Subsidiaries of Company have agreed
to guarantee the Obligations hereunder and under the other Loan Documents and to
secure their guaranties by granting to Administrative Agent, on behalf of
Lenders, a First Priority Lien on substantially all of their respective personal
property, including without limitation a pledge of all of the capital stock of
each of their respective Subsidiaries:
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Holdings, Company, Lenders and Agents
agree as follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
---------------------
The following terms used in this Agreement shall have the following
meanings:
"ACQUIRING SUBSIDIARY" means a Subsidiary of Company consummating a
Permitted Acquisition.
2
<PAGE>
"ADJUSTED EURODOLLAR RATE" means, for any Interest Rate Determination
Date with respect to an Interest Period for a Eurodollar Rate Loan, the rate per
annum (rounded upwards, if necessary, to the nearest integral multiple of the
number of decimal points displayed on Telerate Page 3750, or any successor or
similar service, or if neither such Telerate Page 3750 nor any successor or
similar service is available and such rate is determined using Reference
Lenders, one one-hundredth of one percent (1/100%)) equal to (i) the average of
the offered quotations appearing on Telerate Page 3750 (or if such Telerate Page
shall not be available, any successor or similar service as may be selected by
Administrative Agent and Company) as of 11:00 a.m. (London time) (or as soon
thereafter as practicable) two (2) Business Days prior to the beginning of such
Interest Period for such Eurodollar Rate Loan, or (ii) if neither such Telerate
Page 3750 nor any successor or similar service is available, then the rate per
annum obtained by dividing (x) the arithmetic average of the quotation by each
--------
Reference Lender (notified to Administrative Agent by such Reference Lender) of
the rate of interest per annum at which deposits in Dollars in immediately
available funds are offered to such Reference Lender two (2) Business Days prior
to the beginning of such Interest Period by first class banks in the London
interbank market as of approximately 9:00 A.M. (Chicago time) for delivery on
such Interest Rate Determination Date, in each case for a period equal to such
Interest Period an in an amount equal to the proposed Eurodollar Rate Loan of
such Reference Lender to which such Interest Period relates, by (ii) a
--
percentage equal to 100% minus the stated maximum rate of all reserve
-----
requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member bank of the Federal Reserve System in respect
of "Eurocurrency liabilities" as defined in Regulation D (or any successor
category of liabilities under Regulation D); provided that if any Reference
--------
Lender fails to provide Administrative Agent with its aforementioned quotation
then the Adjusted Eurodollar Rate shall be determined based on the quotation
provided to Administrative Agent by the other Reference Lender(s).
"ADMINISTRATIVE AGENT" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Administrative Agent appointed pursuant to subsection 9.5A.
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFILIATE", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise; provided, however, that in no event shall Arranger,
-------- -------
any Agent or any Lender be deemed to be an Affiliate of Company for purposes of
any Loan Document.
3
<PAGE>
"AGENTS" means, collectively, the Syndication Agent and the
Administrative Agent, and also means and includes any successor Syndication
Agent or Administrative Agent, as the case may be, appointed pursuant to
subsection 9.5A, and each is individually referred to as an "AGENT".
"AGREEMENT" means this Credit Agreement dated as of September 30,
1997, as it may be amended, supplemented or otherwise modified from time to
time.
"APPLICABLE TRANCHE A BASE RATE MARGIN" means, as of any date of
determination, a percentage per annum as set forth below opposite the applicable
Consolidated Leverage Ratio:
CONSOLIDATED LEVERAGE RATIO APPLICABLE TRANCHE A BASE RATE MARGIN
------------------------------- -------------------------------------
greater than 8:00:1.00 1.50%
less than or equal to 8.00:1.00 1.25%
but greater than 7.00:1.00
less than or equal to 7.00:1.00 1.00%
but greater than 6.00:1.00
less than or equal to 6.00:1.00 0.75%
but greater than 5.00:1.00
less than or equal to 5.00:1.00 0.50%
but greater than 4.00:1.00
less than or equal to 4.00:1.00 0.25%
; provided that for the first six months after the Closing Date, the Applicable
--------
Tranche A Base Rate Margin shall be 1.50% per annum.
"APPLICABLE TRANCHE B BASE RATE MARGIN" means, as of any date of
determination, a percentage per annum as set forth below opposite the applicable
Consolidated Leverage Ratio:
CONSOLIDATED LEVERAGE RATIO APPLICABLE TRANCHE B BASE RATE MARGIN
------------------------------- -------------------------------------
greater than 8:00:1.00 1.75%
less than or equal to 8.00:1.00 1.50%
but greater than 7.00:1.00
less than or equal to 7.00:1.00 1.25%
4
<PAGE>
; provided that for the first six months after the Closing Date, the Applicable
--------
Tranche B Base Rate Margin shall be 1.75% per annum.
"APPLICABLE TRANCHE A EURODOLLAR MARGIN" means, as of any date of
determination, a percentage per annum as set forth below opposite the applicable
Consolidated Leverage Ratio:
CONSOLIDATED LEVERAGE RATIO APPLICABLE TRANCHE A EURODOLLAR RATE MARGIN
------------------------------- -------------------------------------------
greater than 8:00:1.00 2.50%
less than or equal to 8.00:1.00 2.25%
but greater than 7.00:1.00
less than or equal to 7.00:1.00 2.00%
but greater than 6.00:1.00
less than or equal to 6.00:1.00 1.75%
but greater than 5.00:1.00
less than or equal to 5.00:1.00 1.50%
but greater than 4.00:1.00
less than or equal to 4.00:1.00 1.25%
; provided that for the first six months after the Closing Date, the Applicable
--------
Tranche A Eurodollar Margin shall be 2.50% per annum.
"APPLICABLE TRANCHE B EURODOLLAR MARGIN" means, as of any date of
determination, a percentage per annum as set forth below opposite the applicable
Consolidated Leverage Ratio:
CONSOLIDATED LEVERAGE RATIO APPLICABLE TRANCHE B EURODOLLAR RATE MARGIN
------------------------------- -------------------------------------------
greater than 8:00:1.00 2.75%
less than or equal to 8.00:1.00 2.50%
but greater than 7.00:1.00
less than or equal to 7.00:1.00 2.25%
; provided that for the first six months after the Closing Date, the Applicable
--------
Tranche B Eurodollar Margin shall be 2.75% per annum.
5
<PAGE>
"ARRANGER" has the meaning assigned to that term in the introduction
to this Agreement.
"ASSET SALE" means any sale by Company or any of its Subsidiaries to
any Person other than Company or any of its Intercompany Subsidiaries of (i) any
of the stock of any of Company's Subsidiaries, (ii) substantially all of the
assets of any division or line of business of Company or any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible) of
Company or any of its Subsidiaries (other than (a) inventory sold or otherwise
disposed in the ordinary course of business; (b) assets sold or otherwise
disposed in the ordinary course of business; provided that such asset sales may
--------
be excluded from the definition of "Asset Sale" only if the Net Asset Sale
Proceeds from such asset sale are reinvested or committed to be reinvested by
Company or its Subsidiaries in similar assets within 180 days after the date of
the receipt of the consideration in respect of such asset sale and are so
reinvested as soon as practicable after receipt of any required consents or
approvals from the FCC and, in any event, not later than 360 days after such
receipt of such proceeds; provided further that the sale, transfer or other
-------- -------
disposition of any Cellular System owned and/or operated by Company or any of
its Subsidiaries shall not be excluded from the definition of "Asset Sale" under
this clause (b); (c) sales of obsolete or worn-out assets in the ordinary course
of business; (d) any such other assets to the extent that the aggregate value of
such assets sold in any single transaction or related series of transactions is
equal to $200,000 or less; and (e) the sale of the Fort Myers MSA Cellular
System pursuant to the Fort Myers Sale Agreement).
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially
the form of Exhibit X annexed hereto.
---------
"ASSUMED PERMITTED ACQUISITION INDEBTEDNESS" means the existing
Indebtedness of a Cellular System assumed in connection with a Permitted
Acquisition; provided that (i) such Indebtedness was not incurred by such
--------
Cellular System or the Person owning and/or operating such Cellular System in
connection with or for the purpose of financing such Permitted Acquisition, (ii)
such Indebtedness is unsecured, (iii) such Indebtedness is assumed solely by an
Acquiring Subsidiary, and (iv) under the terms of such Indebtedness and pursuant
to applicable laws, no recourse may be had for the payment of principal,
interest or premium with respect to such Indebtedness or for any claim based
thereon against the Company or any of its Subsidiaries (other than such
Acquiring Subsidiary) or any of their respective properties or assets.
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the Prime Rate or
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
6
<PAGE>
"BMo" has the meaning assigned to that term in the introduction to
this Agreement.
"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 New York or is a day on which
banking institu tions located in such state are authorized or required by law or
other governmental action to close, and (ii) with respect to all notices,
determinations, fundings and pay ments in connection with the Adjusted
Eurodollar Rate or any Eurodollar Rate Loans, any day that is a Business Day
described in clause (i) above and that is also a day for trading by and between
banks in Dollar deposits in the London interbank market.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States, in each case maturing within one year
after such date; (ii) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof, in each case maturing within one year after such
date and having, at the time of the acquisition thereof, the highest rating
obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's
Investors Service, Inc. ("MOODY'S"); (iii) commercial paper maturing no more
than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least 95% of its assets invested continuously in the types of investments
referred to in clauses (i) and (ii) above, (b) has net assets of not less than
$500,000,000, and (c) has the highest rating obtainable from either S&P or
Moody's.
"CELLULAR SYSTEM" means a public cellular mobile radio
telecommunications system that is or will be constructed and operated in an MSA
or an RSA in the United States of America.
7
<PAGE>
"CERTIFICATE RE NON-BANK STATUS" means a certificate substantially in
the form of Exhibit XI annexed hereto delivered by a Lender to Administrative
----------
Agent pursuant to subsection 2.7B(iii).
"CHANGE OF CONTROL" means (i) any sale, transfer or other conveyance,
whether direct or indirect, of a majority of the fair market value of the assets
of Company or Holdings, on a consolidated basis, in one transaction or a series
of related transactions, if, immediately after giving effect to such
transaction, any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable), other
than an Excluded Person or Excluded Group, is or becomes the "beneficial owner"
(as such term is used in Rule 13d-3 promulgated pursuant to the Exchange Act),
directly or indirectly, of more than 30% of the equity of the transferee, (ii)
any person or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not applicable), other than an Excluded
Person or Excluded Group, is or becomes the "beneficial owner" (as such term is
used in Rule 13d-3 promulgated pursuant to the Exchange Act), directly or
indirectly, of (x) more than 30% of the equity of Company or Holdings then
outstanding normally entitled to vote in elections of directors and (y) a higher
percentage of the aggregate ordinary voting power of Company or Holdings than is
represented by the Excluded Group, (iii) during any period of 12 consecutive
months after the date hereof, individuals who at the beginning of any such 12-
month period constituted the Board of Directors of Company or Holdings (together
with any new directors whose election by such Board or whose nomination for
election by the shareholders of Company or Holdings was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of Company or Holdings then in office, (iv) Price and his
family shall fail to own, whether directly or indirectly, 10% of the outstanding
voting stock of Holdings, (v) Holdings shall fail to own 100% of the outstanding
capital stock of Company, or (vi) the occurrence of a "Change of Control" under
either or both of the Subordinated Note Indenture or the Holdings Discount Note
Indenture. Notwithstanding anything in the foregoing to the contrary the
following transactions shall not constitute a "Change of Control": (x) the
Merger, (y) any corporate reorganization of PCC, and (z) any merger of PCC and
PriCellular.
"CLASS" means, as applied to Lenders, each of the following two
classes of Lenders: (i) Lenders having Tranche A Term Loan Exposure and/or
Revolving Loan Exposure (taken together as a single class) and (ii) Lenders
having Tranche B Term Loan Exposure.
"CLOSING DATE" means the date on or before October 15, 1997, on which
the initial Loans are made.
"COLLATERAL" means, collectively, all of the personal property
(including capital stock) in which Liens are purported to be granted pursuant to
the Collateral Documents as security for the Obligations.
8
<PAGE>
"COLLATERAL ACCOUNT" has the meaning assigned to that term in the
Collateral Account Agreement.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account Agreement
executed and delivered by Company and Administrative Agent on the Closing Date,
substantially in the form of Exhibit XIII annexed hereto, as such Collateral
------------
Account Agreement may hereafter be amended, supplemented or otherwise modified
from time to time.
"COLLATERAL DOCUMENTS" means the Collateral Account Agreement, the
Holdings Pledge Agreement, the Company Pledge Agreement, the Company Security
Agreement, the Subsidiary Pledge Agreements, the Subsidiary Security Agreements
and all other instruments or documents delivered by any Loan Party pursuant to
this Agreement or any of the other Loan Documents in order to grant to
Administrative Agent, on behalf of Lenders, a First Priority Lien on any
personal property of that Loan Party as security for the Obligations.
"COMMITMENTS" means the commitments of Lenders to make Loans as set
forth in subsection 2.1A.
"COMMUNICATIONS ACT" means the Communications Act of 1934, and any
similar or successor federal statute, and the written rules, regulations,
orders, decisions and policies of the FCC thereunder, all as the same may be in
effect from time to time.
"COMMUNICATIONS REGULATORY AUTHORITY" means the FCC, any State PUC and
any future federal or state communications regulatory commission, agency,
department, board or authority.
"COMPANY" means (i) prior to the consummation of the Merger, Merger
Sub, and (ii) after the consummation of the Merger, Palmer as the surviving
corporation in the Merger, which surviving corporation shall change its name to
"Price Communications Wireless, Inc." concurrently with or subsequent to the
Merger, in each case, a wholly-owned Subsidiary of Holdings.
"COMPANY COMMON STOCK" means common stock of Company, par value $0.01
per share.
"COMPANY PLEDGE AGREEMENT" means the Company Pledge Agreement executed
and delivered by Company on the Closing Date, substantially in the form of
Exhibit XVI annexed hereto, as such Company Pledge Agreement may thereafter be
- -----------
amended, supplemented or otherwise modified from time to time.
"COMPANY SECURITY AGREEMENT" means the Company Security Agreement
executed and delivered by Company on the Closing Date, substantially in the form
of Exhibit
-------
9
<PAGE>
XVII annexed hereto, as such Company Security Agreement may thereafter be
- ----
amended, supplemented or otherwise modified from time to time.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit VII annexed hereto delivered to Administrative Agent and Lenders by
-----------
Company pursuant to subsection 6.1(iii).
"CONFIDENTIAL INFORMATION MEMORANDUM" means that certain Confidential
Senior Secured Credit Facilities Syndication Memorandum relating to Company
dated June 1997.
"CONSOLIDATED ADJUSTED EBITDA" means, for any period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) to the extent
deducted in calculating Consolidated Net Income, (w) Consolidated Interest
Expense, (x) provisions for taxes based on income, (y) total depreciation
expense, and (z) total amortization expense, and (iii) other non-cash items
reducing Consolidated Net Income less other non-cash items increasing
----
Consolidated Net Income, all of the foregoing as determined on a consolidated
basis for Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED ANNUALIZED EBITDA" means, as at any date of
determination, the product of (x) Consolidated Adjusted EBITDA for the two
consecutive Fiscal Quarter period immediately preceding the date of
determination multiplied by (y) two (2); provided, however, that for the period
------------- -------- -------
ending December 31, 1997, Consolidated Annualized EBITDA shall be the product of
(x) the sum of (i) the Consolidated Adjusted EBITDA of Palmer and its
Subsidiaries from July 1, 1997 through the Closing Date plus (ii) the
----
Consolidated Adjusted EBITDA of Company and its Subsidiaries from the Closing
Date through December 31, 1997 multiplied by (y) two (2); provided further that
---------- -- -------- -------
in each case Consolidated Annualized EBITDA shall exclude the contribution to
such amounts of the Fort Myers MSA Cellular System.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum of
(i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Company and its
Subsidiaries) by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries (excluding any addition arising from
expenditures of insurance proceeds in respect of lost, destroyed or damaged
assets, equipment or other property to the extent such proceeds are spent on the
replacement or repair of such assets, equipment or other property within 180
days of receipt of such proceeds) plus (ii) to the extent not covered by clause
----
(i) of this definition, the aggregate of all expenditures by Company and its
Subsidiaries during that period (a) to purchase or develop computer software or
systems (but only to the extent such expenditures are capitalized on the
consolidated balance sheet of Company and its Subsidiaries in conformity with
GAAP) or (b) to acquire (by purchase or otherwise) the business, property or
fixed assets of any Person, or
10
<PAGE>
the stock or other evidence of beneficial ownership of any Person that, as a
result of such acquisition, becomes a Subsidiary of Company (other than any
Permitted Acquisition permitted under subsection 7.7(iii)).
"CONSOLIDATED CASH INTEREST EXPENSE" means, for any period,
Consolidated Interest Expense for such period excluding, however, any interest
--------- -------
expense not payable in Cash (including amortization of discount and amortization
of debt issuance costs).
"CONSOLIDATED EXCESS CASH FLOW" means, for any period, an amount (if
positive) equal to (i) the sum, without duplication, of the amounts for such
period of Consolidated Adjusted EBITDA minus (ii) the sum, without duplication,
-----
of the amounts for such period of (a) voluntary and scheduled repayments of
Consolidated Total Debt (excluding repayments of Revolving Loans except to the
extent the Revolving Loan Commitments are permanently reduced in connection with
such repayments), (b) Consolidated Capital Expenditures (without duplication,
net of any proceeds of any related financings with respect to such
expenditures), (c) Consolidated Interest Expense, (d) the provision for current
taxes based on income of Company and its Subsidiaries and payable in cash with
respect to such period, (e) Restricted Junior Payments made to Holdings and
described in subsection 7.5(ii), (f) Investments made which are described in
subsections 7.3(vi)-(viii), and (g) extraordinary cash expenses of Company and
its Subsidiaries made during such period but not deducted in calculating
Consolidated Adjusted EBITDA.
"CONSOLIDATED FIXED CHARGES" means, for any period, the sum (without
duplication) of the amounts for such period of (i) Consolidated Interest
Expense, (ii) provisions for taxes based on income, (iii) scheduled principal
payments made in respect of Consolidated Total Debt, (iv) Consolidated Capital
Expenditures and (v) Restricted Junior Payments made to Holdings and described
in subsection 7.5(ii)(b), all of the foregoing as determined on a consolidated
basis for Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, total interest
expense (including that portion attributable to Capital Leases in accordance
with GAAP and capitalized interest) of Company and its Subsidiaries on a
consolidated basis with respect to all outstanding Indebtedness of Company and
its Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing and net costs under Interest Rate Agreements, but
excluding, however, any amounts referred to in subsection 2.3 payable to
Arranger, Agents and Lenders on or before the Closing Date.
"CONSOLIDATED LEVERAGE RATIO" means, as at any date of determination,
the ratio of (x) Consolidated Total Debt as of the last day of the Fiscal
Quarter immediately preceding the Fiscal Quarter in which such date of
determination occurs to (y) Consolidated Annualized EBITDA for the period ending
on such date.
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"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
--------
that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the aggregate
amount of all rents paid or payable by Company and its Subsidiaries on a
consolidated basis during that period under all Capital Leases and Operating
Leases to which Company or any of its Subsidiaries is a party as lessee.
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebted ness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (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)
with respect to net obligations under Hedge Agreements. Contingent Obligations
shall include, without limitation, (a) the direct or indirect guaranty,
endorsement (otherwise 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 non-performance by any other party or
parties to an agreement, and (c) any liability of such Person for the obligation
of another through any agreement (contingent or otherwise) (X) to purchase,
repurchase or otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether in the
form of loans, advances, stock purchases, capital contributions or
12
<PAGE>
otherwise) or (Y) to main tain the solvency or any balance sheet item, level of
income or financial condition of another if, in the case of any agreement
described under subclauses (X) or (Y) of this sentence, the primary purpose or
intent thereof is as described in the preceding sentence. The amount of any
Contingent Obligation shall be equal to the amount of the obligation so
guaranteed or otherwise supported or, if less, the amount to which such
Contingent Obligation is specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument to
which that Person is a party or by which it or any of its properties is bound or
to which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement, futures contract, option contract, synthetic cap or other
similar agreement or arrangement to which Company or any of its Subsidiaries is
a party.
"DEFAULTED ADVANCE" means, with respect to any Lender at any time, the
amount of any Loan required to have been made by such Lender pursuant to
subsection 2.1 that has not been so made by such Lender or by Administrative
Agent on its behalf. In the event that a portion of a Defaulted Advance shall
be deemed made pursuant to subsection 2.1C, the remaining portion of such
Defaulted Advance shall continue to be considered a Defaulted Advance. To the
extent any portion of a Loan made by Administrative Agent on a Lender's behalf
is not fully repaid by such Lender by the close of the Business Day following
the making of such Loan and Administrative Agent thereafter exercises its right
pursuant to subsection 2.1C to require repayment of such advance by Company,
then effective at the time of such repayment by Company, a Defaulted Advance
shall arise equal to the amount of such repayment.
"DEFAULTING LENDER" means, at any time, any Lender that, at such time,
owes a Defaulted Advance.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DLJ" has the meaning assigned to that term in the introduction to
this Agreement.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"ELIGIBLE ASSIGNEE" means (A) (i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or any
state thereof; (iii) a commercial bank organized under the laws of any other
country or a political subdivision thereof;
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<PAGE>
provided that (x) such bank is acting through a branch or agency located in the
- --------
United States or (y) such bank is organized under the laws of a country that is
a member of the Organization for Economic Cooperation and Development or a
political subdivision of such country; and (iv) insurance companies, mutual
funds, lease financing companies and investment funds which (x) in the case of
assignments of Revolving Loan Commitments, extend credit as one of their
businesses or (y) in the case of assignments of Term Loans, buy loans as one of
their businesses, and any Related Funds; and (B) any Lender and any Affiliate of
any Lender; provided that no Affiliate of Company shall be an Eligible
--------
Assignee.
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined
in Section 3(3) of ERISA which is or was maintained or contributed to by
Company, any of its Subsidiaries or any of their respective ERISA Affiliates.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA AFFILIATE" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Company or
such Subsidiary within the meaning of this definition with respect to the
period such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities arising after such period for which Company or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition
14
<PAGE>
which reasonably might constitute grounds under ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan; (vi) the
imposition of liability on Company, any of its Subsidiaries or any of their
respective ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by
reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal of
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in
a complete or partial withdrawal (within the meaning of Sections 4203 and 4205
of ERISA) from any Multiemployer Plan if there is any potential liability
therefor, or the receipt by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates of notice from any Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA, or that
it intends to terminate or has terminated under Section 4041A or 4042 of ERISA;
(viii) the occurrence of an act or omission which could give rise to the
imposition on Company, any of its Subsidiaries or any of their respective ERISA
Affiliates of fines, penalties, taxes or related charges under Chapter 43 of the
Internal Revenue Code or under Section 409, Section 502(c), (i) or (l), or
Section 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof,
or against Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in connection with any Employee Benefit Plan; (x) receipt from the
Internal Revenue Service of notice of the failure of any Pension Plan to qualify
under Section 401(a) of the Internal Revenue Code, or the failure of any trust
forming part of any Pension Plan to qualify for exemption from taxation under
Section 501(a) of the Internal Revenue Code; or (xi) the imposition of a Lien
pursuant to Section 401(a)(29) or 412(n) of the Internal Revenue Code or
pursuant to ERISA with respect to any Pension Plan.
"ESCROWED DEBT SECURITIES PROCEEDS" means (i) the net proceeds from
the sale of the Subordinated Notes and (ii) the approximately $48,300,000 in net
proceeds from the sale of the Holdings Discount Notes, in each case deposited in
the accounts referred to in the Subordinated Note Indenture and the Holdings
Discount Note Indenture, respectively.
"EURODOLLAR RATE LOANS" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXCLUDED GROUP" means a "group" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) that includes one or more Excluded Persons;
provided that the voting power of the capital stock of Company or Holdings
- --------
"beneficially owned" (as such term is used in Rule 13d-3 promulgated under the
Exchange Act) by such Excluded Persons (without attribution to such Excluded
Persons of the ownership by other members of the "group") represents a majority
of the voting power of the capital stock "beneficially owned" (as such term is
used in Rule 13d-3 promulgated under the Exchange Act) by such group.
15
<PAGE>
"EXCLUDED NET DEBT PROCEEDS" means the cash proceeds, net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including without limitation reasonable legal fees and
expenses, from the issuance of any Qualified Holdings Debt Securities after the
Closing Date and applied to the redemption, repayment or repurchase of the
Holdings Discount Notes or any Refinancing thereof.
"EXCLUDED NET EQUITY PROCEEDS" means the cash proceeds, net of
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including without limitation reasonable legal fees and
expenses, from the issuance of any Qualified Holdings Equity Securities after
the Closing Date and applied to the redemption, repayment or repurchase of the
Holdings Discount Notes or any Refinancing thereof.
"EXCLUDED PERSON" means members of the Price family who owned capital
stock of Holdings or PCC on the date hereof or any direct descendant of Price
and any Affiliate of any of the foregoing that is wholly-owned by one of the
foregoing.
"EXISTING CELLULAR SYSTEM" means any Cellular System owned and
operated by Company and its Subsidiaries as of the Closing Date after giving
effect to the Merger.
"EXISTING CREDIT AGREEMENT" means that certain Third Amended and
Restated Loan Agreement, dated as of December 1, 1995, by and among Palmer, the
financial institutions listed therein, CoreStates Bank, N.A., NationsBank of
Texas, N.A. and NatWest Bank N.A., as co-agents, PNC Bank, National Association,
as administrative agent, The Toronto-Dominion Bank, as documentation agent, and
Toronto Dominion (Texas), Inc., as collateral agent, as amended prior to the
Closing Date.
"FACILITIES" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by Company or any of its
Subsidiaries or any of their respective predecessors or Affiliates.
"FCC" means the Federal Communications Commission, or any other
similar or successor agency or entity of the federal government performing
substantially the same functions.
"FCC FORT MYERS CONSENT" means all required FCC consents, approvals,
permits, related authorizations and waivers with respect to the transfer or
assignment of the FCC Licenses used in connection with the Fort Myers MSA
Cellular System in connection with the sale of the Fort Myers MSA Cellular
System pursuant to the Fort Myers Sale Agreement, all in form and substance
reasonably satisfactory to Arranger, Agents and Lenders.
"FCC LICENSE" means any cellular telecommunications, microwave,
personal communications or other related license, authorization, designation
(including a designation
16
<PAGE>
as a tentative selectee by the FCC), certificate, franchise, consent, approval
or permit granted or issued by the FCC to a Person for the purposes of owning,
controlling, constructing and/or operating any Cellular System.
"FCC LICENSE SUBSIDIARY APPLICATIONS" has the meaning assigned to such
term in subsection 4.1G(ii).
"FCC MERGER CONSENT" means all required FCC consents, approvals,
permits, related authorizations and waivers with respect to the transfer or
assignment of the FCC Licenses held by Palmer or any of its Subsidiaries to
Company and its Subsidiaries in connection with the Merger, or otherwise used in
connection with the Existing Cellular Systems, all in form and substance
reasonably satisfactory to Arranger, Agents and Lenders.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period 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 for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Administrative Agent from three Federal funds brokers
of recognized standing selected by it.
"FINAL ORDER" means, as of any date of determination with respect to
any written action or consent by the FCC, such written action or consent which
shall have been obtained and (i) which shall not have been reversed, stayed,
enjoined, annulled or suspended and (ii) for which the time for filing a request
for administrative or judicial relief or for instituting administrative review
thereof sua sponte shall have expired without any such filing having been made
--- ------
or notice of such review having been issued, or, in the event of such filing or
review sua sponte, such filing or review sua sponte shall have been disposed of
--- ------ --- ------
favorably to confirmation of such written action or the grant of such consent
and the time for seeking further relief with respect thereto shall have expired
without any request for such further relief having been filed.
"FINANCIAL PLAN" has the meaning assigned to that term in subsection
6.1(xii).
"FIRST PRIORITY" means, with respect to any Lien purported to be
created in any Collateral pursuant to any Collateral Document, that (i) such
Lien has priority over any other Lien on such Collateral (other than Liens
permitted pursuant to subsection 7.2) and (ii) such Lien is the only Lien (other
than Permitted Encumbrances and Liens permitted pursuant to subsection 7.2) to
which such Collateral is subject.
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries
ending on December 31 of each calendar year.
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<PAGE>
"FORT MYERS MSA CELLULAR SYSTEM" means the Fort Myers, Florida, MSA
Cellular System, call sign KNKA598.
"FORT MYERS SALE AGREEMENT" means that certain agreement, dated as of
June 13, 1997, by and between Palmer and Wireless One, Inc. relating to the sale
of the Fort Myers MSA Cellular System.
"FORT MYERS SALE PROCEEDS" means the net cash proceeds in an amount
not less than $166,300,000 from the sale by Palmer of the Fort Myers MSA
Cellular System.
"FUNDING AND PAYMENT OFFICE" means (i) the office of Administrative
Agent and Swing Line Lender located at 115 South LaSalle Street, Chicago,
Illinois 60603 or (ii) such other office of Administrative Agent and Swing Line
Lender in Chicago or New York as may from time to time hereafter be designated
as such in a written notice delivered by Administrative Agent and Swing Line
Lender to Company and each Lender.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof
set forth in subsection 1.2, generally accepted accounting principles set forth
in opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants or in such other statements
by such other entity as may be approved by a significant segment of the
accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court, including without limitation
any FCC License and any approval, license, permit, consent, filing or
registration under the Communications Act, necessary in order to enable Company
and its Subsidiaries to own, construct, maintain and operate Cellular Systems
and to invest in other Persons who own, construct, maintain and operate Cellular
Systems.
"GUARANTIES" means the Holdings Guaranty and the Subsidiary Guaranty.
"HEDGE AGREEMENT" means an Interest Rate Agreement or a Currency
Agreement designed to hedge against fluctuations in interest rates or currency
values, respectively.
"HOLDINGS" means Price Communications Cellular Holdings, Inc., a
Delaware corporation and a direct wholly-owned Subsidiary of Intermediary
Holdings.
"HOLDINGS COMMON STOCK" means the common stock of Holdings, par value
$0.01 per share.
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"HOLDINGS DISCOUNT NOTE INDENTURE" means that certain Indenture, dated
as of August 11, 1997, by and among PCC, Holdings and Bank of Montreal Trust
Company, as trustee, as such indenture may be amended from time to time to the
extent permitted under subsection 7.15D.
"HOLDINGS DISCOUNT NOTES" means the $153,400,000 in aggregate
principal amount at maturity of 13 1/2% senior secured discount notes due 2007
of Holdings issued pursuant to the Holdings Discount Note Indenture for gross
proceeds of approximately $80,000,000.
"HOLDINGS GUARANTY" means the Holdings Guaranty executed and delivered
by Holdings on the Closing Date, substantially in the form of Exhibit XIV
-----------
annexed hereto, as such Holdings Guaranty may thereafter be amended,
supplemented or otherwise modified from time to time.
"HOLDINGS PLEDGE AGREEMENT" means the Holdings Pledge Agreement
executed and delivered by Holdings on the Closing Date, substantially in the
form of Exhibit XV annexed hereto, as such Holdings Pledge Agreement may
----------
thereafter be amended, supplemented or otherwise modified from time to time.
"INCURRED PERMITTED ACQUISITION INDEBTEDNESS" means Indebtedness
incurred in connection with a Permitted Acquisition; provided that (i) such
--------
Indebtedness is incurred solely by an Acquiring Subsidiary, and (ii) under the
terms of such Indebtedness and pursuant to applicable laws, no recourse may be
had for the payment of principal, interest or premium with respect to such
Indebtedness or for any claim based thereon against the Company or any of its
Subsidiaries (other than such Acquiring Subsidiary) or any of their respective
properties or assets.
"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 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 (excluding notes and drafts evidencing payment of trade accounts
in the ordinary course of business), (iv) any obligation owed for all or any
part of the deferred purchase price of property or services (excluding any such
obligations incurred under ERISA and trade accounts payable and accrued
obligations incurred in the ordinary course of business), which purchase price
is (a) due more than six months from the date of incurrence of the obligation in
respect thereof or (b) evidenced by a note or similar written instrument, and
(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.
Obligations under Interest Rate Agreements and Currency Agreements constitute
(X) in the case of Hedge Agreements, Contingent Obligations, and (Y) in all
other cases, Investments, and in neither case constitute Indebtedness.
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"INDEMNITEE" has the meaning assigned to that term in subsection
10.3.
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"INTERCOMPANY SUBSIDIARY" means any Subsidiary of Company of which not
less than 80% of the ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the Person or Persons
(whether directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the management
and policies thereof is at the time owned or controlled, directly or indirectly,
by Company or any of its Subsidiaries or a combination thereof; provided that
--------
the definition of "Intercompany Subsidiaries" includes all of the Subsidiaries
of Palmer listed on Schedule 5.1D annexed hereto as of the Closing Date.
-------------
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan,
each March 31, June 30, September 30 and December 31 of each year, commencing on
the first such date to occur after the Closing Date, and (ii) with respect to
any Eurodollar Rate Loan, the last day of each Interest Period applicable to
such Loan; provided that, in the case of each Interest Period of longer than
--------
three months, "Interest Payment Date" shall also include each date that is three
months, or an integral multiple thereof, after the commencement of such Interest
Period.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.
"INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"INTERMEDIARY HOLDINGS" means Price Communications Cellular Inc., a
Delaware corporation and a direct wholly-owned Subsidiary of PCC.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (other than a Person that prior
to such purchase or acquisition was a wholly-owned Subsidiary of Company), (ii)
any direct or indirect loan, advance (other than advances to employees for
moving, entertainment and travel expenses, drawing accounts and similar
20
<PAGE>
expenditures in the ordinary course of business) or capital contri bution by
Company or any of its Subsidiaries to any other Person (other than a wholly-
owned Subsidiary of Company), 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, or (iii) Interest Rate
Agreements or Currency Agreements not constituting Hedge Agreements. 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.
"ISSUING LENDER" means, with respect to any Letter of Credit, the
Lender which agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 3.1B(ii).
"JOINT VENTURE" means a joint venture, partnership or other similar
arrange ment, whether in corporate, partnership or other legal form; provided
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that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1, and the term "Lenders" shall
include Swing Line Lender unless the context otherwise requires; provided that
--------
the term "Lenders", when used in the context of a particular Commitment, shall
mean Lenders having that Commitment.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Standby Letters of
Credit issued or to be issued by Issuing Lenders for the account of Company
pursuant to subsection 3.1.
"LETTER OF CREDIT USAGE" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
----
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B).
"LICENSE SUBSIDIARIES" means any direct or indirect special purpose
Subsidiary of Holdings or Company which holds, or is created or acquired to
hold, the Principal FCC Licenses relating to the Existing Cellular Systems and
any Cellular Systems acquired in a Permitted Acquisition and any assignment of
license of the CELLULAR ONE mark.
"LIEN" means any lien, mortgage, pledge, assignment, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title reten tion agreement, any lease in the nature thereof, and any
agreement to give any security interest) and any option, trust or other
preferential arrangement having the practical effect of any of the foregoing.
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"LOAN" or "LOANS" means one or more of the Tranche A Term Loans,
Tranche B Term Loans, Revolving Loans or Swing Line Loans or any combination
thereof.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Letters of
Credit (and any applications for, or reimbursement agreements or other documents
or certificates executed by Company in favor of an Issuing Lender relating to,
the Letters of Credit), the Guaranties and the Collateral Documents.
"LOAN PARTY" means each of Holdings, Company, any of Company's
Subsidiaries from time to time executing a Loan Document and Palmer, and "LOAN
PARTIES" means all such Persons, collectively.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U
of the Board of Governors of the Federal Reserve System as in effect from time
to time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Palmer or any of its Subsidiaries, taken as a whole, or (ii) the
impairment of the ability of any Loan Party to perform in any material respect,
or of Arranger, Agents or Lenders to enforce in any material respect, the
Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Loan Documents)
for which breach, nonperformance, cancellation or failure to renew could have a
Material Adverse Effect.
"MATERIAL SUBSIDIARY" means each Subsidiary of Company now existing or
hereinafter acquired or formed by Company which, on a consolidated basis for
such Subsidiary and its Subsidiaries, (i) for the most recent Fiscal Year,
accounted for more than 5% of the consolidated revenues of Company and its
Subsidiaries or (ii) as at the end of such Fiscal Year, was the owner of more
than 5% of the consolidated assets of Company and its Subsidiaries.
"MERGER" means the merger of Merger Sub with and into Palmer in
accordance with the terms of the Merger Agreement, with Palmer being the
surviving corporation in such Merger and such surviving corporation shall change
its name to "Price Communications Wireless, Inc." concurrently with or
subsequent to the Merger.
"MERGER AGREEMENT" means that certain Agreement and Plan of Merger, by
and among Palmer, PCC and Merger Sub, dated as of May 23, 1997, as such
agreement may be amended from time to time thereafter to the extent permitted
under subsection 7.15A.
"MERGER SUB" means Price Communications Wireless, Inc., a Delaware
corporation (and its predecessors) existing prior to the Merger, which shall be
succeeded by Palmer upon consummation of the Merger and such surviving
corporation shall change its
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<PAGE>
name to "Price Communications Wireless, Inc." concurrently with or subsequent to
the Merger, and in each case a direct wholly-owned Subsidiary of Holdings.
"MSA" means any "metropolitan statistical area", as such term is
defined and modified by the FCC for purposes of licensing Cellular Systems.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received, and excluding any interest payments thereon) received from such Asset
Sale, net of any bona fide direct costs incurred in connection with such Asset
Sale, including without limitation (i) income taxes reasonably estimated to be
actually payable within two years of the date of such Asset Sale as a result of
any gain recognized in connection with such Asset Sale, (ii) payment of the
outstanding principal amount of, premium or penalty, if any, and interest on any
Indebtedness (other than the Loans) that is required to be repaid under the
terms thereof as a result of such Asset Sale and (iii) amounts provided as a
reserve under GAAP against any liabilities under any indemnification obligations
associated with such Asset Sale.
"NET POPS" means, with respect to any Person, the Pops of an MSA or
RSA multiplied by the percentage interest of such Person in the Person holding
or designated to receive an FCC License.
"NON-EXCLUDED NET DEBT PROCEEDS" means the cash proceeds not
constituting Excluded Net Debt Proceeds, net of underwriting discounts and
commissions and other reasonable costs and expenses associated therewith,
including without limitation reasonable legal fees and expenses, from the
issuance of any debt Securities of Holdings or any of its Subsidiaries after the
Closing Date.
"NON-EXCLUDED NET EQUITY PROCEEDS" means the cash proceeds not
constituting Excluded Net Equity Proceeds, net of underwriting discounts and
commissions and other reasonable costs and expenses associated therewith,
including without limitation reasonable legal fees and expenses, from the
issuance of any equity Securities of Holdings or any of its Subsidiaries after
the Closing Date.
"NOTES" means one or more of the Tranche A Term Notes, Tranche B Term
Notes, Revolving Notes or Swing Line Note or any combination thereof.
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Administrative Agent pursuant
- ---------
to subsection 2.1B with respect to a proposed borrowing.
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"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in
the form of Exhibit II annexed hereto delivered by Company to Administrative
----------
Agent pursuant to subsection 2.2D with respect to a proposed conversion or
continuation of the applicable basis for determining the interest rate with
respect to the Loans specified therein.
"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice substantially
in the form of Exhibit III annexed hereto delivered by Company to Administrative
-----------
Agent pursuant to subsection 3.1B(i) with respect to the proposed issuance of a
Letter of Credit.
"OBLIGATIONS" means all obligations of every nature of each Loan Party
from time to time owed to Arranger, Agents, Lenders or any of them under the
Loan Documents, whether for principal, interest, reimbursement of amounts drawn
under Letters of Credit, fees, expenses, indemnification or otherwise.
"OFFICER'S CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its executive vice presidents or vice
presidents, by its chief financial officer or its treasurer; provided that every
--------
Officer's Certificate with respect to the compliance with a condition precedent
to the making of any Loans hereunder shall include a statement that such officer
has reviewed the terms of this Agreement and has made, or caused to be made, a
review in reasonable detail and that such review has not disclosed the existence
of the failure by Company or any of its Subsidiaries to comply with the
conditions precedent to the making of Loans hereunder.
"OPERATING LEASE" means, as applied to any Person, any lease
(including, without limitation, leases that may be terminated by the lessee at
any time) of any property (whether real, personal or mixed) that is not a
Capital Lease other than any such lease under which that Person is the lessor.
"PALMER" means Palmer Wireless, Inc., a Delaware corporation, which
shall be the surviving corporation upon consummation of the Merger and such
surviving corporation shall change its name to "Price Communications Wireless,
Inc." concurrently with or subsequent to the Merger.
"PALMER CLASS A COMMON STOCK" means the Class A common stock of
Palmer, par value $0.01 per share.
"PALMER CLASS B COMMON STOCK" means the Class B common stock of
Palmer, par value $0.01 per share.
"PALMER SHARES" means, collectively, (i) the 10,589,681 Palmer Class A
Common Stock issued and outstanding, (ii) the 17,293,578 Palmer Class B Common
Stock issued and outstanding, and (iii) all options for issuance of or
conversion to Palmer Class A Common Stock under any stock option or purchase
plans of Palmer.
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<PAGE>
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PCC" means Price Communications Corporation, a New York corporation.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ACQUISITION" means any acquisition, whether by purchase,
exchange or "swap" of Cellular Systems, issuance of stock or other equity or
debt Securities, merger, reorganization or any other method, by an Acquiring
Subsidiary of not less than eighty percent (80%) of the ownership interest of
(x) any Cellular System owned and operated by another Person (other than Company
or any of its Subsidiaries) and/or all or substantially all of the property or
assets related to such Cellular System or (y) any other Person (other than
Company or any of its Subsidiaries) which is primarily engaged in the business
of owning and/or operating one or more Cellular Systems; provided, however, that
-------- -------
any such acquisition shall be subject to the requirements set forth in
subsection 7.7(iii).
"PERMITTED ACQUISITION CASH FINANCING" means any Cash and cash
proceeds available to Company and its Subsidiaries under this Agreement,
including without limitation (i) Revolving Loans under this Agreement, (ii) the
Non-Excluded Net Debt Proceeds from (x) Indebtedness permitted under subsection
7.1(xi), (y) Incurred Permitted Acquisition Indebtedness and/or (z) Assumed
Permitted Acquisition Indebtedness, and (iii) Net Asset Sale Proceeds from the
sale or other disposition of any Cellular System owned and operated by Company
or any its Subsidiaries permitted under subsection 7.7(vi), to be used to
consummate Permitted Acquisitions; provided, however, that Non-Excluded Net
-------- -------
Equity Proceeds constituting Permitted Acquisition Equity Financing shall not be
included in the definition of "Permitted Acquisition Cash Financing".
"PERMITTED ACQUISITION EQUITY FINANCING" means (x) up to 50% of the
Non-Excluded Net Equity Proceeds from the issuance of any equity Securities of
Holdings (it being understood that the remaining 50% of such Non-Excluded Net
Equity Proceeds shall be applied as a mandatory prepayment pursuant to
subsection 2.4B(iii)(b)), or (y) 100% of the aggregate fair market value of
equity Securities of Holdings issued directly to the seller(s) or Affiliates of
such seller(s) in a Permitted Acquisition, in each case to be used to consummate
Permitted Acquisitions.
"PERMITTED ENCUMBRANCES" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA, and any such Lien expressly prohibited by any
applicable terms of any of the Loan Documents):
(i) Liens for taxes, assessments or governmental charges or claims the
payment of which is not, at the time, required by subsection 6.3;
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<PAGE>
(ii) statutory Liens of landlords, statutory Liens of banks and rights
of set-off, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, other Liens imposed by law, unpaid
vendors Liens, and rights of reclamation or other similar Liens of sellers
of inventory in the ordinary course of business, in each case incurred in
the ordinary course of business (a) for amounts not yet overdue or (b) for
amounts that are overdue and that (in the case of any such amounts overdue
for a period in excess of 30 days) are being contested in good faith by
appropriate proceedings, so long as such reserves or other appropriate
provisions, if any, as shall be required by GAAP shall have been made for
any such contested amounts;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety 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), so long as no foreclosure, sale or similar
proceedings have been commenced with respect to any portion of the
Collateral on account thereof;
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to third parties in accordance with
any applicable terms of the Collateral Documents and not interfering in any
material respect with the ordinary conduct of the business of Company or
any of its Subsidiaries or resulting in a material diminution in the value
of any Collateral as security for the Obligations;
(vi) easements, rights-of-way, restrictions, encroachments, and other
minor defects or irregularities in title, in each case which do not and
will not interfere in any material respect with the ordinary conduct of the
business of Company or any of its Subsidiaries or result in a material
diminution in the value of any Collateral as security for the Obligations;
(vii) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 7.9, (b) restriction or encumbrance that the
interest or title of such lessor or sublessor may be subject to, or (c)
subordination of the interest of the lessee or sublessee under such lease
to any restriction or encumbrance referred to in the preceding clause (b),
so long as the holder of such restriction or encumbrance agrees to
recognize the rights of such lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
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<PAGE>
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
(x) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;
(xi) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or
similar agreements entered into in the ordinary course of business of
Company and its Subsidiaries;
(xii) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary; and
(xiii) restrictions on the transfer of the FCC Licenses or assets of
the Company or its Subsidiaries imposed by any of the FCC Licenses as
presently in effect or by the Communications Act, any state laws and any
regulations thereunder.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability 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 (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"PLEDGED COLLATERAL" means, collectively, the "Pledged Collateral" as
defined in the Holdings Pledge Agreement, the Company Pledge Agreement and the
Subsidiary Pledge Agreements.
"POPS" means the estimate of the population of an MSA or 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 Atlas or the Rand
McNally Atlas is no longer published, such other nationally recognized source of
such information acceptable to Administrative Agent.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"PRE-MERGER ACQUIRED PALMER SHARES" means Palmer Class A Common Stock
acquired by Company or any Affiliate of Company prior to the Merger.
"PRICE" means Robert Price.
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"PRICELLULAR" means PriCellular Corporation, a Delaware corporation.
"PRIME RATE" means the rate that BMo announces from time to time as
its prime lending rate, as in effect from time to time. The Prime Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. BMo or any other Lender may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate.
"PRINCIPAL FCC LICENSES" means the cellular telephone licenses,
designations and authorizations issued by the FCC pursuant to Part 22 of 47
C.F.R. (or any rules or regulations that may replace the licensing sections of
Part 22) with respect to the Existing Cellular Systems or any Cellular Systems
acquired in a Permitted Acquisition.
"PRO FORMA FINANCIAL COVENANT COMPLIANCE" means, as of any date of
determination, the pro forma compliance of Company and its Subsidiaries on a
consolidated basis with each of the financial covenants set forth in subsection
7.6 for the immediately preceding two Fiscal Quarter period (on an annualized
basis) prior to such date of determination (the "COMPLIANCE PERIOD") after
giving effect to (i) a Permitted Acquisition by an Acquiring Subsidiary, if any,
including without limitation giving effect to the incurrence or assumption of
any Indebtedness or any other costs and expenditures or the making of any
distributions and other payments in connection with or otherwise relating to
such Permitted Acquisition, (ii) an Asset Sale permitted under subsection
7.7(vi), if any, including without limitation the elimination of the
contribution to Consolidated Adjusted EBITDA by the assets being sold and, if
assets are being concurrently acquired with the proceeds of such sale, the
inclusion of the amount such assets would have contributed to Consolidated
Adjusted EBITDA, or, if assets are not concurrently acquired, the assumed or
actual repayment of Indebtedness under this Agreement in the amount of such
proceeds, and (iii) the making of any Restricted Junior Payments under clause
(b) of the proviso contained in subsection 7.5, if any, in each case as if such
Permitted Acquisition, Asset Sale or Restricted Junior Payment were made on the
first day of such Compliance Period.
"PRO FORMA TOTAL DEBT SERVICE" means, as of any date of determination,
without duplication, the projected amount of (i) Consolidated Cash Interest
Expense, (ii) scheduled repayments of principal on Indebtedness (with respect to
the Loans only, determined as the difference between the outstanding principal
amount of the Loans on the date of determination and the amount the Commitments
will be after the reductions thereof set forth in subsection 2.4 for the next
succeeding four consecutive Fiscal Quarter period following such date of
determination), (iii) fees payable under this Agreement and (iv) other payments
payable by Company or any of its Subsidiaries in respect of Indebtedness (other
than voluntary repayments of the Loans under subsection 2.4B(i) or 2.4B(ii)) for
Company and its Subsidiaries on a consolidated basis for the next succeeding
four consecutive Fiscal Quarter period following the date of determination after
giving effect to all Hedge Agreements, if any. For purposes of this definition
only, (i) it shall be assumed that the Indebtedness with respect to which the
Pro Forma Total Debt Service is being determined shall give effect to all
scheduled payments of Indebtedness for the four consecutive Fiscal
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Quarter period immediately succeeding such date of determination, and (ii) where
interest payments for the four consecutive Fiscal Quarter period immediately
succeeding the date of determination are not fixed by way of Hedge Agreements or
otherwise for the entire period, interest shall be determined on such
Indebtedness for periods for which interest payments are not so fixed at the
lower of (x) the Base Rate in effect on the date of determination or (y) the
Adjusted Eurodollar Rate in effect on the date of determination for a Eurodollar
Rate Loan having a six-month Interest Period.
"PRO RATA SHARE" means (i) with respect to all payments, computations
and other matters relating to the Tranche A Term Loan Commitment or the Tranche
A Term Loan of any Lender, the percentage obtained by dividing (x) the Tranche A
--------
Term Loan Exposure of that Lender by (y) the aggregate Tranche A Term Loan
--
Exposure of all Lenders, (ii) with respect to all payments, computations and
other matters relating to the Tranche B Term Loan Commitment or the Tranche B
Term Loan of any Lender, the percentage obtained by dividing (x) the Tranche B
--------
Term Loan Exposure of that Lender by (y) the aggregate Tranche B Term Loan
--
Exposure of all Lenders, (iii) with respect to all payments, computations and
other matters relating to the Revolving Loan Commitment or the Revolving Loans
of any Lender or any Letters of Credit issued or participations therein
purchased by any Lender or any participations in any Swing Line Loans purchased
by any Lender, the percentage obtained by dividing (x) the Revolving Loan
--------
Exposure of that Lender by (y) the aggregate Revolving Loan Exposure of all
--
Lenders, and (iv) for all other purposes with respect to each Lender, the
percentage obtained by dividing (x) the sum of the Tranche A Term Loan Exposure
--------
of that Lender plus the Tranche B Term Loan Exposure of that Lender plus the
---- ----
Revolving Loan Exposure of that Lender by (y) the sum of the aggregate Tranche A
--
Term Loan Exposure of all Lenders plus the aggregate Tranche B Term Loan
----
Exposure of all Lenders plus the aggregate Revolving Loan Exposure of all
----
Lenders, in any such case as the applicable percentage may be adjusted by
assignments permitted pursuant to subsection 10.1. The initial Pro Rata Share
of each Lender for purposes of each of clauses (i), (ii), (iii) and (iv) of the
preceding sentence is set forth opposite the name of that Lender in Schedule 2.1
------------
annexed hereto.
"PURCHASE MONEY INDEBTEDNESS" means Indebtedness of Company or any of
its Subsidiaries incurred in connection with the purchase of property or assets
(other than Cellular Systems) for the business of Company or any of its
Subsidiaries; provided that the recourse of the lenders with respect to such
--------
Indebtedness is limited solely to the property or assets so purchased without
further recourse to either Company or any of its Subsidiaries.
"PURCHASE PRICE" means the aggregate amount to be paid by PCC, on
behalf of Merger Sub, to holders of Palmer Shares pursuant to the Merger
Agreement, such amount not to exceed $17.50 per Palmer Share for an aggregate
purchase price not to exceed $488,900,000 plus $17.50 per Palmer Share for such
shares issued subsequent to May 23, 1997.
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"PURCHASED PALMER SHARES" means shares of Palmer Class A Common Stock
purchased by PCC or any of its Subsidiaries and contributed to Company before
the consummation of the Merger.
"QUALIFIED COMPANY EQUITY CONTRIBUTIONS" means a combination of (i)
cash and (ii) Purchased Palmer Shares.
"QUALIFIED HOLDINGS DEBT SECURITIES" means debt Securities of Holdings
that, by their terms, are unsecured, require no cash interest payments prior to
February 1, 2003, require no principal payments, repurchases or redemptions
prior to August 1, 2007 and contain covenants and defaults not materially less
favorable to the Lenders than those set forth in the Holdings Discount Note
Indenture, all as reasonably determined by Administrative Agent.
"QUALIFIED HOLDINGS EQUITY SECURITIES" means equity Securities of
Holdings that, by their terms or by the terms of any Security into which they
are convertible, exercisable or exchangeable, are not, or upon the happening of
any event or the passage of time would not be, required to be redeemed or
repurchased (including at the option of the holder thereof) by Holdings or any
of its Subsidiaries, in whole or in part, on or prior to August 1, 2007.
"REFERENCE LENDERS" means BMo, CoreStates Bank, N.A. and Bank of
Tokyo-Mitsubishi Trust Company; provided that another Lender satisfactory to
--------
Administrative Agent and Company may be substituted for any such Lender as a
successor Reference Lender.
"REFINANCING" shall have the meaning assigned to that term in the
definition of "Refinancing Indebtedness".
"REFINANCING INDEBTEDNESS" means Indebtedness (a) issued in exchange
for, or the proceeds from the issuance and sale of such Indebtedness which are
used substantially concurrently to repay, redeem, defease, refund, refinance,
discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "REFINANCING"), any
Indebtedness in a principal amount (or, if such Indebtedness does not require
cash payments prior to maturity or is otherwise issued at a discount, the
original issue price of such Indebtedness), not to exceed the sum of (x) the
lesser of (i) the then outstanding aggregate principal amount of the
Indebtedness being Refinanced plus any accrued and unpaid interest thereon and
(ii) if such Indebtedness being Refinanced was issued with an original issue
discount, the accreted value thereof (as determined in accordance with GAAP) at
the time of such Refinancing, (y) the amount of any premium required to be paid
in connection with such Refinancing pursuant to the terms of such Indebtedness
and (z) all other customary fees and expenses of Holdings or Company reasonably
incurred in connection with such Refinancing; provided that Refinancing
--------
Indebtedness of the Subordinated Notes and the Holdings Discount Notes shall
only be permitted if issued pursuant to an indenture or other
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<PAGE>
agreement that would be permitted as an amendment to the Subordinated Note
Indenture or the Holdings Discount Note Indenture, respectively, pursuant to
subsection 7.15B or 7.15D, respectively.
"REFUNDED SWING LINE LOANS" has the meaning assigned to that term in
subsection 2.1A(iv).
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
"RELATED AGREEMENTS" means, collectively, the Merger Agreement, the
Fort Myers Sale Agreement, the Holdings Discount Note Indenture, and the
Subordinated Note Indenture.
"RELATED FUND" means, with respect to any Lender that is an investment
fund which invests in Loans, any other similar investment fund that invests in
Loans and is advised or managed by the same investment advisor or fund manager
as such Lender or by an Affiliate of such investment advisor or fund manager.
"REQUISITE CLASS LENDERS" means, at any time of determination, (i) for
the Class of Lenders having Tranche A Term Loan Exposure and/or Revolving Loan
Exposure, Lenders having or holding more than 66 2/3% of the sum of the
aggregate Tranche A Term Loan Exposure of all Lenders plus the aggregate
----
Revolving Loan Exposure of all Lenders and (ii) for the Class of Lenders having
Tranche B Term Loan Exposure, Lenders having or holding more than 66 2/3% of the
aggregate Tranche B Term Loan Exposure of all Lenders.
"REQUISITE LENDERS" means Lenders having or holding more than 51% of
the sum of the aggregate Tranche A Term Loan Exposure of all Lenders plus the
----
aggregate Tranche B Term Loan Exposure of all Lenders plus the aggregate
----
Revolving Loan Exposure of all Lenders; provided, however, that if any Lender
-------- -------
shall be a Defaulting Lender at such time, there shall be excluded from the
determination of Requisite Lenders at such time (a) the aggregate principal
amount of the Loans made by such Lender and outstanding at such time and (b) the
aggregate Commitments of such Lender at such time.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company or Holdings now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock to the holders of that class, (ii) any
redemption, retirement, sinking fund or similar payment, purchase or other
acquisition for value, direct or indirect, of any shares of any class of stock
of Company or Holdings now or hereafter outstanding, (iii) any payment made to
retire, or
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to obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of stock of Company or Holdings now or hereafter
outstanding, and (iv) any payment or prepayment of principal of, premium, if
any, or interest on, or redemption, purchase, retirement, defeasance
(including in-substance or legal defeasance), sinking fund or similar payment
with respect to, any Subordinated Indebtedness; provided that in the event that
--------
this Agreement is terminated without any Loans being made hereunder (and no
Letters of Credit are issued) the proceeds from the sale of the Holdings
Discount Notes and the Subordinated Notes may be applied to the redemption or
defeasance thereof.
"REVOLVING LOAN COMMITMENT" means the commitment of a Lender to make
Revolving Loans to Company pursuant to subsection 2.1A(iii), and "REVOLVING LOAN
COMMITMENTS" means such commitments of all Lenders in the aggregate.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means the eighth
anniversary of the Closing Date.
"REVOLVING LOAN EXPOSURE" means, with respect to any Lender as of any
date of determination (i) prior to the termination of the Revolving Loan
Commitments, that Lender's Revolving Loan Commitment (after giving effect to
reductions thereof) and (ii) after the termination of the Revolving Loan
Commitments, the sum of (a) the aggregate outstanding principal amount of the
Revolving Loans of that Lender plus (b) in the event that Lender is an Issuing
----
Lender, the aggregate Letter of Credit Usage in respect of all Letters of Credit
issued by that Lender (in each case net of any participations purchased by other
Lenders in such Letters of Credit or any unreimbursed drawings thereunder) plus
----
(c) the aggregate amount of all participations purchased by that Lender in any
outstanding Letters of Credit or any unreimbursed drawings under any Letters of
Credit issued or acquired through a participation purchase plus (d) in the case
----
of Swing Line Lender, the aggregate outstanding principal amount of all Swing
Line Loans (net of any participations therein purchased by other Lenders) plus
----
(e) the aggregate amount of all participations purchased by that Lender in any
outstanding Swing Line Loans.
"REVOLVING LOANS" means the Loans made by Lenders to Company pursuant
to subsection 2.1A(iii).
"REVOLVING NOTES" means (i) the promissory notes of Company issued
pursuant to subsection 2.1E(i)(c) on the Closing Date and (ii) any promissory
notes issued by Company pursuant to the last sentence of subsection 10.1B(i) in
connection with assignments of the Revolving Loan Commitments and Revolving
Loans of any Lenders, in each case substantially in the form of Exhibit V
---------
annexed hereto, as they may be amended, supplemented or otherwise modified from
time to time.
"RSA" means any "rural service area", as such term is defined and
modified by the FCC for purposes of licensing Cellular Systems.
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"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"SPECIFIED CELLULAR SYSTEM INFORMATION" means, for each Cellular
System as of the last date of the period that financial statements are delivered
pursuant to subsection 6.1, the following information: (i) market penetration
of Company and its Subsidiaries; (ii) Net Pops for that market; (iii) monthly
churn (as such term is used in the cellular telecommunications industry); (iv)
monthly revenue per subscriber; and (v) the number of subscribers at the end of
such period.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries, (v)
performance, payment, deposit or surety obligations of Company or any of its
Subsidiaries, in any case if required by law or governmental rule or regulation
or in accordance with custom and practice in the industry, (vi) obligations owed
by an Acquisition Subsidiary to a seller of a Cellular System in a Permitted
Acquisition and (vii) up to $5,000,000 of obligations under existing Hedge
Agreements identified on Schedule 7.4 annexed hereto; provided that Standby
------------ --------
33
<PAGE>
Letters of Credit may not be issued for the purpose of supporting (a) trade
payables or (b) except as provided in clause (vii) above, any Indebtedness
constituting "antecedent debt" (as that term is used in Section 547 of the
Bankruptcy Code).
"STATE PUC" means any state public utility commission or any other
state commission, agency, department, board or authority with responsibility for
regulating intrastate and local telecommunications services.
"STATE TELECOMMUNICATIONS LAWS" means any state law pertaining to or
regulating intrastate and local telecommunications services, or any successor
statute or statutes thereto, and all written rules, regulations, policies,
orders and decisions of any State PUC.
"SUBORDINATED INDEBTEDNESS" means (i) the Indebtedness of Company
evidenced by the Subordinated Notes and (ii) any other Indebtedness of Company
subordinated in right of payment to the Obligations pursuant to documentation
containing maturities, amortization schedules, covenants, defaults, remedies,
subordination provisions and other material terms in form and substance
reasonably satisfactory to Administrative Agent and Requisite Lenders.
"SUBORDINATED NOTE INDENTURE" means that certain Indenture, dated as
of July 10, 1997, by and among PCC, Company and Bank of Montreal Trust Company,
as trustee, as such indenture may be amended from time to time to the extent
permitted under subsection 7.15B.
"SUBORDINATED NOTES" means the $175,000,000 in aggregate principal
amount of 11-3/4% Senior Subordinated Notes due 2007 of Company issued pursuant
to the Subordinated Note Indenture.
"SUBORDINATED NOTE OFFERING MEMORANDUM" means the Offering Memorandum
dated July 2, 1997, as amended, with respect to the Subordinated Notes.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total ordinary voting power of
shares of stock or other ownership interests entitled (without regard to the
occurrence of any contingency) to vote in the election of the Person or Persons
(whether directors, managers, trustees or other Persons performing similar
functions) having the power to direct or cause the direction of the management
and policies 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 GUARANTOR" means any domestic Subsidiary of Company that
executes and delivers a counterpart of the Subsidiary Guaranty on the Closing
Date or from time to time thereafter pursuant to subsection 6.7.
34
<PAGE>
"SUBSIDIARY GUARANTY" means the Subsidiary Guaranty executed and
delivered by existing domestic Subsidiaries of Company on the Closing Date and
to be executed and delivered by additional domestic Subsidiaries of Company from
time to time thereafter in accordance with subsection 6.7, substantially in the
form of Exhibit XVIII annexed hereto, as such Subsidiary Guaranty may hereafter
-------------
be amended, supplemented or otherwise modified from time to time.
"SUBSIDIARY PLEDGE AGREEMENT" means each Subsidiary Pledge Agreement
executed and delivered by an existing Subsidiary Guarantor on the Closing Date
or executed and delivered by any additional Subsidiary Guarantor from time to
time thereafter in accordance with subsection 6.7, in each case substantially in
the form of Exhibit XIX annexed hereto, as such Subsidiary Pledge Agreement may
-----------
be amended, supplemented or otherwise modified from time to time, and
"SUBSIDIARY PLEDGE AGREEMENTS" means all such Subsidiary Pledge Agreements,
collectively.
"SUBSIDIARY SECURITY AGREEMENT" means each Subsidiary Security
Agreement executed and delivered by an existing Subsidiary Guarantor on the
Closing Date or executed and delivered by any additional Subsidiary Guarantor
from time to time thereafter in accordance with subsection 6.7, in each case
substantially in the form of Exhibit XX annexed hereto, as such Subsidiary
----------
Security Agreement may be amended, supplemented or otherwise modified from time
to time, and "SUBSIDIARY SECURITY AGREEMENTS" means all such Subsidiary Security
Agreements, collectively.
"SUPPLEMENTAL COLLATERAL AGENT" has the meaning assigned to that term
in subsection 9.1B.
"SWING LINE LENDER" means BMo, or any Person serving as a successor
Administrative Agent hereunder, in its capacity as Swing Line Lender hereunder.
"SWING LINE LOAN COMMITMENT" means the commitment of Swing Line Lender
to make Swing Line Loans to Company pursuant to subsection 2.1A(iv).
"SWING LINE LOANS" means the Loans made by Swing Line Lender to
Company pursuant to subsection 2.1A(iv).
"SWING LINE NOTE" means (i) the promissory note of Company issued
pursuant to subsection 2.1E(ii) on the Closing Date and (ii) any promissory note
issued by Company to any successor Administrative Agent and Swing Line Lender
pursuant to the last sentence of subsection 9.5B, in each case substantially in
the form of Exhibit VI annexed hereto, as it may be amended, supplemented or
----------
otherwise modified from time to time.
"SYNDICATION AGENT" has the meaning assigned to that term in the
introduction to this Agreement and also means and includes any successor
Syndication Agent appointed pursuant to subsection 9.5A.
35
<PAGE>
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
--------
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise), or a franchise tax
thereon, of that Person (and/or, in the case of a Lender, its lending office).
"TERM LOANS" means, collectively, the Tranche A Term Loans and the
Tranche B Term Loans.
"TOTAL UTILIZATION OF REVOLVING LOAN COMMITMENTS" means, as at any
date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans (other than Revolving Loans made for the purpose of
repaying any Refunded Swing Line Loans or reimbursing the applicable Issuing
Lender for any amount drawn under any Letter of Credit but not yet so applied)
plus (ii) the aggregate principal amount of all outstanding Swing Line Loans
- ----
plus (iii) the Letter of Credit Usage.
- ----
"TRANCHE A TERM LOAN COMMITMENT" means the commitment of a Lender to
make a Tranche A Term Loan to Company pursuant to subsection 2.1A(i), and
"TRANCHE A TERM LOAN COMMITMENTS" means such commitments of all Lenders in the
aggregate.
"TRANCHE A TERM LOAN EXPOSURE" means, with respect to any Lender as of
any date of determination (i) prior to the funding of the Tranche A Term Loans,
that Lender's Tranche A Term Loan Commitment and (ii) after the funding of the
Tranche A Term Loans, the outstanding principal amount of the Tranche A Term
Loan of that Lender.
"TRANCHE A TERM LOANS" means the Tranche A Term Loans made by Lenders
to Company pursuant to subsection 2.1A(i).
"TRANCHE A TERM NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E(i)(a) on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Tranche A Term Loan Commitments
or Tranche A Term Loans of any Lenders, in each case substantially in the form
of Exhibit IV-A annexed hereto, as they may be amended, supplemented or
------------
otherwise modified from time to time.
"TRANCHE B TERM LOAN COMMITMENT" means the commitment of a Lender to
make a Tranche B Term Loan to Company pursuant to subsection 2.1A(ii), and
"TRANCHE B TERM LOAN COMMITMENTS" means such commitments of all Lenders in the
aggregate.
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<PAGE>
"TRANCHE B TERM LOAN EXPOSURE" means, with respect to any Lender as of
any date of determination (i) prior to the funding of the Tranche B Term Loans,
that Lender's Tranche B Term Loan Commitment and (ii) after the funding of the
Tranche B Term Loans, the outstanding principal amount of the Tranche B Term
Loan of that Lender.
"TRANCHE B TERM LOANS" means the Tranche B Term Loans made by Lenders
to Company pursuant to subsection 2.1A(ii).
"TRANCHE B TERM NOTES" means (i) the promissory notes of Company
issued pursuant to subsection 2.1E(i)(b) on the Closing Date and (ii) any
promissory notes issued by Company pursuant to the last sentence of subsection
10.1B(i) in connection with assignments of the Tranche B Term Loan Commitments
or Tranche B Term Loans of any Lenders, in each case substantially in the form
of Exhibit IV-B annexed hereto, as they may be amended, supplemented or
------------
otherwise modified from time to time.
"TRANSACTION COSTS" means the fees, costs and expenses payable by
Company and its Subsidiaries on or before the Closing Date in connection with
the transactions contemplated by the Loan Documents and the Related Agreements.
"UCC" means the Uniform Commercial Code (or any similar or equivalent
legislation) as in effect in any applicable jurisdiction.
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
------------------------------------------------------------------------
AGREEMENT.
---------
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i), (ii) and
(xii) of subsection 6.1 shall be prepared in accordance with GAAP as in effect
at the time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(iv)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 5.3.
1.3 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
-------------------------------------------------------
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use herein of the word "include" or "including", when
following any general statement, term or matter, shall not be construed to
limit such statement, term or
37
<PAGE>
matter to the specific items or matters set forth immediately following such
word or to similar items or matters, whether or not nonlimiting language (such
as "without limitation" or "but not limited to" or words of similar import) is
used with reference thereto, but rather shall be deemed to refer to all other
items or matters that fall within the broadest possible scope of such general
statement, term or matter.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
-------------------------------------------------
A. COMMITMENTS. Subject to the terms and conditions of this
Agreement and in reliance upon the representations and warranties of Company set
forth herein, each Lender hereby severally agrees to make the Loans described in
subsections 2.1A(i), 2.1A(ii) and 2.1A(iii) and Swing Line Lender hereby agrees
to make the Loans described in subsection 2.1A(iv).
(i) Tranche A Term Loans. Each Lender severally agrees to lend
--------------------
to Company on the Closing Date an amount not exceeding its Pro Rata Share
of the aggregate amount of the Tranche A Term Loan Commitments to be used
for the purposes identified in subsection 2.5A. The amount of each
Lender's Tranche A Term Loan Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate amount of the Tranche A
------------
Term Loan Commitments is $100,000,000; provided that the Tranche A Term
--------
Loan Commitments of Lenders shall be adjusted to give effect to any
assignments of the Tranche A Term Loan Commitments pursuant to subsection
10.1B. Each Lender's Tranche A Term Loan Commitment shall expire
immediately and without further action on October 15, 1997 if the Tranche A
Term Loans are not made on or before that date. Company may make only one
borrowing under the Tranche A Term Loan Commitments. Amounts borrowed under
this subsection 2.1A(i) and subsequently repaid or prepaid may not be
reborrowed.
(ii) Tranche B Term Loans. Each Lender severally agrees to lend
--------------------
to Company on the Closing Date an amount not exceeding its Pro Rata Share
of the aggregate amount of the Tranche B Term Loan Commitments to be used
for the purposes identified in subsection 2.5A. The amount of each
Lender's Tranche B Term Loan Commitment is set forth opposite its name on
Schedule 2.1 annexed hereto and the aggregate amount of the Tranche B Term
------------
Loan Commit ments is $225,000,000; provided that the Tranche B Term Loan
--------
Commitments of Lenders shall be adjusted to give effect to any assignments
of the Tranche B Term Loan Commitments pursuant to subsection 10.1B. Each
Lender's Tranche B Term Loan Commitment shall expire immediately and
without further action on October 15, 1997 if the Tranche B Term Loans are
not made on or before that date. Company may make only one borrowing under
the Tranche B Term Loan Commitments. Amounts
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<PAGE>
borrowed under this subsection 2.1A(ii) and subsequently repaid or prepaid
may not be reborrowed.
(iii) Revolving Loans. Each Lender severally agrees, subject to
---------------
the limitations set forth below with respect to the maximum amount of
Revolving Loans permitted to be outstanding from time to time, to lend to
Company from time to time during the period from the Closing Date to but
excluding the Revolving Loan Commitment Termination Date an aggregate
amount not exceeding its Pro Rata Share of the aggregate amount of the
Revolving Loan Commitments to be used for the purposes identified in
subsection 2.5B. The original amount of each Lender's Revolving Loan
Commitment is set forth opposite its name on Schedule 2.1 annexed hereto
------------
and the aggregate original amount of the Revolving Loan Commitments is up
to $200,000,000; provided that the Revolving Loan Commitments of Lenders
--------
shall be adjusted to give effect to any assignments of the Revolving Loan
Commitments pursuant to subsection 10.1B; and provided, further that the
-------- -------
amount of the Revolving Loan Commitments shall be reduced from time to time
by the amount of any reductions thereto made pursuant to subsections
2.4A(iii), 2.4B(ii) and 2.4B(iii). Each Lender's Revolving Loan Commitment
shall expire on the Revolving Loan Commitment Termination Date and all
Revolving Loans and all other amounts owed hereunder with respect to the
Revolving Loans and the Revolving Loan Commitments shall be paid in full no
later than that date; provided that each Lender's Revolving Loan Commitment
--------
shall expire immediately and without further action on October 15, 1997 if
the Term Loans and the initial Revolving Loans are not made on or before
that date. Amounts borrowed under this subsection 2.1A(iii) may be repaid
and reborrowed to but excluding the Revolving Loan Commitment Termination
Date.
Anything contained in this Agreement to the contrary notwithstanding,
the Revolving Loans and the Revolving Loan Commitments shall be subject to
the limitation that in no event shall the Total Utilization of Revolving
Loan Commitments at any time exceed the difference of (i) the Revolving
Loan Commitments then in effect less (ii) an amount equal to the aggregate
----
principal amount of Indebtedness incurred by Company and its Subsidiaries
under clause (x) of Section 4.12 of the Subordinated Note Indenture then
outstanding, if any.
(iv) Swing Line Loans. Swing Line Lender hereby agrees, subject to
----------------
the limitations set forth below with respect to the maximum amount of Swing
Line Loans permitted to be outstanding from time to time, to make a portion
of the Revolving Loan Commitments available to Company from time to time
during the period from the Closing Date to but excluding the Revolving Loan
Commitment Termination Date by making Swing Line Loans to Company in an
aggregate amount not exceeding the amount of the Swing Line Loan Commitment
to be used for the purposes identified in subsection 2.5B, notwithstanding
the fact that such Swing Line Loans, when aggregated with Swing Line
Lender's outstanding Revolving Loans and Swing Line Lender's Pro Rata Share
of the Letter of Credit Usage then in effect, may exceed Swing Line
Lender's Revolving Loan Commitment. The original amount of the
39
<PAGE>
Swing Line Loan Commitment is $5,000,000; provided that any reduction of
--------
the Revolving Loan Commitments made pursuant to subsection 2.4A(iii),
2.4B(ii) or 2.4B(iii) which reduces the aggregate Revolving Loan
Commitments to an amount less than the then current amount of the Swing
Line Loan Commitment shall result in an automatic corresponding reduction
of the Swing Line Loan Commitment to the amount of the Revolving Loan
Commitments, as so reduced, without any further action on the part of
Company, Administrative Agent or Swing Line Lender. The Swing Line Loan
Commitment shall expire on the Revolving Loan Commitment Termination Date
and all Swing Line Loans and all other amounts owed hereunder with respect
to the Swing Line Loans shall be paid in full no later than that date;
provided that the Swing Line Loan Commitment shall expire immediately and
--------
without further action on October 15, 1997 if the Term Loans and the
initial Revolving Loans are not made on or before that date. Amounts
borrowed under this subsection 2.1A(iv) may be repaid and reborrowed to but
excluding the Revolving Loan Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding,
the Swing Line Loans and the Swing Line Loan Commitment shall be subject to
the limitation that in no event shall the Total Utilization of Revolving
Loan Commitments at any time exceed the difference of (i) the Revolving
Loan Commitments then in effect less (ii) an amount equal to the aggregate
----
principal amount of Indebtedness incurred by Company and its Subsidiaries
under clause (x) if Section 4.12 of the Subordinated Note Indenture then
outstanding, if any.
With respect to any Swing Line Loans which have not been voluntarily
prepaid by Company pursuant to subsection 2.4B(i), Swing Line Lender may,
at any time in its sole and absolute discretion, deliver to Administrative
Agent (with a copy to Company), no later than 10:00 A.M. (Chicago time) on
the first Business Day in advance of the proposed Funding Date, a notice
(which shall be deemed to be a Notice of Borrowing given by Company)
requesting Lenders to make Revolving Loans that are Base Rate Loans on such
Funding Date in an amount equal to the amount of such Swing Line Loans (the
"REFUNDED SWING LINE LOANS") outstanding on the date such notice is given
which Swing Line Lender requests Lenders to prepay. Anything contained in
this Agreement to the contrary notwithstanding, (i) the proceeds of such
Revolving Loans made by Lenders other than Swing Line Lender shall be
immediately delivered by Administrative Agent to Swing Line Lender (and not
to Company) and applied to repay a corresponding portion of the Refunded
Swing Line Loans and (ii) on the day such Revolving Loans are made, Swing
Line Lender's Pro Rata Share of the Refunded Swing Line Loans shall be
deemed to be paid with the proceeds of a Revolving Loan made by Swing Line
Lender, and such portion of the Swing Line Loans deemed to be so paid shall
no longer be outstanding as Swing Line Loans and shall no longer be due
under the Swing Line Note of Swing Line Lender but shall instead constitute
part of Swing Line Lender's outstanding Revolving Loans and shall be due
under the Revolving Note of Swing Line Lender. Company hereby authorizes
Administrative Agent and Swing Line Lender to charge Company's
40
<PAGE>
accounts with Administrative Agent and Swing Line Lender (up to the amount
available in each such account) in order to immediately pay Swing Line
Lender the amount of the Refunded Swing Line Loans to the extent the
proceeds of such Revolving Loans made by Lenders, including the Revolving
Loan deemed to be made by Swing Line Lender, are not sufficient to repay in
full the Refunded Swing Line Loans. If any portion of any such amount paid
(or deemed to be paid) to Swing Line Lender should be recovered by or on
behalf of Company from Swing Line Lender in bankruptcy, by assignment for
the benefit of creditors or otherwise, the loss of the amount so recovered
shall be ratably shared among all Lenders in the manner contemplated by
subsection 10.5.
If for any reason (a) Revolving Loans are not made upon the request of
Swing Line Lender as provided in the immediately preceding paragraph in an
amount sufficient to repay any amounts owed to Swing Line Lender in respect
of any outstanding Swing Line Loans or (b) the Revolving Loan Commitments
are terminated at a time when any Swing Line Loans are outstanding, each
Lender shall be deemed to, and hereby agrees to, have purchased a
participation in such outstanding Swing Line Loans in an amount equal to
its Pro Rata Share (calculated, in the case of the foregoing clause (b),
immediately prior to such termination of the Revolving Loan Commitments) of
the unpaid amount of such Swing Line Loans together with accrued interest
thereon. Upon one Business Day's notice from Swing Line Lender, each Lender
shall deliver to Swing Line Lender an amount equal to its respective
participation in same day funds at the Funding and Payment Office. In order
to further evidence such participation (and without prejudice to the
effectiveness of the participation provisions set forth above), each Lender
agrees to enter into a separate participation agreement at the request of
Swing Line Lender in form and substance reasonably satisfactory to Swing
Line Lender. In the event any Lender fails to make available to Swing Line
Lender the amount of such Lender's participation as provided in this
paragraph, Swing Line Lender shall be entitled to recover such amount on
demand from such Lender together with interest thereon at the Federal Funds
Effective Rate for three Business Days and thereafter at the Base Rate. In
the event Swing Line Lender receives a payment of any amount in which other
Lenders have purchased participations as provided in this paragraph, Swing
Line Lender shall promptly distribute to each such other Lender its Pro
Rata Share of such payment.
Anything contained herein to the contrary notwithstanding, each
Lender's obligation to make Revolving Loans for the purpose of repaying any
Refunded Swing Line Loans pursuant to the second preceding paragraph and
each Lender's obligation to purchase a participation in any unpaid Swing
Line Loans pursuant to the immediately preceding paragraph shall be
absolute and unconditional and shall not be affected by any circumstance,
including without limitation (a) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against Swing Line
Lender, Company or any other Person for any reason whatsoever; (b) the
occurrence or continuation of an Event of Default or a Potential Event of
Default; (c) any adverse change in the business, operations, properties,
assets, condition
41
<PAGE>
(financial or otherwise) or prospects of Company or any of its
Subsidiaries; (d) any breach of this Agreement or any other Loan Document
by any party thereto; or (e) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing; provided
--------
that such obligations of each Lender are subject to the condition that (X)
Swing Line Lender believed in good faith that all conditions under Section
4 to the making of the applicable Refunded Swing Line Loans or other unpaid
Swing Line Loans, as the case may be, were satisfied at the time such
Refunded Swing Line Loans or unpaid Swing Line Loans were made or (Y) the
satisfaction of any such condition not satisfied had been waived in
accordance with subsection 10.6 prior to or at the time such Refunded Swing
Line Loans or other unpaid Swing Line Loans were made.
B. BORROWING MECHANICS. Tranche A Term Loans or Tranche B Term Loans or
Revolving Loans made on any Funding Date (other than Revolving Loans made
pursuant to a request by Swing Line Lender pursuant to subsection 2.1A(iv) for
the purpose of repaying any Refunded Swing Line Loans or Revolving Loans made
pursuant to subsection 3.3B for the purpose of reimbursing any Issuing Lender
for the amount of a drawing under a Letter of Credit issued by it) shall be in
an aggregate minimum amount of $1,000,000 in the case of Base Rate Loans or
$5,000,000 in the case of Eurodollar Rate Loans and integral multiples of
$1,000,000 in excess of that amount. Swing Line Loans made on any Funding Date
shall be in an aggregate minimum amount of $1,000,000 and integral multiples of
$1,000,000 in excess of that amount. Whenever Company desires that Lenders make
Term Loans or Revolving Loans it shall deliver to Administrative Agent a Notice
of Borrowing no later than 10:00 A.M. (Chicago time) at least three Business
Days in advance of the proposed Funding Date (in the case of a Eurodollar Rate
Loan) or at least one Business Day in advance of the proposed Funding Date (in
the case of a Base Rate Loan). Whenever Company desires that Swing Line Lender
make a Swing Line Loan, it shall deliver to Administrative Agent a Notice of
Borrowing no later than 12:00 Noon (Chicago time) on the proposed Funding Date.
The Notice of Borrowing shall specify (i) the proposed Funding Date (which shall
be a Business Day), (ii) the amount and type of Loans requested, (iii) in the
case of Swing Line Loans, that such Loans shall be Base Rate Loans, (iv) in the
case of Revolving Loans not made on the Closing Date, whether such Loans shall
be Base Rate Loans or Eurodollar Rate Loans, and (v) in the case of any Loans
requested to be made as Eurodollar Rate Loans, the initial Interest Period
requested therefor. Term Loans and Revolving Loans may be continued as or
converted into Base Rate Loans and Eurodollar Rate Loans in the manner provided
in subsection 2.2D. In lieu of delivering the above-described Notice of
Borrowing, Company may give Administrative Agent telephonic notice by the
required time of any proposed borrowing under this subsection 2.1B; provided
--------
that such notice shall be promptly confirmed in writing by delivery of a Notice
of Borrowing to Administrative Agent on or before the applicable Funding Date.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to borrow on behalf of Company or
for otherwise acting in good faith under this
42
<PAGE>
subsection 2.1B, and upon funding of Loans by Lenders in accordance with this
Agreement pursuant to any such telephonic notice Company shall have effected
Loans hereunder.
Company shall notify Administrative Agent prior to the funding of any
Loans in the event that any of the matters to which Company is required to
certify in the applicable Notice of Borrowing is no longer true and correct as
of the applicable Funding Date, and the acceptance by Company of the proceeds of
any Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a Eurodollar Rate Loan (or telephonic notice in lieu
thereof) shall be irrevocable on and after the related Interest Rate
Determination Date, and Company shall be bound to make a borrowing in accordance
therewith unless Company shall pay compensation, if any, for the non-
commencement of an Interest Period on the proposed Funding Date as provided in
subsection 2.6D.
C. DISBURSEMENT OF FUNDS. All Term Loans and Revolving Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to their
respective Pro Rata Shares, it being understood that no Lender shall be
responsible for any default by any other Lender in that other Lender's
obligation to make a Loan requested hereunder nor shall the Commitment of any
Lender to make the particular type of Loan requested be increased or decreased
as a result of a default by any other Lender in that other Lender's obligation
to make a Loan requested hereunder. Promptly after receipt by Administrative
Agent of a Notice of Borrowing pursuant to subsection 2.1B (or telephonic notice
in lieu thereof), Administrative Agent shall notify each Lender or Swing Line
Lender, as the case may be, of the proposed borrowing. Each Lender shall make
the amount of its Loan available to Administrative Agent not later than 12:00
Noon (Chicago time) on the applicable Funding Date, and Swing Line Lender shall
make the amount of its Swing Line Loan available to Administrative Agent not
later than 2:00 P.M. (Chicago time) on the applicable Funding Date, in each case
in same day funds in Dollars, at the Funding and Payment Office. Except as
provided in subsection 2.1A(iv) or subsection 3.3B with respect to Revolving
Loans used to repay Refunded Swing Line Loans or to reimburse any Issuing Lender
for the amount of a drawing under a Letter of Credit issued by it, upon
satisfaction or waiver of the conditions precedent specified in subsection 4.1
(in the case of Loans made on the Closing Date) and 4.2 (in the case of all
Loans), Administrative Agent shall make the proceeds of such Loans available to
Company on the applicable Funding Date by causing an amount of same day funds in
Dollars equal to the proceeds of all such Loans received by Administrative Agent
from Lenders or Swing Line Lender, as the case may be, to be credited to the
account of Company at the Funding and Payment Office and shall transfer any
funds so credited in accordance with the written instructions of Company.
Unless Administrative Agent shall have been notified by any Lender
prior to the Funding Date for any Loans that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Loan requested on
such Funding Date,
43
<PAGE>
Administrative Agent may assume that such Lender has made such amount available
to Administrative Agent on such Funding Date and Administrative Agent may, in
its sole discretion, but shall not be obligated to, make available to Company a
corresponding amount on such Funding Date. If such corresponding amount is not
in fact made available to Administrative Agent by such Lender, Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from such Funding Date until
the date such amount is paid to Administrative Agent, at the Federal Funds
Effective Rate for three Business Days and thereafter at the Base Rate. If such
Lender does not pay such corresponding amount forthwith upon Administrative
Agent's demand therefor, Administrative Agent shall promptly notify Company and
Company shall immediately pay to Administrative Agent such corresponding amount
not paid by such Lender together with interest thereon, for each day from such
Funding Date until the date such amount is paid to Administrative Agent, at the
rate payable under this Agreement for Base Rate Loans. Nothing in this
subsection 2.1C shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that Company may
have against any Lender as a result of any default by such Lender hereunder.
If Company shall exercise its right of set-off pursuant to subsection 10.4,
the amount so set off shall be deemed to be a Eurodollar Rate Loan with an
Interest Period of one month made by the applicable Defaulting Lender on the
date, and to the extent, of such set-off.
D. THE REGISTER.
(i) Administrative Agent shall maintain, at its address referred to in
subsection 10.8, a register for the recordation of the names and addresses
of Lenders and the Commitments and Loans of each Lender from time to time
(the "REGISTER"). The Register shall be available for inspection by
Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(ii) Administrative Agent shall record in the Register the Tranche A
Term Loan Commitment, Tranche B Term Loan Commitment and Revolving Loan
Commitment and the Tranche A Term Loan, Tranche B Term Loan and Revolving
Loans from time to time of each Lender, the Swing Line Loan Commitment and
the Swing Line Loans from time to time of Swing Line Lender, and each
repayment or prepayment in respect of the principal amount of the Tranche A
Term Loan, Tranche B Term Loan or Revolving Loans of each Lender or the
Swing Line Loans of Swing Line Lender. Any such recordation shall be
conclusive and binding on Company and each Lender, absent error; provided
--------
that failure to make any such recordation, or any error in such
recordation, shall not affect any Lender's Commitments or Company's
Obligations in respect of any applicable Loans.
(iii) Each Lender shall record on its internal records (including,
without limitation, the Notes held by such Lender) the amount of the
Tranche A Term Loan, Tranche B Term Loan and each Revolving Loan made by it
and each payment in respect thereof. Any such recordation shall be
conclusive and binding on Company,
44
<PAGE>
absent error; provided that failure to make any such recordation, or any
--------
error in such recordation, shall not affect any Lender's Commitments or
Company's Obligations in respect of any applicable Loans; and provided,
--------
further that in the event of any inconsistency between the Register
-------
and any Lender's records, the recordations in the Register shall govern.
(iv) Company, Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of
the corresponding Commitments and Loans listed therein for all purposes
hereof, and no assignment or transfer of any such Commitment or Loan shall
be effective, in each case unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent and recorded in the Register as provided in subsection
10.1B(ii). Prior to such recordation, all amounts owed with respect to the
applicable Commitment or Loan shall be owed to the Lender listed in the
Register as the owner thereof, and any request, authority or consent of any
Person who, at the time of making such request or giving such authority or
consent, is listed in the Register as a Lender shall be conclusive and
binding on any subsequent holder, assignee or transferee of the
corresponding Commitments or Loans.
(v) Company hereby designates BMo to serve as Company's agent solely
for purposes of maintaining the Register as provided in this subsection
2.1D, and Company hereby agrees that, to the extent BMo serves in such
capacity, BMo and its officers, directors and employees shall constitute
Indemnitees for all purposes under subsection 10.3.
E. NOTES. Company shall execute and deliver on the Closing Date (i) to
each Lender (or to Administrative Agent for that Lender) (a) a Tranche A Term
Note substantially in the form of Exhibit IV-A annexed hereto to evidence that
------------
Lender's Tranche A Term Loan, in the principal amount of that Lender's Tranche A
Term Loan and with other appropriate insertions, (b) a Tranche B Term Note
substantially in the form of Exhibit IV-B annexed hereto to evidence that
------------
Lender's Tranche B Term Loan, in the principal amount of that Lender's Tranche B
Term Loan and with other appropriate insertions, and (c) a Revolving Note
substantially in the form of Exhibit V annexed hereto to evidence that Lender's
---------
Revolving Loans, in the principal amount of that Lender's Revolving Loan
Commitment and with other appropriate insertions, and (ii) to Swing Line Lender
(or to Administrative Agent for Swing Line Lender) a Swing Line Note
substantially in the form of Exhibit VI annexed hereto to evidence Swing Line
----------
Lender's Swing Line Loans, in the principal amount of the Swing Line Loan
Commitment and with other appropriate insertions.
Administrative Agent may deem and treat the payee of any Note as the
owner thereof for all purposes hereof unless and until an Assignment Agreement
effecting the assignment or transfer thereof shall have been accepted by
Administrative Agent as provided in subsection 10.1B(ii). Any request,
authority or consent of any person or entity who, at the time of making such
request or giving such authority or consent, is the holder of any
45
<PAGE>
Note shall be conclusive and binding on any subsequent holder, assignee or
transferee of that Note or of any Note or Notes issued in exchange therefor.
2.2 INTEREST ON THE LOANS.
---------------------
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Term Loan and each Revolving Loan shall bear interest on the unpaid
principal amount thereof from the date made through maturity (whether by
acceleration or otherwise) at a rate determined by reference to the Base Rate or
the Adjusted Eurodollar Rate. Subject to the provisions of subsection 2.7, each
Swing Line Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate. The applicable basis for determining
the rate of interest with respect to any Term Loan or any Revolving Loan shall
be selected by Company initially at the time a Notice of Borrowing is given with
respect to such Loan pursuant to subsection 2.1B, and the basis for determining
the interest rate with respect to any Term Loan or any Revolving Loan may be
changed from time to time pursuant to subsection 2.2D. If on any day a Term Loan
or Revolving Loan is outstanding with respect to which notice has not been
delivered to Administrative Agent in accordance with the terms of this Agreement
specifying the applicable basis for determining the rate of interest, then for
that day that Loan shall bear interest determined by reference to the Base Rate.
(i) Subject to the provisions of subsections 2.2E and 2.7, the Tranche
A Term Loans and the Revolving Loans shall bear interest through maturity
as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus
----
the Applicable Tranche A Base Rate Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Tranche A Eurodollar Margin.
----
(ii) Subject to the provisions of subsections 2.2E and 2.7, the
Tranche B Term Loans shall bear interest through maturity as follows:
(a) if a Base Rate Loan, then at the sum of the Base Rate plus
----
the Applicable Tranche B Base Rate Margin; or
(b) if a Eurodollar Rate Loan, then at the sum of the Adjusted
Eurodollar Rate plus the Applicable Tranche B Eurodollar Margin.
----
(iii) Subject to the provisions of subsections 2.2E and 2.7, the
Swing Line Loans shall bear interest through maturity at the sum of the
Base Rate plus the Applicable Tranche A Base Rate Margin minus 0.50% per
---- -----
annum.
46
<PAGE>
Administrative Agent shall determine the applicable margins for
interest rates based upon the Consolidated Leverage Ratio indicated by the most
recent financial statements dated as of the end of a calendar quarter delivered
to Administrative Agent pursuant to subsection 6.1(i) or (ii). Any adjustments
to such applicable margins shall become effective three Business Days following
the date of delivery of such financial statements to Administrative Agent;
provided, however, that if such financial statements are not delivered within
- -------- -------
five Business Days after the date required hereunder (or such later date
consented to by Requisite Lenders), such applicable margins shall increase to
the maximum percentage amount set forth in the applicable definitions of such
terms from the date when such financial statements were required to be delivered
to Administrative Agent hereunder until received by Administrative Agent. Upon
any change in such applicable margins, Administrative Agent shall promptly
notify Company and Lenders of the new applicable margins.
B. INTEREST PERIODS. In connection with each Eurodollar Rate Loan,
Company may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a one, two, three or six month period; provided
--------
that:
(i) the initial Interest Period for any Eurodollar Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a Eurodollar Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a Eurodollar Rate Loan;
(ii) in the case of immediately successive Interest Periods applicable
to a Eurodollar Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
--------
otherwise expire on a day that is not a Business Day but is a day of the
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iv) 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 calendar month at the end of such Interest Period) shall,
subject to clause (v) of this subsection 2.2B, end on the last Business Day
of a calendar month;
(v) no Interest Period with respect to any portion of the Tranche A
Term Loans shall extend beyond September 30, 2005, no Interest Period with
respect to any portion of the Tranche B Term Loans shall extend beyond
September 30, 2006, and no Interest Period with respect to any portion of
the Revolving Loans shall extend beyond the Revolving Loan Commitment
Termination Date;
47
<PAGE>
(vi) no Interest Period with respect to any portion of the Tranche A
Term Loans or Tranche B Term Loans shall extend beyond a date on which
Company is required to make a scheduled payment of principal of the Tranche
A Term Loans or Tranche B Term Loans, as the case may be, unless the sum of
(a) the aggregate principal amount of Tranche A Term Loans or Tranche B
Term Loans, as the case may be, that are Base Rate Loans plus (b) the
----
aggregate principal amount of Tranche A Term Loans or Tranche B Term Loans,
as the case may be, that are Eurodollar Rate Loans with Interest Periods
expiring on or before such date equals or exceeds the principal amount
required to be paid on the Tranche A Term Loans or Tranche B Term Loans, as
the case may be, on such date;
(vii) there shall be no more than twelve (12) Interest Periods
outstanding at any time for all of the Loans; and
(viii) in the event Company fails to specify an Interest Period for
any Eurodollar Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity); provided that in the event any Swing Line Loans or any Revolving
--------
Loans that are Base Rate Loans are prepaid pursuant to subsection 2.4B(i),
interest accrued on such Swing Line Loans or Revolving Loans through the date of
such prepayment shall be payable on the next succeeding Interest Payment Date
applicable to Base Rate Loans (or, if earlier, at final maturity) without the
payment of additional interest on the interest accrued through the date of
prepayment of principal pursuant to subsection 2.4B(i).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its out standing Tranche A Term Loans, Tranche B Term Loans or Revolving Loans
equal to $5,000,000 and integral multiples of $1,000,000 in excess of that
amount from Loans bearing interest at a rate determined by reference to one
basis to Loans bearing interest at a rate determined by reference to an
alternative basis or (ii) upon the expiration of any Interest Period applicable
to a Eurodollar Rate Loan, to continue all or any portion of such Loan equal to
$5,000,000 and integral multiples of $1,000,000 in excess of that amount as a
Eurodollar Rate Loan; provided, however, that a Eurodollar Rate Loan may only be
-------- -------
converted into a Base Rate Loan on the expiration date of an Interest Period
applicable to such Eurodollar Rate Loan.
Company shall deliver a Notice of Conversion/Continuation to
Administrative Agent no later than 10:00 A.M. (Chicago time) at least one
Business Day in advance of the proposed conversion date (in the case of a
conversion to a Base Rate Loan) and at least three Business Days in advance of
the proposed conversion/continuation date (in the case of a conversion to, or
a continuation of, a Eurodollar Rate Loan). A Notice of Conversion/
48
<PAGE>
Continuation shall specify (i) the proposed conversion/continuation date (which
shall be a Business Day), (ii) the amount and type of the Loan to be
converted/continued, (iii) the nature of the proposed conversion/continuation,
(iv) in the case of a conversion to, or a continuation of, a Eurodollar Rate
Loan, the requested Interest Period, and (v) in the case of a conversion to, or
a continuation of, a Eurodollar Rate Loan, that no Potential Event of Default or
Event of Default has occurred and is continuing. In lieu of delivering the
above-described Notice of Conversion/Continuation, Company may give
Administrative Agent telephonic notice by the required time of any proposed
conversion/continuation under this subsection 2.2D; provided that such notice
--------
shall be promptly confirmed in writing by delivery of a Notice of
Conversion/Continuation to Administrative Agent on or before the proposed
conversion/continuation date. Upon receipt of written or telephonic notice of
any proposed conversion/continuation under this subsection 2.2D, Administrative
Agent shall promptly transmit such notice by telefacsimile or telephone to each
Lender.
Neither Administrative Agent nor any Lender shall incur any liability
to Company in acting upon any telephonic notice referred to above that
Administrative Agent believes in good faith to have been given by a duly
authorized officer or other person authorized to act on behalf of Company or for
otherwise acting in good faith under this subsection 2.2D, and upon conversion
or continuation of the applicable basis for determining the interest rate with
respect to any Loans in accordance with this Agreement pursuant to any such
telephonic notice Company shall have effected a conversion or continuation, as
the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable
on and after the related Interest Rate Determination Date, and Company shall be
bound to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Any principal payments on the Loans not paid when due
and, to the extent permitted by applicable law, any interest payments thereon
not paid when due and any fees and other amounts then due and payable hereunder,
shall thereafter bear interest (including post-petition interest in any
proceeding under the Bankruptcy Code or other applicable bankruptcy laws)
payable upon demand at a rate that is 2.00% per annum in excess of the interest
rate otherwise payable under this Agreement with respect to the applicable Loans
(or, in the case of any such fees and other amounts, at a rate which is 2.00%
per annum in excess of the interest rate otherwise payable under this Agreement
for Base Rate Loans); provided that, in the case of Eurodollar Rate Loans, upon
--------
the expiration of the Interest Period in effect at the time any such increase in
interest rate is effective such Eurodollar Rate Loans shall thereupon become
Base Rate Loans and shall thereafter bear interest payable upon demand at a rate
which is 2.00% per annum in excess of the interest rate otherwise payable under
this Agreement for Base Rate Loans. Payment or acceptance of the increased
rates of interest provided for in this subsection 2.2E is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event of
Default or otherwise prejudice or limit any rights or remedies of Administrative
Agent or any Lender.
49
<PAGE>
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed (i)
in the case of Base Rate Loans, on the basis of a 365-day or 366-day year, as
the case may be, and (ii) in the case of Eurodollar Rate Loans, on the basis of
a 360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a Eurodollar Rate
Loan, the date of conversion of such Eurodollar Rate Loan to such Base Rate
Loan, as the case may be, shall be included, and the date of payment of such
Loan or the expiration date of an Interest Period applicable to such Loan or,
with respect to a Base Rate Loan being converted to a Eurodollar Rate Loan, the
date of conversion of such Base Rate Loan to such Eurodollar Rate Loan, as the
case may be, shall be excluded; provided that if a Loan is repaid on the same
--------
day on which it is made, one day's interest shall be paid on that Loan.
2.3 FEES.
----
A. COMMITMENT FEES. Subject to subsection 10.4, Company agrees to pay to
Administrative Agent, for distribution to each Lender in proportion to that
Lender's Pro Rata Share, commitment fees for the period from and including the
Closing Date to and excluding the Revolving Loan Commitment Termination Date
equal to (x) the average of the daily excess of the Revolving Loan Commitments
over the aggregate principal amount of (i) outstanding Revolving Loans (but not
any outstanding Swing Line Loans) plus (ii) the Letter of Credit Usage
----
multiplied by (y) 0.50% per annum, such commit ment fees to be calculated on the
- -------------
basis of a 360-day year and the actual number of days elapsed and to be payable
on (I) the Closing Date or the date of the expiration or termination of the
Commitments hereunder and (II) thereafter quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing on the first such date
to occur after the Closing Date, and on the Revolving Loan Commitment
Termination Date.
B. OTHER FEES. Company agrees to pay to Arranger, Syndication Agent
and/or Administrative Agent all fees specified in separate letter agreements
among Arranger, Syndication Agent, Administrative Agent, Company and/or PCC and
to pay to Administrative Agent such other fees in the amounts and at the times
separately agreed upon between Company and Administrative Agent. Upon payment
by Company of such fees, PCC shall have no obligation to pay to Arranger, any
Agent or any Lender any fees or sums in respect of such separate letter
agreements.
50
<PAGE>
2.4 REPAYMENTS, PREPAYMENTS AND REDUCTIONS IN REVOLVING LOAN COMMITMENTS;
---------------------------------------------------------------------
GENERAL PROVISIONS REGARDING PAYMENTS; APPLICATION OF PROCEEDS OF
-----------------------------------------------------------------
COLLATERAL AND PAYMENTS UNDER GUARANTIES.
----------------------------------------
A. SCHEDULED PAYMENTS OF TERM LOANS AND SCHEDULED REDUCTIONS OF REVOLVING
LOAN COMMITMENTS.
(i) Scheduled Payments of Tranche A Term Loans. Subject to subsection
------------------------------------------
10.4, Company shall make principal payments on the Tranche A Term Loans in
installments on the dates and in the amounts set forth below:
Scheduled Repayment
Date of Tranche A Term Loans
---- -----------------------
December 31, 1999 $2,500,000
March 31, 2000 $2,500,000
June 30, 2000 $2,500,000
September 30, 2000 $2,500,000
December 31, 2000 $3,125,000
March 31, 2001 $3,125,000
June 30, 2001 $3,125,000
September 30, 2001 $3,125,000
December 31, 2001 $3,750,000
March 31, 2002 $3,750,000
June 30, 2002 $3,750,000
September 30, 2002 $3,750,000
December 31, 2002 $4,375,000
March 31, 2003 $4,375,000
June 30, 2003 $4,375,000
September 30, 2003 $4,375,000
December 31, 2003 $5,000,000
51
<PAGE>
March 31, 2004 $5,000,000
June 30, 2004 $5,000,000
September 30, 2004 $5,000,000
December 31, 2004 $6,250,000
March 31, 2005 $6,250,000
June 30, 2005 $6,250,000
September 30, 2005 $6,250,000
------------
TOTAL $100,000,000
============
; provided that the scheduled installments of principal of the Tranche A
--------
Term Loans set forth above shall be reduced in connection with any voluntary
or mandatory prepayments of the Tranche A Term Loans in accordance with
subsection 2.4B(iv); and provided, further that the Tranche A Term Loans and
-------- -------
all other amounts owed hereunder with respect to the Tranche A Term Loans
shall be paid in full no later than September 30, 2005, and the final
installment payable by Company in respect of the Tranche A Term Loans on
such date shall be in an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by Company under this
Agreement with respect to the Tranche A Term Loans.
(ii) Scheduled Payments of Tranche B Term Loans. Subject to subsection
------------------------------------------
10.4, Company shall make principal payments on the Tranche B Term Loans in
installments on the dates and in the amounts set forth below:
Scheduled Repayment
Date of Tranche B Term Loans
---- -----------------------
December 31, 1997 $562,500
March 31, 1998 $562,500
June 30, 1998 $562,500
September 30, 1998 $562,500
December 31, 1998 $562,500
March 31, 1999 $562,500
June 30, 1999 $562,500
September 30, 1999 $562,500
December 31, 1999 $562,500
March 31, 2000 $562,500
June 30, 2000 $562,500
September 30, 2000 $562,500
December 31, 2000 $562,500
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<PAGE>
March 31, 2001 $562,500
June 30, 2001 $562,500
September 30, 2001 $562,500
December 31, 2001 $562,500
March 31, 2002 $562,500
June 30, 2002 $562,500
September 30, 2002 $562,500
December 31, 2002 $562,500
March 31, 2003 $562,500
June 30, 2003 $562,500
September 30, 2003 $562,500
December 31, 2003 $562,500
March 31, 2004 $562,500
June 30, 2004 $562,500
September 30, 2004 $562,500
December 31, 2004 $562,500
March 31, 2005 $562,500
June 30, 2005 $562,500
September 30, 2005 $562,500
December 31, 2005 $51,750,000
March 30, 2006 $51,750,000
June 30, 2006 $51,750,000
September 30, 2006 $51,750,000
------------
TOTAL $225,000,000
============
; provided that the scheduled installments of principal of the Tranche B
--------
Term Loans set forth above shall be reduced in connection with any voluntary
or mandatory prepayments of the Tranche B Term Loans in accordance with
subsection 2.4B(iv); and provided, further that the Tranche B Term Loans and
-------- -------
all other amounts owed hereunder with respect to the Tranche B Term Loans
shall be paid in full no later than September 30, 2006, and the final
installment payable by Company in respect of the Tranche B Term Loans on
such date shall be in an amount, if such amount is different from that
specified above, sufficient to repay all amounts owing by Company under this
Agreement with respect to the Tranche B Term Loans.
(iii) Scheduled Reductions of Revolving Loan Commitments. The
--------------------------------------------------
Revolving Loan Commitments shall be permanently reduced on the dates and
in the amounts set forth below:
53
<PAGE>
Scheduled Reduction of
Date Revolving Loan Commitments
---- --------------------------
December 31, 1999 $5,000,000
March 31, 2000 $5,000,000
June 30, 2000 $5,000,000
September 30, 2000 $5,000,000
December 31, 2000 $6,250,000
March 31, 2001 $6,250,000
June 30, 2001 $6,250,000
September 30, 2001 $6,250,000
December 31, 2001 $7,500,000
March 31, 2002 $7,500,000
June 30, 2002 $7,500,000
September 30, 2002 $7,500,000
December 31, 2002 $8,750,000
March 31, 2003 $8,750,000
June 30, 2003 $8,750,000
September 30, 2003 $8,750,000
December 31, 2003 $10,000,000
March 31, 2004 $10,000,000
June 30, 2004 $10,000,000
September 30, 2004 $10,000,000
December 31, 2004 $12,500,000
March 31, 2005 $12,500,000
June 30, 2005 $12,500,000
September 30, 2005 $12,500,000
TOTAL $200,000,000
============
; provided that the scheduled reductions of the Revolving Loan Commitments
--------
set forth above shall be reduced in connection with any voluntary or
mandatory reductions of the Revolving Loan Commitments in accordance with
subsection 2.4B(iv).
B. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN REVOLVING LOAN
COMMITMENTS.
(i) Voluntary Prepayments. Company may, upon written or telephonic
---------------------
notice to Administrative Agent on or prior to 12:00 Noon (Chicago time) on
the date
54
<PAGE>
of prepayment, which notice, if telephonic, shall be promptly
confirmed in writing, at any time and from time to time prepay any Swing
Line Loan on any Business Day in whole or in part in an aggregate minimum
amount that is an integral multiple of $1,000,000. Company may, upon not
less than one Business Day's prior written or telephonic notice, in the case
of Base Rate Loans, and three Business Days' prior written or telephonic
notice, in the case of Eurodollar Rate Loans, in each case given to
Administrative Agent by 12:00 Noon (Chicago time) on the date required and,
if given by telephone, promptly confirmed in writing to Administrative Agent
(which original written or telephonic notice Administrative Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any time
and from time to time prepay any Term Loans or Revolving Loans on any
Business Day in whole or in part in an aggregate minimum amount that is an
integral multiple of $1,000,000; provided, however, that a Eurodollar Rate
-------- -------
Loan may only be prepaid on the expiration of the Interest Period applicable
thereto unless Company pays any additional compensation required by
subsection 2.6D. Any such voluntary prepayment shall be applied as
specified in subsection 2.4B(iv). Any prepayments under this subsection
2.4B(i) shall be subject to subsection 10.4.
(ii) Voluntary Reductions of Revolving Loan Commitments. Company may,
--------------------------------------------------
upon not less than three Business Days' prior written or telephonic notice
confirmed in writing to Administrative Agent (which original written or
telephonic notice Administrative Agent will promptly transmit by
telefacsimile or telephone to each Lender), at any time and from time to
time terminate in whole or permanently reduce in part, without premium or
penalty, the Revolving Loan Commitments in an amount up to the amount by
which the Revolving Loan Commitments exceed the Total Utilization of
Revolving Loan Commitments at the time of such proposed termination or
reduction; provided that any such partial reduction of the Revolving Loan
--------
Commitments shall be in an aggregate minimum amount that is an integral
multiple of $1,000,000. Company's notice to Administrative Agent shall
designate the date (which shall be a Business Day) of such termination or
reduction and the amount of any partial reduction, and such termination or
reduction of the Revolving Loan Commitments shall be effective on the date
specified in Company's notice and shall reduce the Revolving Loan Commitment
of each Lender proportionately to its Pro Rata Share. Any such voluntary
reduction of the Revolving Loan Commitments shall be applied as specified in
subsection 2.4B(iv).
(iii) Mandatory Prepayments and Mandatory Reductions of Revolving Loan
----------------------------------------------------------------
Commitments. The Loans shall be prepaid and/or the Revolving Loan
-----------
Commitments shall be permanently reduced in the amounts and under the
circumstances set forth below, all such prepayments and/or reductions to be
applied as set forth below or as more specifically provided in subsection
2.4B(iv):
(a) Prepayments and Reductions From Net Asset Sale Proceeds.
-------------------------------------------------------
No later than the third Business Day following the date of receipt by
Company or any of its Subsidiaries of any Net Asset Sale Proceeds in
respect of Asset Sales
55
<PAGE>
in an aggregate cumulative amount equal to or greater than $5,000,000
during any given Fiscal Year, Company shall prepay the Loans and/or the
Revolving Loan Commitments shall be permanently reduced in an aggregate
amount equal to such Net Asset Sale Proceeds; provided, however, that
-------- -------
the Net Asset Proceeds received by Company or any of its Subsidiaries
from any Asset Sale of any Cellular System permitted under subsection
7.7(vi) shall be excluded from the requirements of this subsection
2.4B(iii)(a) to the extent such proceeds are reinvested in another
Cellular System pursuant to subsections 7.7(iii) and (vi).
(b) Prepayments and Reductions Due to Issuance of Equity
----------------------------------------------------
Securities. No later than the third Business Day following the date of
----------
receipt by Holdings or any of its Subsidiaries of Non-Excluded Net
Equity Proceeds, Company shall prepay the Loans and/or the Revolving
Loan Commitments shall be permanently reduced in an aggregate amount
equal to 50% of such Non-Excluded Net Equity Proceeds.
(c) Prepayments and Reductions Due to Issuance of Debt
--------------------------------------------------
Securities. No later than the third Business Day following the date of
----------
receipt by Holdings or any of its Subsidiaries of Non-Excluded Net Debt
Proceeds, Company shall prepay the Loans and/or the Revolving Loan
Commitments shall be permanently reduced in an aggregate amount equal
to such Non-Excluded Net Debt Proceeds; provided, however, that (1) the
-------- -------
Non-Excluded Net Debt Proceeds received by Company or any of its
Subsidiaries from the issuance of debt Securities permitted under
subsections 7.1(i)-(x) shall be excluded from the requirements of this
subsection 2.4B(iii)(c) and (2) the Non-Excluded Net Debt Proceeds
received by Company or any of its Subsidiaries from the issuance of
debt Securities permitted under subsection 7.1(xi) shall be excluded
from the requirements of this subsection 2.4B(iii)(c) to the extent
such proceeds are used to make Permitted Acquisitions pursuant to
subsection 7.7(iii).
(d) Prepayments and Reductions from Consolidated Excess Cash
--------------------------------------------------------
Flow. In the event that there shall be Consolidated Excess Cash Flow
----
for any Fiscal Year (commencing with Fiscal Year 1998), Company shall
prepay no later than 90 days after the end of such Fiscal Year the
Loans and/or the Revolving Loan Commitments shall be permanently
reduced in an aggregate amount equal to 50% of such Consolidated Excess
Cash Flow.
(e) Calculations of Net Proceeds Amounts; Additional
------------------------------------------------
Prepayments and Reductions Based on Subsequent Calculations.
-----------------------------------------------------------
Concurrently with any prepayment of the Loans and/or reduction of the
Revolving Loan Commitments pursuant to subsections 2.4B(iii)(a)-(d),
Company shall deliver to Administrative Agent an Officer's Certificate
demonstrating the calculation of the amount (the "NET PROCEEDS AMOUNT")
of the applicable Net Asset Sale Proceeds or Non-Excluded Net Equity
Proceeds or Non-Excluded Net Debt
56
<PAGE>
Proceeds, or the applicable Consolidated Excess Cash Flow, as the case
may be, that gave rise to such prepayment and/or reduction.
(f) Prepayments Due to Reductions or Restrictions of Revolving Loan
---------------------------------------------------------------
Commitments. Company shall from time to time prepay first the Swing
----------- -----
Line Loans and second the Revolving Loans to the extent necessary (1)
------
so that the Total Utilization of Revolving Loan Commitments shall not
at any time exceed the Revolving Loan Commitments then in effect and
(2) to give effect to the limitations set forth in the second paragraph
of subsection 2.1A(iii) and in the second paragraph of subsection
2.1A(iv).
(iv) Application of Prepayments and Unscheduled Reductions of Revolving
------------------------------------------------------------------
Loan Commitments.
----------------
(a) Application of Voluntary Prepayments by Type of Loans and Order
---------------------------------------------------------------
of Maturity. Any voluntary prepayments pursuant to subsection 2.4B(i)
-----------
shall be applied as specified by Company in the applicable notice of
prepayment; provided that in the event Company fails to specify the
--------
Loans to which any such prepayment shall be applied, such prepayment
shall be applied first to repay outstanding Swing Line Loans to the
-----
full extent thereof, second to repay outstanding Term Loans to the full
------
extent thereof, and third to repay outstanding Revolving Loans to the
-----
full extent thereof. Any voluntary prepayments of the Term Loans
pursuant to subsection 2.4B(i) shall be applied to prepay the Tranche A
Term Loans and the Tranche B Term Loans on a pro rata basis (in
accordance with the respective outstanding principal amounts thereof)
first to scheduled installments of principal of the Tranche A Term
-----
Loans and the Tranche B Term Loans scheduled within one year of the
prepayment in forward order of maturity on a pro rata basis and second
------
to prepay the remaining scheduled installments of principal of the
Tranche A Term Loans and the Tranche B Term Loans set forth in
subsections 2.4A(i) and 2.4A(ii), respectively, on a pro rata basis.
(b) Application of Mandatory Prepayments by Type of Loans.
-----------------------------------------------------
Any amount (the "APPLIED AMOUNT") required to be applied as a mandatory
prepayment of the Loans and/or a reduction of the Revolving Loan
Commitments pursuant to subsections 2.4B(iii)(a)-(d) shall be applied
first to prepay the Term Loans to the full extent thereof, second, to
----- ------
the extent of any remaining portion of the Applied Amount, to prepay
the Swing Line Loans to the full extent thereof and to permanently
reduce the Revolving Loan Commitments by the amount of such prepayment,
third, to the extent of any remaining portion of the Applied Amount, to
-----
prepay the Revolving Loans to the full extent thereof and to further
permanently reduce the Revolving Loan Commitments by the amount of such
prepayment, and fourth, to the extent of any remaining portion of the
------
Applied Amount, to further permanently reduce the Revolving Loan
Commitments to the full extent thereof.
57
<PAGE>
(c) Application of Mandatory Prepayments of Term Loans to Tranche A
---------------------------------------------------------------
Term Loans and Tranche B Term Loans and the Scheduled Installments of
---------------------------------------------------------------------
Principal Thereof.
-----------------
(1) Any mandatory prepayments of the Term Loans pursuant
to subsection 2.4B(iii) shall be applied to prepay the Tranche A
Term Loans and the Tranche B Term Loans on a pro rata basis in
accordance with the respective outstanding principal amounts
thereof; provided that, in the case of any such mandatory
--------
prepayment of the Tranche B Term Loans with respect to which
Company has given Administrative Agent written notification, prior
to Administrative Agent's receipt of such mandatory prepayment,
that Company has elected to give each Lender of Tranche B Term
Loans the option to waive their rights to receive such prepayment
(a "WAIVABLE MANDATORY PREPAYMENT"), Administrative Agent shall,
upon receipt of such Waivable Mandatory Prepayment, notify each
Lender of Tranche B Term Loans of such receipt and of the amount
of such Waivable Mandatory Prepayment to be applied to such
Lender's Tranche B Term Loan and of the designation of such
Waivable Mandatory Prepayment as such by Company; provided further
-------- -------
that Company shall use its reasonable efforts to notify Tranche B
Term Lenders of such Waivable Mandatory Prepayment three Business
Days prior to the payment to Administrative Agent of such Waivable
Mandatory Prepayment (it being understood that Company shall have
no liability for failing to so notify Tranche B Term Lenders). In
the event any Tranche B Term Lender desires to waive such Lender's
right to receive such Waivable Mandatory Prepayment, (A) such
Lender shall so advise Administrative Agent in writing no later
than the close of business on the date it receives such notice
from Administrative Agent and (B) upon application of such
proceeds from such Lender, (I) Administrative Agent shall apply
50% of the amount so waived by such Lender to prepay the Tranche A
Term Loans and to reduce the unpaid scheduled installments of
principal of the Tranche A Term Loans set forth in subsection
2.4A(i) on a pro rata basis and (II) in the case of amounts so
waived prior to payment to Administrative Agent, Company shall
retain the remainder of the amount so waived and in the case of
amounts so waived after payment to Administrative Agent,
Administrative Agent shall return the remainder of the amount so
waived by such Lender to Company. Any amounts so waived by any
Tranche B Lender thereupon shall be scheduled to be paid to such
Lender on September 30, 2006, and, if not paid prior to such date,
shall be paid on such date as required by the second proviso of
subsection 2.4A(ii).
(2) Any mandatory prepayments applied to the Tranche A
Term Loans or the Tranche B Term Loans pursuant to subsection
58
<PAGE>
2.4B(iv)(c)(1) shall be applied on a pro rata basis (in accordance
with the respective outstanding principal amounts thereof) to
reduce each scheduled installments of principal of the Tranche A
Term Loans or the Tranche B Term Loans, as the case may be, set
forth in subsection 2.4A(i) or 2.4A(ii) that is unpaid at the time
of such prepayment.
(d) Application of Prepayments to Base Rate Loans and Eurodollar
------------------------------------------------------------
Rate Loans. Considering Tranche A Term Loans, Tranche B Term Loans and
----------
Revolving Loans being prepaid separately, any prepayment thereof shall
be applied first to Base Rate Loans to the full extent thereof before
application to Eurodollar Rate Loans, in each case in a manner which
minimizes the amount of any payments required to be made by Company
pursuant to subsection 2.6D.
(e) Application of Reductions of Revolving Loan Commitments. Any
-------------------------------------------------------
voluntary reduction of the Revolving Loan Commitments pursuant to
subsection 2.4B(ii) shall be applied at the Company's option either (x)
first to scheduled reductions of the Revolving Loan Commitments
-----
scheduled within one year of the prepayment in forward order of
maturity and second to reduce the remaining scheduled reductions of the
------
Revolving Loan Commitments set forth in subsections 2.4A(iii) on a pro
rata basis or (y) to reduce the scheduled reductions of the Revolving
Loan Commitments set forth in subsection 2.4A(iii) on a pro rata basis.
Any mandatory reduction of the Revolving Loan Commitments pursuant to
subsection 2.4B(iii) shall be applied on a pro rata basis (in
accordance with the respective outstanding principal amounts thereof)
to each scheduled reduction of the Revolving Loan Commitments set forth
in subsection 2.4A(iii) that is remaining at the time of such mandatory
reduction.
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of principal,
--------------------------
interest, fees and other Obligations hereunder and under the Notes shall be
made in Dollars in same day funds, without defense, setoff or counterclaim,
free of any restriction or condition, and delivered to Administrative Agent
not later than 12:00 Noon (Chicago time) on the date due at the Funding and
Payment Office for the account of Lenders. Funds received by Administrative
Agent after such time on such due date shall be deemed to have been paid by
Company on the next succeeding Business Day.
(ii) Application of Payments to Principal and Interest. Except as
-------------------------------------------------
provided in subsection 2.2C, all payments in respect of the principal amount
of any Loan shall include payment of accrued interest on the principal
amount being repaid or prepaid, and all such payments (and, in any event,
any payments in respect of any Loan on a date when interest is due and
payable with respect to such Loan) shall be applied to the payment of
interest before application to principal.
59
<PAGE>
(iii) Apportionment of Payments. Aggregate principal and interest
-------------------------
payments in respect of Term Loans and Revolving Loans shall be apportioned
among all outstanding Loans to which such payments relate, in each case
proportionately to Lenders' respective Pro Rata Shares. Administrative
Agent shall promptly distribute to each Lender, at its primary address set
forth below its name on the appropriate signature page hereof or at such
other address as such Lender may request, its Pro Rata Share of all such
payments received by Administrative Agent and the commitment fees of such
Lender when received by Administrative Agent pursuant to subsection 2.3.
Notwithstanding the foregoing provisions of this subsection 2.4C(iii), if,
pursuant to the provisions of subsection 2.6C, any Notice of
Conversion/Continuation is withdrawn as to any Affected Lender or if any
Affected Lender makes Base Rate Loans in lieu of its Pro Rata Share of any
Eurodollar Rate Loans, Administrative Agent shall give effect thereto in
apportioning payments received thereafter.
(iv) Payments on Business Days. Subject to subsection 2.2B, whenever
-------------------------
any payment to be made hereunder shall be stated to be due on a day that is
not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation
of the payment of interest hereunder or of the commitment fees hereunder, as
the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing of
-------------------
any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
--------
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
Obligations of Company hereunder or under such Note with respect to any Loan
or any payments of principal or interest on such Note.
D. APPLICATION OF PROCEEDS OF COLLATERAL AND PAYMENTS UNDER
GUARANTIES.
(i) Application of Proceeds of Collateral. Except as provided in
-------------------------------------
subsection 2.4B(iii)(a) with respect to prepayments from Net Asset Sale
Proceeds, all proceeds received by Administrative Agent in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral under any Collateral Document shall be applied in full or in part
by Administrative Agent against the applicable Secured Obligations (as
defined in such Collateral Document) in the following order of priority:
(a) To the payment of all costs and expenses of such sale,
collection or other realization, including reasonable compensation to
Administrative Agent and its agents and counsel, and all other
expenses, liabilities and advances made or incurred by Administrative
Agent in connection therewith, and all amounts for which Administrative
Agent is entitled to indemnification under such Collateral Document and
all advances made by Administrative Agent
60
<PAGE>
thereunder for the account of the applicable Loan Party, and to the
payment of all costs and expenses paid or incurred by Administrative
Agent in connection with the exercise of any right or remedy under such
Collateral Document, all in accordance with the terms of this Agreement
and such Collateral Document;
(b) thereafter, to the extent of any excess such proceeds, to the
payment of all other such Secured Obligations for the ratable benefit
of the holders thereof; and
(c) thereafter, to the extent of any excess such proceeds, to the
payment to or upon the order of such Loan Party or to whosoever may be
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
(ii) Application of Payments Under Guaranties. All payments received by
----------------------------------------
Administrative Agent under any of the Guaranties shall be applied promptly
from time to time by Administrative Agent in the following order of
priority:
(a) To the payment of the costs and expenses of any collection or
other realization under any of the Guaranties, including reasonable
compensation to Administrative Agent and its agents and counsel, and
all expenses, liabilities and advances made or incurred by
Administrative Agent in connection therewith, all in accordance with
the terms of this Agreement and such Guaranty;
(b) thereafter, to the extent of any excess such payments, to the
payment of all other Guarantied Obligations (as defined in such
Guaranty) for the ratable benefit of the holders thereof; and
(c) thereafter, to the extent of any excess such payments, to the
payment to Holdings or the applicable Subsidiary Guarantor or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.
2.5 USE OF PROCEEDS.
---------------
A. TERM LOANS. The proceeds of the Term Loans, together with up to
$100,000,000 in proceeds of the initial Revolving Loans (the "MERGER REVOLVING
LOANS"), the proceeds of the debt and equity capitalization of Company described
in subsection 4.1D and the Fort Myers Sale Proceeds, shall be applied by Company
(i) to fund the Purchase Price for the Palmer Shares, (ii) to refinance all
outstanding Indebtedness of Palmer and its Subsidiaries in an aggregate
principal amount not to exceed $381,400,000, (iii) to pay Transaction Costs in
an aggregate amount not to exceed $25,500,000, and (iv) to fund Company's cash
account in an amount not to exceed $600,000.
61
<PAGE>
B. REVOLVING LOANS; SWING LINE LOANS. The proceeds of the Merger
Revolving Loans shall be applied by Company as provided in subsection 2.5A. The
proceeds of any other Revolving Loans and any Swing Line Loans shall be applied
by Company for working capital and general corporate purposes, which may include
the financing of Permitted Acquisitions in accordance with subsection 7.7(iii)
and the making of intercompany loans to any of Company's Intercompany
Subsidiaries in accordance with subsection 7.1(iv) for their own working
capital, and Standby Letters of Credit shall be issued for the purposes set
forth in the definition of such term.
C. MARGIN REGULATIONS. No portion of the proceeds of any borrowing
under this Agreement shall be used by Company or any of its Subsidiaries in any
manner that might cause the borrowing or the application of such proceeds to
violate Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS.
--------------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to Eurodollar Rate Loans as
to the matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 10:00 A.M. (Chicago time) on each Interest Rate Determination Date,
Administrative Agent shall determine (which determination shall, absent error,
be final, conclusive and binding upon all parties) the interest rate that shall
apply to the Eurodollar Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to Company and each
Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Administrative Agent shall have reasonably determined in good faith (which
determination shall be final and conclusive and binding upon all parties
hereto), on any Interest Rate Determination Date with respect to any Eurodollar
Rate Loans, that by reason of circumstances affecting the London interbank
market adequate and fair means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the definition of Adjusted
Eurodollar Rate, Administrative Agent shall on such date give notice (by
telefacsimile or by telephone confirmed in writing) to Company and each Lender
of such determination, whereupon (i) no Loans may be made as, or converted to,
Eurodollar Rate Loans until such time as Administrative Agent notifies Company
and Lenders that the circumstances giving rise to such notice no longer exist
and (ii) any Notice of Borrowing or Notice of Conversion/Continuation given by
Company with respect to the Loans in respect of which such determination was
made shall be deemed to be rescinded by Company.
62
<PAGE>
C. ILLEGALITY OF EURODOLLAR RATE LOANS. In the event that on any date
any Lender shall have determined (which determination shall be final and
conclusive and binding upon all parties hereto but shall be made only after
consultation with Company and Administrative Agent) that the making, maintaining
or continuation of Loans bearing interest determined by reference to the
Adjusted Eurodollar Rate has become unlawful as a result of compliance by such
Lender in good faith with any law, treaty, governmental rule, regulation,
guideline or order (or would conflict with any such treaty, governmental rule,
regulation, guideline or order not having the force of law even though the
failure to comply therewith would not be unlawful), then, and in any such event,
such Lender shall be an "AFFECTED LENDER" and it shall on that day give notice
(by telefacsimile or by telephone confirmed in writing) to Company and
Administrative Agent of such determination (which notice Administrative Agent
shall promptly transmit to each other Lender). Thereafter (a) the obligation of
the Affected Lender to make Loans as, or to convert Loans to, Eurodollar Rate
Loans shall be suspended until such notice shall be withdrawn by the Affected
Lender, (b) to the extent such determination by the Affected Lender relates to a
Eurodollar Rate Loan then being requested by Company pursuant to a Notice of
Borrowing or a Notice of Conversion/Continuation, the Affected Lender shall make
such Loan as (or convert such Loan to, as the case may be) a Base Rate Loan, (c)
the Affected Lender's obligation to maintain its outstanding Eurodollar Rate
Loans (the "AFFECTED LOANS") shall be terminated without penalty or breakage
compensation at the earlier to occur of the expiration of the Interest Period
then in effect with respect to the Affected Loans or when required by law, and
(d) the Affected Loans shall automatically convert into Base Rate Loans on the
date of such termination. Notwithstanding the foregoing, to the extent a
determination by an Affected Lender as described above relates to a Eurodollar
Rate Loan then being requested by Company pursuant to a Notice of Borrowing or a
Notice of Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Administrative Agent of such rescission on
the date on which the Affected Lender gives notice of its determination as
described above (which notice of rescission Administrative Agent shall promptly
transmit to each other Lender). Except as provided in the immediately preceding
sentence, nothing in this subsection 2.6C shall affect the obligation of any
Lender other than an Affected Lender to make or maintain Loans as, or to convert
Loans to, Eurodollar Rate Loans in accordance with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the manner and method of computing such compensation for
requesting such amounts), for all reasonable losses, expenses and liabilities
(including, without limitation, any interest paid by that Lender to lenders of
funds borrowed by it to make or carry its Eurodollar Rate Loans and any loss,
expense or liability sustained by that Lender in connection with the liquidation
or re-employment of such funds) which that Lender may sustain: (i) if for any
reason (other than a default by that Lender) a borrowing of any Eurodollar Rate
Loan does not occur on a date specified therefor in a Notice of Borrowing or a
telephonic request for borrowing, or a conversion to or continuation of any
Eurodollar Rate Loan does not occur on a date specified therefor in a Notice of
Conversion/Continuation or a
63
<PAGE>
telephonic request for conversion or continuation, (ii) if any prepayment
(including without limitation any prepayment pursuant to subsection 2.4B(i)) or
other principal payment or any conversion of any of its Eurodollar Rate Loans
occurs on a date prior to the last day of an Interest Period applicable to that
Loan, (iii) if any prepayment of any of its Eurodollar Rate Loans is not made on
any date specified in a notice of prepayment given by Company, or (iv) as a
consequence of any other default by Company in the repayment of its Eurodollar
Rate Loans when required by the terms of this Agreement.
E. BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of any of its branch
offices or the office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF EURODOLLAR RATE LOANS.
Calculation of all amounts payable to a Lender under this subsection 2.6 and
under subsection 2.7A shall be made as though that Lender had actually funded
each of its relevant Eurodollar Rate Loans through the purchase of a Eurodollar
deposit bearing interest at the rate obtained pursuant to clause (i) of the
definition of Adjusted Eurodollar Rate in an amount equal to the amount of such
Eurodollar Rate Loan and having a maturity comparable to the relevant Interest
Period and through the transfer of such Eurodollar deposit from an offshore
office of that Lender to a domestic office of that Lender in the United States
of America; provided, however, that each Lender may fund each of its Eurodollar
-------- -------
Rate Loans in any manner it sees fit and the foregoing assumptions shall be
utilized only for the purposes of calculating amounts payable under this
subsection 2.6 and under subsection 2.7A.
G. EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of a Potential Event of Default or an Event of Default,
(i) Company may not elect to have a Loan be made or maintained as, or converted
to, a Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for that Loan and (ii) subject to the provisions of subsection 2.6D, any
Notice of Borrowing or Notice of Conversion/Continuation given by Company with
respect to a requested borrowing or conversion/continuation that has not yet
occurred shall be deemed to be rescinded by Company and be deemed a request to
convert or continue Loans referred to therein as Base Rate Loans.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
----------------------------------------
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the
provisions of subsection 2.7B (which shall be controlling with respect to the
matters covered thereby), in the event that any Lender shall reasonably
determine in good faith (which determination shall, absent error, be final and
conclusive and binding upon all parties hereto) that any law, treaty or
governmental rule, regulation or order, or any change therein or in the
interpretation, administration or application thereof (including the
introduction of any new law, treaty or governmental rule, regulation or order),
or any determination of a court or governmental authority, in each case that
becomes effective after the date hereof, or compliance by such Lender with any
guideline, request or directive issued or made after the
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date hereof by any central bank or other governmental or quasi-governmental
authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such Lender)
with respect to this Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement against assets held by, or deposits or other liabilities in or
for the account of, or advances or loans by, or other credit extended by, or
any other acquisition of funds by, any office of such Lender (other than any
such reserve or other requirements with respect to Eurodollar Rate Loans
that are reflected in the definition of Adjusted Eurodollar Rate); or
(iii) imposes on Lender (or its applicable lending office) any other
condition (other than with respect to a Tax matter) on or affecting such
Lender (or its applicable lending office) or its obligations hereunder or
the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto, in each case which is deemed by such Lender to be material,
then, in any such case, Company shall promptly pay to such Lender, within 10
Business Days after receipt of the statement referred to in the next sentence,
such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its
sole discretion shall determine) as may be necessary to compensate such Lender
for any such increased cost or reduction in amounts received or receivable
hereunder; provided that a Lender shall not be entitled to avail itself of the
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benefit of this subsection 2.7A to the extent it had an ability (subject to
subsection 2.8A) prior to incurrence of such increased costs or taxes to reduce
or avoid the same through the relocation of its lending office or otherwise (and
failed to do so) and to the extent that any such increased cost or reduction in
amounts was incurred more than six months prior to the time it gives notice to
Company (as provided in the next sentence) of the relevant circumstance, unless
such circumstance arose or became applicable retroactively, in which case such
Lender shall not be limited to such six month period so long as such Lender has
given such notice to Company no later than one year from the time such
circumstance became applicable to such Lender. Such Lender shall deliver to
Company (with a copy to Administrative Agent) a written statement, setting forth
in reasonable detail the facts and circumstances giving rise to the claim for
additional amounts to such Lender under this subsection 2.7A, which statement
shall be conclusive and binding upon all parties hereto absent error.
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B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company under
-----------------------------
this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by or
within the United States of America or any political subdivision in or of
the United States of America or any other jurisdiction from or to which a
payment is made by or on behalf of Company or by any federation or
organization of which the United States of America or any such jurisdiction
is a member at the time of payment.
(ii) Grossing-up of Payments. If Company or Administrative Agent is
-----------------------
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by Company to Administrative Agent or any
Lender under any of the Loan Documents:
(a) Company shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Company
becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability is
imposed on Administrative Agent or such Lender, as the case may be) on
behalf of and in the name of Administrative Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to the
extent necessary to ensure that, after the making of that deduction,
withholding or payment, Administrative Agent or such Lender, as the
case may be, receives on the due date a net sum equal to what it would
have received had no such deduction, withholding or payment been
required or made;
(d) within 30 days after paying any sum from which it is required
by law to make any deduction or withholding, and within 30 days after
the due date of payment of any Tax which it is required by clause (b)
above to pay, Company shall deliver to Administrative Agent evidence
satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority; and
(e) to the extent Administrative Agent or a Lender receives a
refund in respect of any amount for any Taxes for which Company has
made a payment pursuant to this subsection 2.7B(ii), Administrative
Agent or such
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Lender, as the case may be, shall pay over to Company the amount of
such refund within 30 days of receipt of such refund;
provided that no such additional amount shall be required to be paid to any
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Lender under clause (c) above except to the extent that any change after the
date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment Agreement pursuant to which such
Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments to
such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
-----------------------------------------------
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Administrative Agent for
transmission to Company, on or prior to the Closing Date (in the case
of each Lender listed on the signature pages hereof) or on or prior to
the date of the Assignment Agreement pursuant to which it becomes a
Lender (in the case of each other Lender), and at such other times as
may be necessary in the determination of Company or Administrative
Agent (each in the reasonable exercise of its discretion), (1) two
original copies of Internal Revenue Service Form 1001 or 4224 (or any
successor forms), properly completed and duly executed by such Lender,
together with any other certificate or statement of exemption required
under the Internal Revenue Code or the regulations issued thereunder to
establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to
such Lender of principal, interest, fees or other amounts payable under
any of the Loan Documents or (2) if such Lender is not a "bank" or
other Person described in Section 881(c)(3) of the Internal Revenue
Code and cannot deliver either Internal Revenue Service Form 1001 or
4224 pursuant to clause (1) above, a Certificate re Non-Bank Status
together with two original copies of Internal Revenue Service Form W-8
(or any successor form), properly completed and duly executed by such
Lender, together with any other certificate or statement of exemption
required under the Internal Revenue Code or the regulations issued
thereunder to establish that such Lender is not subject to deduction or
withholding of United States federal income tax with respect to any
payments to such Lender of interest payable under any of the Loan
Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the
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initial delivery by such Lender of such forms, certificates or other
evidence, whenever a lapse in time or change in circumstances renders
such forms, certificates or other evidence obsolete or inaccurate in
any material respect, that such Lender shall promptly (1) deliver to
Administrative Agent for transmission to Company two new original
copies of Internal Revenue Service Form 1001 or 4224, or a Certificate
re Non-Bank Status and two original copies of Internal Revenue Service
Form W-8, as the case may be, properly completed and duly executed by
such Lender, together with any other certificate or statement of
exemption required in order to confirm or establish that such Lender is
not subject to deduction or withholding of United States federal income
tax with respect to payments to such Lender under the Loan Documents or
(2) notify Administrative Agent and Company of its inability to deliver
any such forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount
to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of clause (a) or
(b)(1) of this subsection 2.7B(iii); provided that if such Lender shall
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have satisfied the requirements of subsection 2.7B(iii)(a) on the
Closing Date (in the case of each Lender listed on the signature pages
hereof) or on the date of the Assignment Agreement pursuant to which it
became a Lender (in the case of each other Lender), nothing in this
subsection 2.7B(iii)(c) shall relieve Company of its obligation to pay
any additional amounts pursuant to clause (c) of subsection 2.7B(ii) in
the event that, as a result of any change in any applicable law, treaty
or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is
no longer properly entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such Lender is
not subject to withholding as described in subsection 2.7B(iii)(a).
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the date
hereof of any law, rule or regulation (or any provision thereof) regarding
capital adequacy, or any change therein or 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 (or its applicable lending office) with any guideline, request or
directive regarding capital adequacy (whether or not having the force of law) of
any such governmental authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the capital of such Lender or
any such Lender's holding company, if any, as a consequence of, or with
reference to, such Lender's Loans or Commitments or Letters of Credit or
participations therein or other obligations hereunder with respect to the Loans
or the Letters of Credit to a level below that which such Lender or such
Lender's holding company, if any, could have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance (taking into
consideration the policies of such Lender or such holding company with regard to
capital adequacy) by an
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amount deemed by such Lender to be material, then from time to time, within
five Business Days after receipt by Company from such Lender of the statement
referred to in the next sentence, Company shall pay to such Lender within
15 Business Days of receipt such statement such additional amount or
amounts as will compensate such Lender or such controlling corporation
on an after-tax basis for such reduction; provided that a Lender shall not be
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entitled to avail itself of the benefit of this subsection 2.7C to the extent
that any such reduction of return was incurred more than six months prior to the
time such Lender gives notice to Company, unless such reduction arose
retroactively, in which case such Lender shall give such notice within six
months from the time such reductions become applicable to such Lender. Such
Lender shall deliver to Company (with a copy to Administrative Agent) a written
statement, setting forth in reasonable detail the facts and circumstances giving
rise to the claim for such additional amounts, which statement shall be
conclusive and binding upon all parties hereto absent error.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE; REPLACEMENT OF
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LENDER.
- ------
A. OBLIGATION TO MITIGATE. Each Lender and Issuing Lender agrees that,
as promptly as practicable after such Lender or Issuing Lender becomes aware (or
should have become aware in the exercise of reasonable diligence) of the
occurrence of an event or the existence of a condition that would cause such
Lender to become an Affected Lender or that would entitle such Lender or Issuing
Lender to receive payments under subsection 2.7 or subsection 3.6, it will, to
the extent not inconsistent with the internal policies of such Lender or Issuing
Lender and any applicable legal or regulatory restrictions, use reasonable
efforts (i) to make, issue, fund or maintain the Commitments of such Lender or
the affected Loans or Letters of Credit of such Lender or Issuing Lender through
another lending or letter of credit office of such Lender or Issuing Lender, or
(ii) take such other measures as such Lender or Issuing Lender may deem
reasonable, if as a result thereof the circumstances which would cause such
Lender to be an Affected Lender would cease to exist or the additional amounts
which would otherwise be required to be paid to such Lender or Issuing Lender
pursuant to subsection 2.7 or subsection 3.6 would be materially reduced and if,
as determined by such Lender or Issuing Lender in its sole discretion, the
making, issuing, funding or maintaining of such Commitments or Loans or Letters
of Credit through such other lending or letter of credit office or in accordance
with such other measures, as the case may be, would not otherwise materially
adversely affect such Commitments or Loans or Letters of Credit or the interests
of such Lender or Issuing Lender. A certificate as to the amount of any such
expenses payable by Company pursuant to this subsection 2.8 (setting forth in
reasonable detail the facts and circumstances giving rise to the claim for such
amount) submitted by such Lender or Issuing Lender to Company (with a copy to
Administrative Agent) shall be conclusive absent error.
B. REPLACEMENT OF LENDER. If Company receives a notice pursuant to
subsection 2.6C or 2.7A, so long as (i) no Potential Event of Default or Event
of Default shall have occurred and be continuing and Company has obtained a
commitment from another Lender or an Eligible Assignee to purchase at par such
Lender's Loans, Commitments and other Obligations and to assume all obligations
of the Lender to be replaced, (ii) at such time the
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Lender to be replaced is not an Issuing Lender with respect to any Letters of
Credit outstanding (unless all such Letters of Credit are terminated or
arrangements acceptable to such Issuing Lender (such as a "back-to-back" letter
of credit) are made) and (iii) such Lender to be replaced is unwilling to
withdraw the notice delivered to Company, then upon 10 Business Days prior
written notice to such Lender and Administrative Agent, Company may require the
Lender giving such notice to assign all of its Loans, Commitments and other
Obligations to such other Lender or Eligible Assignee pursuant to the provisions
of subsection 10.1B; provided that prior to or concurrently with such
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replacement (i) Company shall have paid to the Lender giving such notice all
amounts due under subsections 2.6D and 2.7A through such date of replacement,
(ii) Company or the applicable assignee shall have paid to Administrative Agent
(unless waived) the processing and recordation fee required to be paid by
subsection 10.1B(i) and (iii) all of the requirements for such assignment
contained in subsection 10.1B, including, without limitation, the consent of
Administrative Agent (if required) and the receipt by Administrative Agent of an
executed Assignment Agreement and other supporting documents, shall have been
fulfilled.
SECTION 3. LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
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THEREIN.
- -------
A. LETTERS OF CREDIT. In addition to Company requesting that Lenders
make Revolving Loans pursuant to subsection 2.1A(iii) and that Swing Line Lender
make Swing Line Loans pursuant to subsection 2.1A(iv), Company may request, in
accordance with the provisions of this subsection 3.1, from time to time during
the period from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date, that one or more Lenders issue Letters of Credit for the
account of Company for the purposes specified in the definition of Standby
Letters of Credit. Subject to the terms and conditions of this Agreement and in
reliance upon the representations and warranties of Company herein set forth,
any one or more Lenders may, but (except as provided in subsection 3.1B(ii))
shall not be obligated to, issue such Letters of Credit in accordance with the
provisions of this subsection 3.1; provided that Company shall not request that
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any Lender issue (and no Lender shall issue):
(i) any Letter of Credit if, after giving effect to such issuance, the
Total Utilization of Revolving Loan Commitments would exceed the difference
of (a) the Revolving Loan Commitments then in effect less (b) an amount
----
equal to the aggregate principal amount of Indebtedness incurred by Company
and its Subsidiaries under clause (x) of Section 4.12 of the Subordinated
Note Indenture then outstanding, if any;
(ii) any Letter of Credit if, after giving effect to such issuance, the
Letter of Credit Usage would exceed $25,000,000;
(iii) any Letter of Credit having an expiration date later than the
earlier of (a) the Revolving Loan Commitment Termination Date and (b) the
date which is one
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year from the date of issuance of such Standby Letter of Credit; provided
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that the immediately preceding clause (b) shall not prevent any Issuing
Lender from agreeing that a Letter of Credit will automatically be extended
for one or more successive periods not to exceed one year each unless such
Issuing Lender elects not to extend for any such additional period; and
provided, further that such Issuing Lender shall elect not to extend
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such Standby Letter of Credit if it has knowledge that an Event of
Default has occurred and is continuing (and has not been waived in
accordance with subsection 10.6) at the time such Issuing Lender must elect
whether or not to allow such extension; or
(iv) any Letter of Credit denominated in a currency other than
Dollars.
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires the issuance of a
------------------
Letter of Credit, it shall deliver to Administrative Agent a Notice of
Issuance of Letter of Credit substantially in the form of Exhibit III
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annexed hereto no later than 12:00 Noon (Chicago time) at least three
Business Days, or such shorter period as may be agreed to by the Issuing
Lender in any particular instance, in advance of the proposed date of
issuance. The Notice of Issuance of Letter of Credit shall specify (a) the
proposed date of issuance (which shall be a Business Day), (b) whether the
Letter of Credit is to be a Standby Letter of Credit [a Commercial Letter of
Credit], (c) the face amount of the Letter of Credit, (d) the expiration
date of the Letter of Credit, (e) the name and address of the beneficiary,
and (f) either the verbatim text of the proposed Letter of Credit or the
proposed terms and conditions thereof, including a precise description of
any documents to be presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of the Letter of Credit, would
require the Issuing Lender to make payment under the Letter of Credit;
provided that the Issuing Lender, in its reasonable discretion, may require
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changes in the text of the proposed Letter of Credit or any such documents;
and provided, further that no Letter of Credit shall require payment against
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a conforming draft to be made thereunder on the same business day (under the
laws of the jurisdiction in which the office of the Issuing Lender to which
such draft is required to be presented is located) that such draft is
presented if such presentation is made after 10:00 A.M. (in the time zone of
such office of the Issuing Lender) on such business day.
(ii) Determination of Issuing Lender. Upon receipt by Administrative
-------------------------------
Agent of a Notice of Issuance of Letter of Credit pursuant to subsection
3.1B(i) requesting the issuance of a Letter of Credit, in the event
Administrative Agent elects to issue such Letter of Credit, Administrative
Agent shall promptly so notify Company, and Administrative Agent shall be
the Issuing Lender with respect thereto. In the event that Administrative
Agent, in its sole discretion, elects not to issue such Letter of Credit,
Administrative Agent shall promptly so notify Company, whereupon Company may
request any other Lender to issue such Letter of Credit by delivering to
such Lender a copy of the applicable Notice of Issuance of Letter of Credit.
Any
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Lender so requested to issue such Letter of Credit shall promptly notify
Company and Administrative Agent whether or not, in its sole discretion, it
has elected to issue such Letter of Credit, and any such Lender which so
elects to issue such Letter of Credit shall be the Issuing Lender with
respect thereto. In the event that all other Lenders shall have declined to
issue such Letter of Credit, notwithstanding the prior election of
Administrative Agent not to issue such Letter of Credit, Administrative
Agent shall be obligated to issue such Letter of Credit and shall be the
Issuing Lender with respect thereto, notwithstanding the fact that the
Letter of Credit Usage with respect to such Letter of Credit and with
respect to all other Letters of Credit issued by Administrative Agent, when
aggregated with Administrative Agent's outstanding Revolving Loans and Swing
Line Loans, may exceed Administrative Agent's Revolving Loan Commitment then
in effect; provided that Administrative Agent shall not be obligated to
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issue any Letter of Credit denominated in a foreign currency.
(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
----------------------------
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures.
(iv) Notification to Lenders. Upon the issuance of any Letter of Credit
-----------------------
the applicable Issuing Lender shall promptly notify Administrative Agent and
each other Lender of such issuance, which notice shall be accompanied by a
copy of such Letter of Credit. Promptly after receipt of such notice (or,
if Administrative Agent is the Issuing Lender, together with such notice),
Administrative Agent shall notify each Lender of the amount of such Lender's
respective participation in such Letter of Credit, determined in accordance
with subsection 3.1C.
(v) Reports to Lenders. Within 15 days after the end of each calendar
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quarter ending after the Closing Date, so long as any Letter of Credit shall
have been outstanding during such calendar quarter, each Issuing Lender
shall deliver to each other Lender a report setting forth for such calendar
quarter the daily aggregate amount available to be drawn under the Letters
of Credit issued by such Issuing Lender that were outstanding during such
calendar quarter.
C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT.
Immediately upon the issuance of each Letter of Credit, each Lender shall be
deemed to, and hereby agrees to, have irrevocably purchased from the Issuing
Lender a participation in such Letter of Credit and any drawings honored
thereunder in an amount equal to such Lender's Pro Rata Share of the maximum
amount which is or at any time may become available to be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
---------------------
Company agrees to pay the following amounts with respect to Letters
of Credit issued hereunder:
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(i) with respect to each Letter of Credit, (1) a fronting fee, payable
directly to the applicable Issuing Lender for its own account, equal to the
greater of (x) $500 and (y) 0.25% per annum of the daily amount available to
be drawn under such Letter of Credit and (2) a letter of credit fee, payable
to Administrative Agent for the account of Lenders, equal to (a) the
Applicable Tranche A Eurodollar Margin multiplied by (b) the daily amount
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available to be drawn under such Letter of Credit, each such fronting fee or
letter of credit fee to be payable in arrears on and to (but excluding) each
March 31, June 30, September 30 and December 31 of each year and computed on
the basis of a 360-day year for the actual number of days elapsed; and
(ii) with respect to the issuance, amendment or transfer of each Letter
of Credit and each payment of a drawing made thereunder (without duplication
of the fees payable under clause (i) above), documentary and processing
charges payable directly to the applicable Issuing Lender for its own
account in accordance with such Issuing Lender's standard schedule for such
charges in effect at the time of such issuance, amendment, transfer or
payment, as the case may be.
For purposes of calculating any fees payable under clause (i) of this subsection
3.2, the daily amount available to be drawn under any Letter of Credit shall be
determined as of the close of business on any date of determination. Promptly
upon receipt by Administrative Agent of any amount described in clause (i)(b) or
(ii)(b) of this subsection 3.2, Administrative Agent shall distribute to each
Lender its Pro Rata Share of such amount.
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
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A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
In the event an Issuing Lender has determined to honor a drawing under a Letter
of Credit issued by it, such Issuing Lender shall immediately notify Company and
Administrative Agent, and Company shall reimburse such Issuing Lender on or
before the Business Day immediately following the date on which such drawing is
honored (the "REIMBURSEMENT DATE") in an amount in Dollars and in same day funds
equal to the amount of such honored drawing; provided that, anything contained
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in this Agreement to the contrary notwithstanding, (i) unless Company shall have
notified Administrative Agent and such Issuing Lender prior to 10:00 A.M.
(Chicago time) on the date such drawing is honored that Company intends to
reimburse such Issuing Lender for the amount of such honored drawing with funds
other than the proceeds of Revolving Loans, Company shall be deemed to have
given a timely Notice of Borrowing to Administrative Agent requesting Lenders to
make Revolving Loans that are Base Rate Loans on the Reimbursement Date in an
amount in Dollars equal to the amount of such honored drawing and (ii) subject
to satisfaction or
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waiver of the conditions specified in subsection 4.2B, Lenders shall, on the
Reimbursement Date, make Revolving Loans that are Base Rate Loans in the amount
of such honored drawing, the proceeds of which shall be applied directly by
Administrative Agent to reimburse such Issuing Lender for the amount of such
honored drawing; and provided, further that if for any reason proceeds of
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Revolving Loans are not received by such Issuing Lender on the Reimbursement
Date in an amount equal to the amount of such honored drawing, Company shall
reimburse such Issuing Lender, on demand, in an amount in same day funds equal
to the excess of the amount of such honored drawing over the aggregate amount of
such Revolving Loans, if any, which are so received. Nothing in this subsection
3.3B shall be deemed to relieve any Lender from its obligation to make Revolving
Loans on the terms and conditions set forth in this Agreement, and Company shall
retain any and all rights it may have against any Lender resulting from the
failure of such Lender to make such Revolving Loans under this subsection 3.3B.
C. PAYMENT BY LENDERS OF UNREIMBURSED AMOUNTS PAID UNDER LETTERS OF
CREDIT.
(i) Payment by Lenders. In the event that Company shall fail for any
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reason to reimburse any Issuing Lender as provided in subsection 3.3B in an
amount equal to the amount of any drawing honored by such Issuing Lender
under a Letter of Credit issued by it, such Issuing Lender shall promptly
notify each other Lender of the unreimbursed amount of such honored drawing
and of such other Lender's respective participation therein based on such
Lender's Pro Rata Share. Each Lender shall make available to such Issuing
Lender an amount equal to its respective participation, in Dollars and in
same day funds, at the office of such Issuing Lender specified in such
notice, not later than 12:00 Noon (Chicago time) on the first business day
(under the laws of the jurisdiction in which such office of such Issuing
Lender is located) after the date notified by such Issuing Lender. In the
event that any Lender fails to make available to such Issuing Lender on such
business day the amount of such Lender's participation in such Letter of
Credit as provided in this subsection 3.3C, such Issuing Lender shall be
entitled to recover such amount on demand from such Lender together with
interest thereon at the Federal Funds Effective Rate for three Business Days
and thereafter at the Base Rate. Nothing in this subsection 3.3C shall be
deemed to prejudice the right of any Lender to recover from any Issuing
Lender any amounts made available by such Lender to such Issuing Lender
pursuant to this subsection 3.3C in the event that it is determined by the
final judgment of a court of competent jurisdiction that the payment with
respect to a Letter of Credit by such Issuing Lender in respect of which
payment was made by such Lender constituted gross negligence or willful
misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From Company.
---------------------------------------------------------------
In the event any Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of any drawing honored
by such Issuing Lender under a Letter of Credit issued by it, such Issuing
Lender shall distribute to
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each other Lender which has paid all amounts payable by it under subsection
3.3C(i) with respect to such honored drawing such other Lender's Pro Rata
Share of all payments subsequently received by such Issuing Lender from
Company in reimbursement of such honored drawing when such payments are
received. Any such distribution shall be made to a Lender at its primary
address set forth below its name on the appropriate signature page hereof or
at such other address as such Lender may request.
D. INTEREST ON AMOUNTS PAID UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to pay to each
------------------------------
Issuing Lender, with respect to drawings honored under any Letters of Credit
issued by it, interest on the amount paid by such Issuing Lender in respect
of each such honored drawing from the date such drawing is honored to but
excluding the date such amount is reimbursed by Company (including any such
reimbursement out of the proceeds of Revolving Loans pursuant to subsection
3.3B) at a rate equal to (a) for the period from the date such drawing is
honored to but excluding the Reimbursement Date, the rate then in effect
under this Agreement with respect to Revolving Loans that are Base Rate
Loans and (b) thereafter, a rate which is 2.00% per annum in excess of the
rate of interest otherwise payable under this Agreement with respect to
Revolving Loans that are Base Rate Loans; provided, however, that a Lender
-------- -------
which fails to perform its obligations to purchase a participation in an
unreimbursed drawing pursuant to subsection 3.3C(i) shall not be entitled to
receive such excess interest. Interest payable pursuant to this subsection
3.3D(i) shall be computed on the basis of a 365-day year for the actual
number of days elapsed in the period during which it accrues and shall be
payable on demand or, if no demand is made, on the date on which the related
drawing under a Letter of Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly upon
---------------------------------------------------
receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing honored under a Letter of
Credit issued by it, (a) such Issuing Lender shall distribute to each other
Lender, out of the interest received by such Issuing Lender in respect of
the period from the date such drawing is honored to but excluding the date
on which such Issuing Lender is reimbursed for the amount of such drawing
(including any such reimbursement out of the proceeds of Revolving Loans
pursuant to subsection 3.3B), the amount that such other Lender would have
been entitled to receive in respect of the letter of credit fee that would
have been payable in respect of such Letter of Credit for such period
pursuant to subsection 3.2 if no drawing had been honored under such Letter
of Credit, and (b) in the event such Issuing Lender shall have been
reimbursed by other Lenders pursuant to subsection 3.3C(i) for all or any
portion of such honored drawing, such Issuing Lender shall distribute to
each other Lender which has paid all amounts payable by it under subsection
3.3C(i) with respect to such honored drawing such other Lender's Pro Rata
Share of any interest received by such Issuing Lender in respect of that
portion of such honored drawing so reimbursed by other Lenders for the
period from
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the date on which such Issuing Lender was so reimbursed by other Lenders to
but excluding the date on which such portion of such honored drawing is
reimbursed by Company. Any such distribution shall be made to a Lender at
its primary address set forth below its name on the appropriate signature
page hereof or at such other address as such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
--------------------
Subject to the proviso hereof, obligation of Company to reimburse each
-------
Issuing Lender for drawings honored under the Letters of Credit issued by it and
to repay any Revolving Loans made by Lenders pursuant to subsection 3.3B and the
obligations of Lenders under subsection 3.3C(i) shall be unconditional and
irrevocable and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances including, without limitation, any of the
following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
Company or any Lender may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company, whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of
its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) any adverse change in the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries;
(v) any breach of this Agreement or any other Loan Document by any party
thereto;
(vi) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(vii) the fact that an Event of Default or a Potential Event of Default
shall have occurred and be continuing;
provided, in each case, that payment by the applicable Issuing Lender under the
- --------
applicable Letter of Credit shall not have constituted gross negligence, failure
to use reasonable care in deciding whether conditions to payment have been
substantially complied with (the
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"STANDARD OF CARE") or willful misconduct of such Issuing Lender under the
circumstances in question (as determined by a final judgment of a court of
competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
--------------------------------------------------
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel) which such Issuing Lender may incur
or be subject to as a consequence, direct or indirect, of (i) the issuance of
any Letter of Credit by such Issuing Lender, other than as a result of (a) the
gross negligence, failure to use reasonable care in deciding whether conditions
to payment have been substantially or willful misconduct of such Issuing Lender
as determined by a final judgment of a court of competent jurisdiction or (b)
subject to the following clause (ii), the wrongful dishonor by such Issuing
Lender of a proper demand for payment made under any Letter of Credit issued by
it or (ii) the failure of such Issuing Lender to honor a drawing under any such
Letter of Credit as a result of any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto government or
governmental authority (all such acts or omissions herein called "GOVERNMENTAL
ACTS").
B. NATURE OF ISSUING LENDERS' DUTIES. As between Company and any
Issuing Lender, Company assumes all risks of the acts and omissions of, or
misuse of the Letters of Credit issued by such Issuing Lender by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation
of the foregoing, such Issuing Lender shall not be responsible, except for a
breach of the Standard of Care, for: (i) the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party in
connection with the application for and issuance of any such Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) the validity or sufficiency
of any instrument transferring or assigning or purporting to transfer or assign
any such Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, to the extent the Letter of Credit was
transferable (and so marked) at the time of issuance, which transfer or
assignment may prove to be invalid or ineffective for any reason; (iii) failure
of the beneficiary of any such Letter of Credit to comply fully with any
conditions required in order to draw upon such Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any such Letter of Credit or of the proceeds thereof; (vii) the
misapplication by the beneficiary of any such Letter of Credit of the proceeds
of any drawing under such Letter of Credit; or (viii) any consequences arising
from causes beyond the reasonable control of such Issuing Lender, including
without limitation any Governmental Acts, and none of the above shall affect or
impair, or prevent the vesting of, any of such Issuing Lender's rights or powers
hereunder.
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In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith and in accordance with the Standard of Care
shall not put such Issuing Lender under any resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross negligence, the failure
of the Issuing Lender to use reasonable care in deciding whether conditions to
payment have been substantially complied with or willful misconduct of such
Issuing Lender.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
-------------------------------------------------------
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Issuing Lender or Lender shall reasonably determine in good faith (which
determination shall, absent error, be final and conclusive and binding upon all
parties hereto) that any law, treaty or governmental rule, regulation or order,
or any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by any
Issuing Lender or Lender with any guideline, request or directive issued or made
after the date hereof by any central bank or other governmental or quasi-
governmental authority (whether or not having the force of law):
(i) subjects such Issuing Lender or Lender (or its applicable lending or
letter of credit office) to any additional Tax (other than any Tax on the
overall net income of such Issuing Lender or Lender) with respect to the
issuing or maintaining of any Letters of Credit or the purchasing or
maintaining of any participations therein or any other obligations under
this Section 3, whether directly or by such being imposed on or suffered by
any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including
without limitation any marginal, emergency, supplemental, special or other
reserve), special deposit, compulsory loan, FDIC insurance or similar
requirement in respect of any Letters of Credit issued by any Issuing Lender
or participations therein purchased by any Lender; or
(iii) imposes on an Issuing Lender (or its applicable lending office)
any other condition (other than with respect to a Tax matter) on or
affecting such Issuing Lender or Lender (or its applicable lending or letter
of credit office) regarding this Section 3 or any Letter of Credit or any
participation therein;
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and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto, in each case which is deemed by such Issuing Lender to be material;
then, in any case, Company shall promptly pay to such Issuing Lender or Lender,
within 10 Business Days after receipt of the statement referred to in the next
sentence, such additional amount or amounts as may be necessary to compensate
such Issuing Lender or Lender for any such increased cost or reduction in
amounts received or receivable hereunder. Such Issuing Lender or Lender shall
deliver to Company a written statement, setting forth in reasonable detail the
facts and circumstances giving rise to the claim for the additional amounts to
such Issuing Lender or Lender under this subsection 3.6, which statement shall
be conclusive and binding upon all parties hereto absent error.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters
of Credit hereunder are subject to the satisfaction of the following conditions.
4.1 CONDITIONS TO TERM LOANS AND INITIAL REVOLVING LOANS AND SWING LINE
-------------------------------------------------------------------
LOANS.
- -----
The obligations of Lenders to make the Term Loans and any Revolving
Loans and Swing Line Loans to be made on the Closing Date are, in addition to
the conditions precedent specified in subsection 4.2, subject to prior or
concurrent satisfaction of the following conditions:
A. LOAN PARTY DOCUMENTS. On or before the Closing Date, Company
shall, and shall cause each other Loan Party to, deliver to Lenders (or to
Agents for Lenders with sufficient originally executed copies, where
appropriate, for each Lender and Agents' counsel) the following, with respect to
Company or such Loan Party, as the case may be, each, unless otherwise noted,
dated the Closing Date and in form and substance satisfactory to Arranger,
Agents and Lenders:
(i) Certified copies of the Certificate or Articles of Incorporation of
such Person, together with a good standing certificate from the Secretary of
State of its jurisdiction of incorporation and each other state in which
such Person is qualified as a foreign corporation to do business (except
where the failure to qualify should not reasonably be expected to have a
Material Adverse Effect) and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority
of each of such jurisdictions, each dated a recent date prior to the Closing
Date;
(ii) Copies of the Bylaws of such Person, certified as of the Closing
Date by such Person's corporate secretary or an assistant secretary;
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(iii) Resolutions of the Board of Directors of such Person approving
and authorizing the execution, delivery and performance of the Loan
Documents and Related Agreements to which it is a party, certified as of the
Closing Date by the corporate secretary or an assistant secretary of such
Person as being in full force and effect without modification or amendment;
(iv) Signature and incumbency certificates of the officers of such
Person executing the Loan Documents to which it is a party;
(v) Executed originals of the Loan Documents to which such Person is a
party; and
(vi) Such other documents as Agents may reasonably request.
B. CORPORATE AND CAPITAL STRUCTURE, OWNERSHIP, MANAGEMENT, ETC.
(i) Corporate Structure. The corporate organizational structure of PCC,
-------------------
Intermediary Holdings and Holdings and its Subsidiaries, both before and
after giving effect to the Merger, shall be as set forth on Schedule 4.1B
-------------
annexed hereto.
(ii) Capital Structure and Ownership. The capital structure and
-------------------------------
ownership of Holdings and its Subsidiaries, both before and after giving
effect to the Merger, shall be as set forth on Schedule 4.1B annexed hereto.
-------------
Upon consummation of the Merger, PCC shall own indirectly all of the
outstanding stock of Intermediary Holdings, which shall own all of the
outstanding stock of Holdings, and Holdings shall own all of the outstanding
Company Common Stock.
(iii) Management. The management structure of Holdings and its
----------
Subsidiaries, after giving effect to the Merger, shall be as set forth on
Schedule 4.1B annexed hereto.
-------------
C. FORT MYERS MSA CELLULAR SYSTEM SALE. On or prior to the Closing
Date, (i) Palmer shall have completed the sale of the Fort Myers MSA Cellular
System in accordance with Fort Myers Sale Agreement and any other terms and
conditions satisfactory to Arranger, (ii) the Fort Myers Sale Proceeds shall not
be less than $166,300,000 and such proceeds shall have been immediately and
permanently applied to repay all outstanding Indebtedness of Palmer and its
Subsidiaries in amount equal to such net cash proceeds and (iii) the Fort Myers
Sale Agreement shall be in full force and effect and there shall be no breach or
default thereunder.
D. DEBT AND EQUITY CAPITALIZATION OF HOLDINGS AND COMPANY.
(i) Equity Capitalization of Company. On or before the Closing Date,
--------------------------------
(a) PCC or Holdings shall have made or caused to be made Qualified Company
Equity Contributions in an amount contributed to Company of not less than
$80,000,000 in
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exchange for all of the Company Common Stock, and (b) Holdings shall have
contributed to Company, as common equity, not less than $48,300,000 in cash
from a portion of the proceeds from the issuance of the Holdings Discount
Notes. For purposes of valuing the Qualified Company Equity Contributions,
the Purchased Palmer Shares shall be valued at $17.50 per share.
(ii) Escrowed Debt Securities Proceeds. Company shall have received the
---------------------------------
Escrowed Debt Securities Proceeds and deposited such proceeds in accordance
with the terms of the Subordinated Indenture and the Holdings Discount Note
Indenture, as the case may be.
(iii) Use of Proceeds by Company. Company shall have provided evidence
--------------------------
satisfactory to Agents that (x) the proceeds of the equity capitalization of
Company described in the preceding clause (i), (y) the Escrowed Debt
Securities Proceeds referred in the immediately preceding clause (ii) and
(z) the Fort Myers Sale Proceeds referred to in subsection 4.1C have been
irrevocably committed, prior to the application of the proceeds of the Term
Loans and any Revolving Loans made on the Closing Date, to the payment of a
portion of the Purchase Price for the Palmer Shares, the repayment of the
outstanding Indebtedness of Palmer and its Subsidiaries under the Existing
Credit Agreement and the Transaction Costs.
E. RELATED AGREEMENTS AND OTHER AGREEMENTS. Arranger, Agents and
Lenders shall have received (a) a fully executed or conformed copy of each
Related Agreement and any documents executed in connection therewith, and each
Related Agreement shall be in full force and effect and no provision thereof
shall have been modified or waived in any respect determined by Administrative
Agent to be material, in each case without the consent of Arranger, Agents and
Lenders, and (b) an Officer's Certificate from Company, in form and substance
satisfactory to Arranger, Agents and Lenders, certifying to the effect that each
such agreement (which shall be attached thereto) is correct and complete and is
in full force and effect and certifying as to such matters with respect to each
of the Related Agreements.
F. MATTERS RELATING TO EXISTING INDEBTEDNESS OF PALMER AND ITS
SUBSIDIARIES.
(i) Termination of Existing Credit Agreement and Related Liens; Existing
--------------------------------------------------------------------
Letters of Credit. On the Closing Date, Company and its Subsidiaries shall
-----------------
have (a) repaid in full all Indebtedness outstanding of Palmer and its
Subsidiaries, including without limitation all Indebtedness outstanding
under the Existing Credit Agreement, (b) terminated any commitments to lend
or make other extensions of credit thereunder, (c) delivered to
Administrative Agent all documents or instruments necessary to release all
Liens securing Indebtedness or other obligations of Company and its
Subsidiaries thereunder, and (d) made arrangements with respect to the
cancellation of any letters of credit outstanding thereunder or the issuance
of Letters of Credit to support the obligations of Company and its
Subsidiaries with respect thereto, in each case on terms and conditions
satisfactory to Arranger, Agents and Lenders.
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(ii) No Existing Indebtedness to Remain Outstanding. Arranger, Agents
----------------------------------------------
and Lenders shall have received an Officer's Certificate of Company stating
that, after giving effect to the transactions described in this subsection
4.1F, the Indebtedness of Loan Parties (other than Indebtedness under the
Loan Documents, the Subordinated Notes and the Holdings Discount Notes)
shall consist of the Indebtedness described in Schedule 7.1 annexed hereto.
------------
The terms and conditions of all such Indebtedness shall be in form and in
substance satisfactory to Arranger, Agents and Lenders.
G. NECESSARY GOVERNMENTAL AUTHORIZATIONS AND CONSENTS; EXPIRATION OF
WAITING PERIODS, ETC.
(i) Governmental Authorizations and Consents; Expiration of Waiting
---------------------------------------------------------------
Periods. Company and its Subsidiaries shall have obtained all Governmental
-------
Authorizations and all consents of other Persons (including without
limitation the FCC Merger Consent and the FCC Fort Myers Consent, both of
which shall have become a Final Order, but excluding the FCC approval
described in 4.1G(ii)), in each case that are necessary or advisable in
connection with the Merger and the transfer of the Fort Myers MSA Cellular
System, the other transactions contemplated by the Loan Documents and the
Related Agreements, and the continued operation of the business conducted by
Palmer and its Subsidiaries in substantially the same manner as conducted
prior to the consummation of the Merger and the transfer of the Fort Myers
MSA Cellular System, and each of the foregoing shall be in full force and
effect, in each case other than those the failure to obtain or maintain
which, either individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. All applicable waiting periods
shall have expired without any action being taken or threatened by any
competent authority which would restrain, prevent or otherwise impose
adverse conditions on the Merger, the transfer of the Fort Myers MSA
Cellular System or the financing thereof. No action, request for stay,
petition for review or rehearing, reconsideration, or appeal with respect to
any of the foregoing shall be pending, and the time for any applicable
agency to take action to set aside its consent on its own motion shall have
expired. Arranger and Agents shall be reasonably satisfied that the
existing FCC Licenses relating to Palmer and its Subsidiaries will not be
adversely affected by the Merger.
(ii) FCC License Subsidiary Applications. Company and its
-----------------------------------
Subsidiaries shall have filed proper and complete applications with the FCC
seeking FCC approval to assign to the License Subsidiaries the Principal FCC
Licenses with respect to the Existing Cellular Systems, in each case in form
and substance reasonably satisfactory to Agents (collectively, the "FCC
LICENSE SUBSIDIARY APPLICATIONS").
H. CONSUMMATION OF THE MERGER.
(i) All conditions to the Merger set forth in the Merger Agreement shall
have been satisfied or the fulfillment of any such conditions shall have
been waived and any such waiver shall be reasonably acceptable to Arranger,
Agents and Lenders;
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(ii) the Merger shall have become effective in accordance with the terms
of the Merger Agreement and the laws of the State of Delaware;
(iii) the aggregate cash consideration paid to the holders of Palmer
Shares in connection with the Merger and in payment for Pre-Merger Acquired
Palmer Shares shall not exceed $488,900,000 in the aggregate plus $17.50 per
----
share for Palmer Shares issued subsequent to May 23, 1997;
(iv) Transaction Costs shall not exceed $25,500,000, and, if requested,
Arranger, Agents and Lenders shall have received evidence to their
satisfaction to such effect; and
(v) Arranger, Agents and Lenders shall have received an Officer's
Certificate of Company to the effect set forth in clauses (i)-(iv) above and
stating that Company will proceed to consummate the Merger immediately upon
the making of the initial Loans.
I. SECURITY INTERESTS IN PERSONAL PROPERTY. Agents shall have
received evidence satisfactory to it that Holdings, Company and Subsidiary
Guarantors shall have taken or caused to be taken all such actions, executed and
delivered or caused to be executed and delivered all such agreements, documents
and instruments, and made or caused to be made all such filings and recordings
(other than the filing or recording of items described in clauses (iii) and (iv)
below) that may be necessary or, in the opinion of Agents, desirable in order to
create in favor of Administrative Agent, for the benefit of Lenders, a valid and
(upon such filing and recording) perfected First Priority security interest in
the entire personal property Collateral. Such actions shall include, without
limitation, the following:
(i) Schedules to Collateral Documents. Delivery to Agents of accurate
---------------------------------
and complete schedules to all of the applicable Collateral Documents.
(ii) Stock Certificates and Instruments. Delivery to
----------------------------------
Administrative Agent of (a) certificates (which certificates shall be
accompanied by irrevocable undated stock powers, duly endorsed in blank and
otherwise satisfactory in form and substance to Agents) representing all
capital stock pledged pursuant to the Holdings Pledge Agreement, the Company
Pledge Agreement and the Subsidiary Pledge Agreements and (b) all promissory
notes or other instruments (duly endorsed, where appropriate, in a manner
satisfactory to Agents) evidencing any Collateral;
(iii) Lien Searches and UCC Termination Statements. Delivery to
--------------------------------------------
Administrative Agent of (a) the results of a recent search of all UCC
financing statements and fixture filings and all judgment and tax lien
filings with respect to any Loan Party, together with copies of all such
filings disclosed by such search, and (b) UCC termination statements duly
executed by all applicable Persons for filing in all applicable
jurisdictions as may be necessary to terminate any effective UCC financing
statements or fixture filings disclosed in such search (other than any such
financing
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statements or fixture filings in respect of Liens permitted to remain
outstanding pursuant to the terms of this Agreement).
(iv) UCC Financing Statements. Delivery to Administrative Agent of UCC
------------------------
financing statements, duly executed by each applicable Loan Party with
respect to all personal property Collateral of such Loan Party, for filing
in all jurisdictions as may be necessary or, in the opinion of Agents,
desirable to perfect the security interests created in such Collateral
pursuant to the Collateral Documents; and
(v) Opinions of Local Counsel. Delivery to Agents of an opinion of
-------------------------
counsel (which counsel shall be reasonably satisfactory to Agents) under the
laws of each jurisdiction in which any Loan Party or any personal property
Collateral is located with respect to the creation and perfection of the
security interests in favor of Administrative Agent in such Collateral and
such other matters governed by the laws of such jurisdiction regarding such
security interests as Agents may reasonably request, in each case in form
and substance reasonably satisfactory to Agents.
J. FEES. Company shall have paid to Administrative Agent or at the
direction of Syndication Agent, for distribution (as appropriate) to Arranger,
Agents and Lenders, the fees payable on the Closing Date referred to in
subsection 2.3.
K. FINANCIAL STATEMENTS; PRO FORMA BALANCE SHEET. On or before the
Closing Date, Agents and Lenders shall have received from Company (i) unaudited
financial statements of Palmer and its Subsidiaries for each fiscal quarter and
each month thereafter for which financial statements were prepared in the
ordinary course, consisting of a balance sheet and the related consolidated and
consolidating statements of income, stockholders' equity and cash flows for the
periods then ending, all in reasonable detail and certified by the chief
financial officer of Palmer that they fairly present the financial condition of
Palmer and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes
resulting from audit and normal year-end adjustments, (ii) pro forma
--- -----
consolidated balance sheets of Company and its Subsidiaries as at the Closing
Date, prepared in accordance with GAAP and reflecting the consummation of the
Merger, the sale of the Fort Myers MSA Cellular System, the related financings
and the other transactions contemplated by the Loan Documents and the Related
Agreements, and (iii) projected financial statements (including balance sheets
and statements of operations, stockholders' equity and cash flows) of Company
and its Subsidiaries for the nine-year period after the Closing Date, all of the
foregoing financial statements and projections shall be in form and substance
satisfactory to Agents and Lenders.
L. SOLVENCY ASSURANCES. On the Closing Date, Agents and Lenders shall
have received a Financial Condition Certificate dated the Closing Date,
substantially in the form of Exhibit XII annexed hereto and with appropriate
-----------
attachments, in each case demonstrating that, after giving effect to the
consummation of the Merger, the sale of the Fort Myers MSA Cellular System, the
related financings and the other transactions contemplated by the Loan Documents
and the Related Agreements, Company will be Solvent.
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M. EVIDENCE OF INSURANCE. Administrative Agent shall have received a
certificate from Company's insurance broker or other evidence satisfactory to
Agents that all insurance required to be maintained pursuant to subsection 6.4
is in full force and effect and that Administrative Agent on behalf of Lenders
has been named as additional insured and/or loss payee thereunder to the extent
required under subsection 6.4.
N. OPINIONS OF COUNSEL TO LOAN PARTIES. Arranger, Agents and Lenders
and their respective counsel shall have received (i) originally executed copies
of one or more favorable written opinions of Proskauer Rose LLP, counsel for
Price Communications Cellular Holdings, Inc. and Price Communications Wireless,
Inc., and K. Patrick Meehan, general counsel of Palmer Wireless, Inc., each in
form and substance reasonably satisfactory to Agents and their respective
counsel, dated as of the Closing Date and setting forth substantially the
matters in the opinions designated in Exhibit VIII-A and Exhibit VIII-B annexed
-------------- --------------
hereto and as to such other matters as Agents acting on behalf of Lenders may
reasonably request, and (ii) originally executed copies of one or more favorable
written opinions of Davis Wright Tremaine LLP, communications regulatory counsel
for Company, in form and substance reasonably satisfactory to Agents and their
respective counsel, dated as of the Closing Date and setting forth substantially
the matters in the opinions designated in Exhibit VIII-C annexed hereto and as
--------------
to such other matters as Agents acting on behalf of Lenders may reasonably
request.
O. OPINIONS OF AGENTS' COUNSEL. Lenders shall have received
originally executed copies of one or more favorable written opinions of
O'Melveny & Myers LLP, counsel to Agents, dated as of the Closing Date,
substantially in the form of Exhibit IX annexed hereto and as to such other
----------
matters as Agents acting on behalf of Lenders may reasonably request.
P. OPINIONS OF COUNSEL DELIVERED UNDER MERGER AGREEMENT. Arranger,
Agents and Lenders and their respective counsel shall have received copies of
each of the opinions of counsel delivered to the parties under the Merger
Agreement, together with a letter from each such counsel (to the extent not
inconsistent with such counsel's established internal policies) authorizing
Lenders to rely upon such opinion to the same extent as though it were addressed
to Lenders.
Q. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS.
Holdings and Company shall have delivered to Agents Officer's Certificates, in
form and substance satisfactory to Agents, to the effect that the
representations and warranties in Section 5 hereof are true, correct and
complete in all material respects on and as of the Closing Date to the same
extent as though made on and as of that date (or, to the extent such
representations and warranties specifically relate to an earlier date, that such
representations and warranties were true, correct and complete in all material
respects on and as of such earlier date) and that Holdings and Company, as the
case may be, shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Agents and Lenders.
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R. COMPLETION OF PROCEEDINGS. All corporate and other proceedings
taken or to be taken in connection with the transactions contemplated hereby and
all documents incidental thereto required to be delivered hereunder and not
previously found acceptable by Agents, acting on behalf of Lenders, and its
counsel shall be satisfactory in form and substance to Agents and such counsel,
and Agents and such counsel shall have received all such counterpart originals
or certified copies of such documents as Agents may reasonably request.
4.2 CONDITIONS TO ALL LOANS.
-----------------------
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Administrative Agent shall have received before that Funding
Date, in accordance with the provisions of subsection 2.1B, an originally
executed Notice of Borrowing, in each case signed by the chief executive
officer, the chief financial officer, an executive vice president or the
treasurer of Company or by any executive officer of Company designated by any of
the above-described officers on behalf of Company in a writing delivered to
Administrative Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the other
Loan Documents shall be true, correct and complete in all material respects
on and as of that Funding Date to the same extent as though made on and as
of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations
and warranties shall have been true, correct and complete in all material
respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result from
the consummation of the borrowing contemplated by such Notice of Borrowing
that would constitute an Event of Default or a Potential Event of Default;
(iii) With respect to Loans made after the Closing Date, each Loan
Party shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or prior to the Closing Date, the performance of which
was deferred to a later date, by such later date;
(iv) No order, judgment or decree of any court, arbitrator or govern
mental authority shall purport to enjoin or restrain Lenders from making the
Loans to be made by them on that Funding Date; and
(v) The making of the Loans requested on such Funding Date shall not
violate any law including, without limitation, Regulation G, Regulation T,
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Regulation U or Regulation X of the Board of Governors of the Federal
Reserve System.
4.3 CONDITIONS TO LETTERS OF CREDIT.
-------------------------------
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit,
Administrative Agent shall have received, in accordance with the provisions of
subsection 3.1B(i), an originally executed Notice of Issuance of Letter of
Credit, in each case signed by the chief executive officer, the chief financial
officer, an executive vice president or the treasurer of Company or by any
executive officer of Company designated by any of the above-described officers
on behalf of Company in a writing delivered to Administrative Agent, together
with all other information specified in subsection 3.1B(i) and such other
documents or information as the applicable Issuing Lender may reasonably require
in connection with the issuance of such Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES
In order to induce Agents and Lenders to enter into this Agreement and
to make the Loans, to induce Issuing Lenders to issue Letters of Credit and to
induce other Lenders to purchase participations therein, Holdings and Company
represent and warrant to each Agent and each Lender, on the date of this
Agreement, on each Funding Date and on the date of issuance of each Letter of
Credit, that the following statements are true, correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
----------------------------------------------------------------
SUBSIDIARIES.
------------
A. ORGANIZATION AND POWERS. Each Loan Party is a corporation,
partnership or limited partnership, as the case may be, duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation or formation, as the case may be, as specified in Schedule 5.1A
-------------
annexed hereto. Each Loan Party has all requisite corporate or other power and
authority to own and operate its properties, to carry on its business as now
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conducted and as proposed to be conducted, to enter into the Loan Documents and
Related Agreements to which it is a party and to carry out the transactions
contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Each Loan Party is qualified to
do business and in good standing in every jurisdiction where its assets are
located and wherever necessary to carry out its business and operations, except
in jurisdictions where the failure to be so qualified or in good standing has
not had and will not have a Material Adverse Effect.
C. CONDUCT OF BUSINESS. Holdings and its Subsidiaries are engaged
only in the businesses permitted to be engaged in pursuant to subsection 7.14.
D. SUBSIDIARIES. All of the Subsidiaries of Holdings and Company as
of the Closing Date are identified in Schedule 5.1D annexed hereto, as said
-------------
Schedule 5.1D may be supplemented from time to time pursuant to the provisions
- -------------
of subsection 6.1(xv). The capital stock of each of the Subsidiaries of
Holdings identified in Schedule 5.1D annexed hereto (as so supplemented) is duly
-------------
authorized, validly issued, fully paid and nonassessable and none of such
capital stock constitutes Margin Stock. Each of the Sub sidiaries of Holdings
identified in Schedule 5.1D annexed hereto (as so supplemented) is a
-------------
corporation, partnership or limited partnership, as the case may be, duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or formation, as the case may be, set
forth therein, has all requisite corporate or other power and authority to own
and operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and au
thority has not had and will not have a Material Adverse Effect. Schedule 5.1D
-------------
annexed hereto (as so supplemented) correctly sets forth, as of the Closing
Date, the ownership interest of Holdings and each of its Subsidiaries in each of
the Subsidiaries of Holdings identified therein.
E. FCC CONSENTS AND LICENSES. With respect to the FCC consents and
FCC Licenses:
(i) on or before the Closing Date, the FCC Merger Consent will be valid
and in full force and effect, and shall have become a Final Order;
(ii) prior to giving effect to the Merger, Palmer and its Subsidiaries
hold each of the FCC Licenses listed on Schedule 5.1E annexed hereto and on
-------------
or before the Closing Date, Company and its Subsidiaries will hold such FCC
Licenses as listed on such schedule, which schedule accurately identifies
and sets forth (i) the respective expiration dates of all such FCC Licenses
and (ii) any condition imposed by the FCC with respect to such FCC Licenses
that would not typically apply to an FCC License issued with respect to a
Cellular System;
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(iii) the FCC Licenses issued to and held by Company and its
Subsidiaries will constitute all of the licenses, permits, certifications
and other authorizations from any Communications Regulatory Authority that
are required for the operations and businesses of Palmer and its
Subsidiaries (including without limitation the Existing Cellular Systems) as
they are now operated and as proposed to be operated, except with respect to
the Fort Myers MSA Cellular System;
(iv) the FCC Licenses issued to and held by Palmer or any of its
Subsidiaries are, and the FCC Licenses to be held by Company and its
Subsidiaries will be, valid and in full force and effect, unimpaired by any
condition or restriction or any act or omission by Palmer and its
Subsidiaries or by Company or any of its Subsidiaries which could reasonably
be expected to have a Material Adverse Effect;
(v) except as set forth in Schedule 5.1E annexed hereto, there are no
-------------
modifications, amendments, applications, notices of violation or apparent
liability, orders to show cause, orders of forfeiture, formal or informal
complaints or other proceedings pending or, to the knowledge of Company,
threatened, (A) with respect to any FCC License issued to and held by
Company or any of its Subsidiaries (other than proceedings which apply to
the cellular industry generally) which would materially impair the value of
such license, or (B) otherwise with respect to the operations and businesses
of Company, Palmer or any of their respective Subsidiaries, whether by or
before any Communications Regulatory Authority, any court, or any other
governmental authority or any non-governmental arbitral body which would
materially impair the value of such operations and businesses;
(vi) all fees due and payable to the FCC have been paid and no event has
occurred and no circumstance exists which, with or without giving of notice
or lapse of time or both, would constitute grounds for revocation,
suspension, non-renewal or adverse modification of any FCC License issued to
and held by Company or any of its Subsidiaries; and
(vii) each of the Loan Parties (A) is in compliance in all material
respects with the Communications Act, State Telecommunications Laws and the
terms of all FCC Licenses issued to or held by Company and its Subsidiaries,
and (B) has duly filed in a timely manner all material filings, including
any required tariff filings, required by the FCC or any other Communications
Regulatory Authority, including, without limitation, any State PUC, to be
filed by such Loan Party in connection with the provision of the
telecommunications services which it offers.
5.2 AUTHORIZATION OF BORROWING, NO CONFLICT, CONSENTS, ETC.
-------------------------------------------------------
A. AUTHORIZATION OF BORROWING. The execution, delivery and
performance of the Loan Documents and the Related Agreements have been duly
authorized by all necessary corporate action on the part of each Loan Party that
is a party thereto.
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B. NO CONFLICT. The execution, delivery and performance by Loan
Parties of the Loan Documents and the Related Agreements to which they are
parties and the consummation of the transactions contemplated by the Loan
Documents and such Related Agreements do not and will not (i) violate any
provision of any law or any governmental rule or regulation applicable to
Holdings or any of its Subsidiaries, the Certificate or Articles of
Incorporation or Bylaws of Holdings or any of its Subsidiaries or any order,
judgment or decree of any court or other agency of government binding on
Holdings or any of its Subsidiaries, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Holdings or any of its Subsidiaries, (iii) result in
or require the creation or imposition of any Lien upon any of the properties or
assets of Holdings or any of its Subsidiaries (other than any Liens created
under any of the Loan Documents in favor of Administrative Agent on behalf of
Lenders and Permitted Encumbrances), or (iv) require any approval of
stockholders or any approval or consent of any Person under any Contractual
Obligation of Holdings or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Closing Date and
disclosed in writing to Lenders.
C. GOVERNMENTAL CONSENTS. Except as set forth in Schedule 5.2C
-------------
annexed hereto, the execution, delivery and performance by Loan Parties of the
Loan Documents and the Related Agreements to which they are parties and the
consummation of the transactions contemplated by the Loan Documents and such
Related Agreements do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by, any federal, state or
other governmental authority or regulatory body.
D. BINDING OBLIGATION. Each of the Loan Documents and Related
Agreements has been duly executed and delivered by each Loan Party that is a
party thereto and is the legally valid and binding obligation of such Loan
Party, enforceable against such Loan Party in accordance with its respective
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights generally
or by equitable principles relating to enforceability.
E. VALID ISSUANCE OF EQUITY AND DEBT.
(i) Holdings Common Stock. Any Holdings Common Stock to be sold on or
---------------------
before the Closing Date, when issued and delivered, will be duly and validly
issued, fully paid and nonassessable. No stockholder of Holdings has or will
have any preemptive rights to subscribe for any additional equity Securities of
Holdings. The issuance and sale of such Holdings Common Stock, upon such
issuance and sale, will either (a) have been registered or qualified under
applicable federal and state securities laws or (b) be exempt therefrom.
(ii) Holdings Discount Notes. Holdings has the corporate power and
-----------------------
authority to issue the Holdings Discount Notes. The Holdings Discount Notes are
the legally valid and binding obligations of Holdings, enforceable against
Holdings in accordance with their respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable
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principles relating to enforceability. The Holdings Discount Notes, either (a)
have been registered or qualified under applicable federal and state securities
laws or (b) are exempt therefrom.
(iii) Company Common Stock. The Company Common Stock to be issued
--------------------
on or before the Closing Date, when issued and delivered, will be duly and
validly issued, fully paid and nonassessable. No stockholder of Company has or
will have any preemptive rights to subscribe for any additional equity
Securities of Company. The issuance and sale of such Company Common Stock, upon
such issuance and sale, will either (a) have been registered or qualified under
applicable federal and state securities laws or (b) be exempt therefrom.
(iv) Subordinated Notes. Company has the corporate power and
------------------
authority to issue the Subordinated Notes. The Subordinated Notes are the
legally valid and binding obligations of Company, enforceable against Company in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors' rights generally or by equitable principles relating to
enforceability. The subordination provisions of the Subordinated Notes will be
enforceable against the holders thereof and the Loans and all other monetary
Obligations hereunder are and will be within the definitions of "Designated
Senior Indebtedness" and "Senior Indebtedness" included in such provisions. The
Subordinated Notes will either (a) have been registered or qualified under
applicable federal and state securities laws or (b) are exempt therefrom.
5.3 FINANCIAL CONDITION.
-------------------
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheet of Palmer and its Subsidiaries as at December 31, 1994, December
31, 1995 and December 31, 1996 and the related consolidated statements of
income, stockholders' equity and cash flows of Palmer and its Subsidiaries for
the Fiscal Years then ended and (ii) the unaudited consolidated balance sheet of
Palmer and its Subsidiaries as at June 30, 1997 and for each month thereafter,
and the related unaudited consolidated statements of income, stockholders'
equity and cash flows of Palmer and its Subsidiaries for the periods then
ending. Nothing has come to the attention of Holdings or Company which would
lead them to believe that any such statements were not prepared in conformity
with GAAP and fairly present, in all material respects, the financial position
(on a consolidated basis) of the entities described in such financial statements
as at the respective dates thereof and the results of operations and cash flows
(on a consolidated and, where applicable, consolidating basis) of the entities
described therein for each of the periods then ended, subject, in the case of
any such unaudited financial statements, to changes resulting from normal year-
end adjustments. As of the date hereof, Company does not have any Contingent
Obligation, contingent liability or liability for taxes, long-term lease or
unusual forward or long-term commitment that is not reflected in the foregoing
financial statements or the notes thereto and which in any such case
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is material in relation to the business, operations, properties, assets,
condition (financial or otherwise) or prospects of Company or any of its
Subsidiaries.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
---------------------------------------------------------
Since December 31, 1996, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Neither Company nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by subsection
7.5.
5.5 TITLE TO PROPERTIES; LIENS.
--------------------------
Each Loan Party and its Subsidiaries have (i) good, sufficient and
legal title to (in the case of fee interests in real property), (ii) valid
leasehold interests in (in the case of leasehold interests in real or personal
property), or (iii) good title to (in the case of all other personal property),
all of their respective properties and assets reflected in the financial
statements referred to in subsection 5.3 or in the most recent financial
statements delivered pursuant to subsection 6.1, in each case except for assets
disposed of since the date of such financial statements in the ordinary course
of business or as otherwise permitted under subsection 7.7. Except as permitted
by this Agreement, all such properties and assets are free and clear of Liens.
5.6 LITIGATION; COMPLIANCE WITH LAWS; ADVERSE FACTS.
-----------------------------------------------
A. LITIGATION. There are no actions, suits, proceedings,
arbitrations or governmental investigations (whether or not purportedly on
behalf of any Loan Party or any of its Subsidiaries) at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumen tality, domestic or foreign that
are pending or, to the knowledge of Company, threatened against or affecting any
Loan Party or any of its Subsidiaries, any property of any Loan Party or any of
its Subsidiaries (including without limitation any Cellular Systems) or any FCC
Licenses issued to and held by any Loan Party or any of its Subsidiaries and
that, individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect.
B. COMPLIANCE WITH LAWS; ADVERSE FACTS. Each Loan Party and its
Subsidiaries and its respective Cellular Systems are in compliance in all
material respects with the Communications Act and all rules, regulations,
policies and orders of any federal, state or local governmental or regulatory
authority or other entity applicable to Persons owning, operating, controlling
or constructing Cellular Systems. No Loan Party nor any of its Subsidiaries (i)
is in violation of any other applicable laws that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect,
or (ii) is subject to or in default with respect to any final judgments, writs,
injunctions, decrees, rules or regulations of any court, the FCC or any other
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, domestic
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or foreign, that, individually or in the aggregate, could reasonably be expected
to result in a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
----------------
Except to the extent permitted by subsection 6.3, all tax returns and
reports of each Loan Party and its Subsidiaries required to be filed by any of
them have been timely filed, and all taxes shown on such tax returns to be due
and payable and all assessments, fees and other governmental charges upon such
Loan Party and its Subsidiaries and upon their respective properties, assets,
income, businesses and fran chises which are due and payable have been paid when
due and payable except to the extent if being contested in good faith and after
the establishment of adequate reserves. No Loan Party knows of any proposed tax
assessment against it or any of its Subsidiaries which is not being actively
contested by it or such Subsidiary in good faith and by appro priate
proceedings; provided that such reserves or other appropriate provisions, if
--------
any, as shall be required in conformity with GAAP shall have been made or
provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
------------------------------------------------------------------
CONTRACTS.
---------
A. No Loan Party nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. No Loan Party nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
C. Schedule 5.8C annexed hereto contains a true, correct and
-------------
complete list of all the Material Contracts in effect on the Closing Date.
Except as described on Schedule 5.8C annexed hereto, all such Material Contracts
-------------
are in full force and effect and no material defaults currently exist
thereunder.
5.9 GOVERNMENTAL REGULATION.
-----------------------
No Loan Party nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
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5.10 SECURITIES ACTIVITIES.
---------------------
No Loan Party nor any of its Subsidiaries is engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
5.11 EMPLOYEE BENEFIT PLANS.
----------------------
A. Each Loan Party and each of its Subsidiaries and each of their
respective ERISA Affiliates are in material compliance with all applicable
provisions and requirements of ERISA and the regulations and published
interpretations thereunder with respect to each Employee Benefit Plan, and have
performed all their obligations under each Employee Benefit Plan. Each Employee
Benefit Plan which is intended to qualify under Section 401(a) of the Internal
Revenue Code is so qualified.
B. No ERISA Event has occurred or is reasonably expected to occur
that could reasonably be expected to result in liabilities in excess of
$3,000,000 to the Loan Parties or their Subsidiaries.
C. Except to the extent required under Section 4980B of the
Internal Revenue Code or except as set forth in Schedule 5.11C annexed hereto,
--------------
no Employee Benefit Plan provides health or welfare benefits (through the
purchase of insurance or otherwise) for any retired or former employee of any
Loan Party, any of its Subsidiaries or any of their respective ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), does not exceed $10,000,000.
E. As of the most recent valuation date for each Multiemployer
Plan for which the actuarial report is available, the potential liability of all
Loan Parties, their Subsidiaries and their respective ERISA Affiliates for a
complete withdrawal from such Multiemployer Plan (within the meaning of Section
4203 of ERISA), when aggregated with such potential liability for a complete
withdrawal from all Multiemployer Plans, based on information available pursuant
to Section 4221(e) of ERISA, does not exceed $10,000,000.
5.12 CERTAIN FEES.
------------
Except for the payment of a fee to Goldman, Sachs & Co., no broker's
or finder's fee or commission will be payable with respect to this Agreement or
any of the transactions contemplated hereby, and Company hereby indemnifies
Lenders against, and agrees that it will hold Lenders harmless from, any claim,
demand or liability for any such broker's or finder's fees alleged to have been
incurred in connection herewith or therewith
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and any expenses (including reasonable fees, expenses and disbursements of
counsel) arising in connection with any such claim, demand or liability.
5.13 EMPLOYEE MATTERS.
----------------
There is no strike or work stoppage in existence or threatened
involving any Loan Party or any of its Subsidiaries that could reasonably be
expected to have a Material Adverse Effect.
5.14 SOLVENCY.
--------
Each Loan Party is and, upon the incurrence of any Obligations by such
Loan Party on any date on which this representation is made, will be, Solvent.
5.15 MATTERS RELATING TO COLLATERAL.
------------------------------
A. CREATION, PERFECTION AND PRIORITY OF LIENS. The execution and
delivery of the Collateral Documents by Loan Parties, together with (i) the
actions taken on or prior to the date hereof pursuant to subsections 4.1I and
6.7 and (ii) the delivery to Administrative Agent of any Pledged Collateral not
delivered to Administrative Agent at the time of execution and delivery of the
applicable Collateral Document (all of which Pledged Collateral has been so
delivered) are effective to create in favor of Administrative Agent for the
benefit of Lenders, as security for the respective Secured Obligations (as
defined in the applicable Collateral Document in respect of any Collateral), a
valid and perfected First Priority Lien on all of the Collateral, and all
filings and other actions necessary or desirable to perfect and maintain the
perfection and First Priority status of such Liens have been duly made or taken
and remain in full force and effect, other than the filing of any UCC financing
statements delivered to Administrative Agent for filing (but not yet filed) and
the periodic filing of UCC continuation statements in respect of UCC financing
statements filed by or on behalf of Administrative Agent.
B. GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the pledge or grant by any Loan Party
of the Liens purported to be created in favor of Administrative Agent pursuant
to any of the Collateral Documents or (ii) the exercise by Administrative Agent
of any rights or remedies in respect of any Collateral (whether specifically
granted or created pursuant to any of the Collateral Documents or created or
provided for by applicable law), except for filings or recordings contemplated
by subsection 5.15A and except as may be required, (i) under the Communications
Act in connection with the assignment or transfer of control of FCC Licenses
used in connection with Cellular Systems or (ii) in connection with the
disposition of any Pledged Collateral, by laws generally affecting the offering
and sale of securities and provisions of the UCC.
C. ABSENCE OF THIRD-PARTY FILINGS. Except such as may have been filed
in favor of Administrative Agent as contemplated by subsection 5.15A, no
effective UCC financing
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statement, fixture filing or other instrument similar in effect covering all or
any part of the Collateral is on file in any filing or recording office, except
relating to Liens permitted hereunder.
D. MARGIN REGULATIONS. The pledge of the Pledged Collateral pursuant
to the Collateral Documents does not violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System.
E. INFORMATION REGARDING COLLATERAL. All information supplied to
Administrative Agent by or on behalf of any Loan Party with respect to any of
the Collateral (in each case taken as a whole with respect to any particular
Collateral) is accurate and complete in all material respects.
5.16 RELATED AGREEMENTS.
------------------
A. DELIVERY OF RELATED AGREEMENTS. Company has delivered to
Arrangers, Agents and Lenders complete and correct copies of each Related
Agreement and of all exhibits and schedules thereto.
B. WARRANTIES OF PALMER. To the knowledge of Company and except
to the extent otherwise set forth herein or in the schedules hereto, each of the
representations and warranties given by Palmer to PCC and Merger Sub in the
Merger Agreement is true and correct in all material respects as of the date
hereof (or as of any earlier date to which such representation and warranty
specifically relates) and will be true and correct in all material respects as
of the Closing Date (or as of such earlier date, as the case may be), in each
case subject to the qualifications set forth in the schedules to the Merger
Agreement; provided that Lenders shall not be entitled to make any claim against
--------
Company (or utilize the breach of this subsection 5.16B as a basis of an Event
of Default under subsection 8.4) based on the failure of a representation or
warranty of Palmer incorporated by this subsection 5.16B to be true and correct
in all material respects except to the extent Company is entitled to receive
indemnification or other compensation therefor from the seller under the Merger
Agreement.
C. WARRANTIES OF MERGER SUB. Subject to the qualifications set
forth therein, each of the representations and warranties given by Merger Sub to
Palmer in the Merger Agreement is true and correct in all material respects as
of the date hereof and will be true and correct in all material respects as of
the Closing Date.
D. SURVIVAL. Notwithstanding anything in the Merger Agreement to
the contrary, the representations and warranties of Palmer and Merger Sub set
forth in subsections 5.16B and 5.16C shall, solely for purposes of this
Agreement, survive the Closing Date for the benefit of Arranger, Agents and
Lenders.
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5.17 DISCLOSURE.
----------
No representation or warranty of any Loan Party or any of its
Subsidiaries contained in the Confidential Information Memorandum, the
Subordinated Note Offering Memorandum or in any Loan Document or Related
Agreement or in any other document, certificate or written statement furnished
to Lenders by a responsible officer of Company for use in connection with the
transactions contemplated by this Agreement contains any untrue statement of a
material fact in light of the circumstances made. Any projections and pro forma
--- -----
financial information contained in such materials are based upon good faith
estimates and assumptions believed by Company to be reasonable at the
time made, it being recognized by Lenders that such projections as to future
events are not to be viewed as facts and that actual results during the period
or periods covered by any such projections may differ from the projected
results. There are no facts known to Company (other than matters of a general
economic nature) that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect and that have not been disclosed
herein or in such other documents, certificates and statements furnished to
Lenders for use in connection with the transactions contemplated hereby.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and Company covenant and agree that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Holdings and Company shall perform, and shall cause each of their
Subsidiaries to perform, all covenants in this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
--------------------------------------
Company 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. Company will deliver to Agents and Lenders:
(i) Quarterly Financials: as soon as available and in any event within
--------------------
45 days after the end of each of the first three Fiscal Quarters of each
Fiscal Year, (a) the consolidated balance sheet of Company and its
Subsidiaries as at the end of such Fiscal Quarter and the related
consolidated statements of income, stockholders' equity and cash flows of
Company and its Subsidiaries for such Fiscal Quarter and for the period from
the beginning of the then current Fiscal Year to the end of such Fiscal
Quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding periods of the previous Fiscal Year and from
the Financial Plan and the corresponding figures from the Financial Plan for
the current Fiscal Year, all in reasonable detail and certified by the chief
financial officer of Company that they
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fairly present, in all material respects, the financial condition of Company
and its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to
changes resulting from audit and normal year-end adjustments, and (b)
Specified Cellular System Information as at the end of such quarter and
year-to-date and a comparison thereof to corresponding figures from the
Financial Plan for such quarter and year-to-date ;
(ii) Year-End Financials: as soon as available and in any event within
-------------------
90 days after the end of each Fiscal Year, (a) the consolidated balance
sheet of Company and its Subsidiaries as at the end of such Fiscal Year and
the related consolidated statements of income, stockholders' equity and cash
flows of Company and its Subsidiaries for such Fiscal Year, setting forth in
each case in comparative form the corresponding figures for the previous
Fiscal Year and the corresponding figures from the Financial Plan for the
Fiscal Year covered by such financial statements, all in reasonable detail
and certified by the chief financial officer of Company that they fairly
present, in all material respects, the financial condition of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, (b) Specified
Cellular System Information as at the end of such Fiscal Year and a
comparison thereof to budgeted levels for such Fiscal Year, and (c) in the
case of such consolidated financial statements, a report thereon of
independent certified public accountants of recognized national standing
selected by Company and satisfactory to Administrative Agent, which report
shall be unqualified in all material respects, shall express no doubts about
the ability of Company and its Subsidiaries to continue as a going concern,
and shall state that such consolidated financial statements fairly present,
in all material respects, the consolidated financial position of Company and
its Subsidiaries as at the dates indicated and the results of their
operations and their cash flows for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years (except as otherwise
disclosed in such financial statements) and that the examination by such
accountants in connection with such consolidated financial statements has
been made in accordance with generally accepted auditing standards;
(iii) Officer's and Compliance Certificates: together with each
-------------------------------------
delivery of financial statements of Company and its Subsidiaries pursuant to
subdivisions (i) and (ii) above, (a) an Officer's Certificate of Company
stating that the signers have reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Company and its Subsidiaries
during the accounting period covered by such financial statements and that
such review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of such Officer's Certificate, of any condition or
event that constitutes an Event of Default or Potential Event of Default,
or, if any such condition or event existed or exists, specifying the nature
and period of existence thereof and what action Company has taken, is taking
and proposes to take with respect thereto; and (b) a Compliance Certificate
demonstrating in reasonable detail compliance during and at
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the end of the applicable accounting periods with the restrictions contained
in Section 7, in each case to the extent compliance with such restrictions is
required to be tested at the end of the applicable accounting period;
(iv) Reconciliation Statements: if, as a result of any change in
-------------------------
accounting principles and policies from those used in the preparation of the
audited financial statements referred to in subsection 5.3, the consolidated
financial statements of Company and its Subsidiaries delivered pursuant to
subdivisions (i), (ii) or (xii) of this subsection 6.1 will differ in any
material respect from the consolidated financial statements that would have
been delivered pursuant to such subdivisions had no such change in
accounting principles and policies been made, then (a) together with the
first delivery of financial statements pursuant to subdivision (i), (ii) or
(xii) of this subsection 6.1 following such change, consolidated financial
statements of Company and its Subsidiaries for (y) the current Fiscal Year
to the effective date of such change and (z) the two full Fiscal Years
immediately preceding the Fiscal Year in which such change is made, in each
case prepared on a pro forma basis as if such change had been in effect
--- -----
during such periods, and (b) together with each delivery of financial
statements pursuant to subdivision (i), (ii) or (xii) of this subsection 6.1
following such change, a written statement of the chief accounting officer
or chief financial officer of Company setting forth the differences
(including without limitation any differences that would affect any
calculations relating to the financial covenants set forth in subsection
7.6) which would have resulted if such financial statements had been
prepared without giving effect to such change;
(v) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (ii) above, a written statement by the independent certified
public accountants giving the report thereon (a) stating that their audit
examination has included a review of the terms of this Agreement and the
other Loan Documents as they relate to accounting matters and (b) stating
whether, in connection with their audit examination, any condition or event
that constitutes an Event of Default or Potential Event of Default has come
to their attention and, if such a condition or event has come to their
attention, specifying the nature and period of existence thereof; provided
--------
that such accountants shall not be liable by reason of any failure to obtain
knowledge of any such Event of Default or Potential Event of Default that
would not be disclosed in the course of their audit examination;
(vi) Accountants' Reports: promptly upon receipt thereof (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including, without limitation, any comment letter submitted by such
accountants to management in connection with their annual audit;
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(vii) SEC and FCC Filings and Press Releases: promptly upon their
--------------------------------------
becoming available, copies of (a) all financial statements, reports, notices
and proxy statements sent or made available generally by Company to its
security holders or by any Subsidiary of Company to its security holders
other than Company or another Subsidiary of Company, (b) all regular and
periodic reports and all registration statements (other than on Form S-8 or
a similar form) and prospectuses, if any, filed by Company or any of its
Subsidiaries with any securities exchange or with the Securities and
Exchange Commission or any governmental or private regulatory authority, (c)
copies of all material information required to be filed by Company or any of
its Subsidiaries with the FCC or any other Communications Regulatory
Authority, and (d) all press releases and other statements made available
generally by Company or any of its Subsidiaries to the public concerning
material developments in the business of Company or any of its Subsidiaries;
(viii) Events of Default, etc.: promptly upon any officer of Company
-----------------------
obtaining knowledge (a) of any condition or event that constitutes an Event
of Default or Potential Event of Default, (b) that any Person has given any
notice to Company or any of its Subsidiaries or taken any other action with
respect to a claimed default or event or condition of the type referred to
in subsection 8.2, or (c) of the occurrence of any event or change that has
caused or evidences, either in any case or in the aggregate, a Material
Adverse Effect, an Officer's Certificate specifying the nature and period of
existence of such condition, event or change, or specifying the notice given
or action taken by any such Person and the nature of such claimed Event of
Default, Potential Event of Default, default, event or condition, and what
action Company has taken, is taking and proposes to take with respect
thereto;
(ix) Litigation or Other Proceedings: (a) promptly upon any officer of
-------------------------------
Company obtaining knowledge of (X) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration against or affecting
Company or any of its Subsidiaries, any property of Company or any of its
Subsidiaries (including without limitation any Cellular Systems) or any of
the FCC Licenses issued to and held by Company or any of its Subsidiaries
(collectively, "PROCEEDINGS") not previously disclosed in writing by Company
to Agents and Lenders or (Y) any material development in any Proceeding
that, in any case:
(1) if adversely determined, might reasonably be expected to give
rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the transactions
contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Administrative Agent, Lenders and
their counsel to
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evaluate such matters; and (b) within twenty days after the end of each
Fiscal Quarter, a schedule of all Proceedings involving an alleged liability
of, or claims against or affecting, Company or any of its Subsidiaries equal
to or greater than $2,000,000, and promptly after request by Administrative
Agent such other information as may be reasonably requested by
Administrative Agent to enable Administrative Agent and its counsel to
evaluate any of such Proceedings;
(x) ERISA Events: promptly upon becoming aware of the occurrence of or
------------
forthcoming occurrence of any ERISA Event, a written notice specifying the
nature thereof, what action Company, any of its Subsidiaries or any of their
respective ERISA Affiliates has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto;
(xi) ERISA Notices: with reasonable promptness, copies of (a) each
-------------
Schedule B (Actuarial Information) to the annual report (Form 5500 Series)
filed by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates with the Internal Revenue Service with respect to each Pension
Plan; (b) all notices received by Company, any of its Subsidiaries or any of
their respective ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event; and (c) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan as
Administrative Agent shall reasonably request;
(xii) Financial Plans: as soon as practicable and in any event no
---------------
later than 30 days after the beginning of each Fiscal Year, a consolidated
plan and financial forecast for such Fiscal Year and the next succeeding
Fiscal Year (the "FINANCIAL PLAN" for such Fiscal Year), including without
limitation (a) a forecasted consolidated balance sheet and forecasted
consolidated statements of income and cash flows of Company and its
Subsidiaries for such Fiscal Year, together with a pro forma Compliance
--- -----
Certificate for such Fiscal Year and an explanation of the assumptions on
which such forecasts are based, (b) forecasted consolidated statements of
income and cash flows of Company and its Subsidiaries for each month of each
such Fiscal Year, together with an explanation of the assumptions on which
such forecasts are based, (c) projected Specified Cellular System
Information for each month in such Fiscal Year, (d) the amount of forecasted
unallocated overhead for such Fiscal Year, and (e) such other information as
any Lender may reasonably request;
(xiii) Insurance: as soon as practicable and in any event by the last
---------
day of each Fiscal Year, a report in form and substance satisfactory to
Administrative Agent outlining all material insurance coverage maintained as
of the date of such report by Company and its Subsidiaries and all material
insurance coverage planned to be maintained by Company and its Subsidiaries
in the immediately succeeding Fiscal Year;
(xiv) Board of Directors: with reasonable promptness, written notice
------------------
of any change in the Board of Directors of Company;
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(xv) New Subsidiaries: promptly upon any Person becoming a
----------------
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company and
(b) all of the data required to be set forth in Schedule 5.1D annexed hereto
-------------
with respect to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule 5.1D annexed hereto
-------------
for all purposes of this Agreement);
(xvi) Material Contracts: promptly, and in any event within ten
------------------
Business Days after any Material Contract of Company or any of its
Subsidiaries is terminated or amended in a manner that is materially adverse
to Company or such Subsidiary, as the case may be, or any new Material
Contract is entered into, a written statement describing such event with
copies of such material amendments or new contracts, and an explanation of
any actions being taken with respect thereto;
(xvii) FCC Licenses, etc.: promptly upon (a) receipt of notice of (1)
------------------
any forfeiture, non-renewal, cancellation, termination, revocation,
suspension, impairment or material adverse modification of any material FCC
License held by Company or any of its Subsidiaries, or any notice of default
or forfeiture with respect to any such FCC License, or (2) any refusal by
any Communications Regulatory Authority to renew or extend any material
license, permit, certification or other authorization, including without
limitation any FCC License, held by Company or any of its Subsidiaries, an
Officer's Certificate specifying the nature of such event, the period of
existence thereof, and what action Company or its Subsidiaries are taking
and propose to take with respect thereto, and (b) any Permitted Acquisition
of a Cellular System, a written notice setting forth with respect to the
business acquired all of the data required to be set forth in Schedule 5.1E
-------------
with respect to such business and the FCC Licenses and any other licenses,
permits, certifications and other authorizations from any other
Communications Regulatory Authority required in connection with the
operation of such business (it being understood that such written notice
shall be deemed to supplement Schedule 5.1E annexed hereto for all purposes
-------------
of this Agreement); and
(xviii) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by Administrative Agent or any
Lender.
6.2 CORPORATE EXISTENCE, ETC.
-------------------------
Except as permitted under subsection 7.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its corporate existence and all rights and franchises material to its
business; provided, however that neither Company nor any of its Subsidiaries
-------- -------
shall be required to preserve any such right or franchise if the Board of
Directors of Company or such Subsidiary shall determine that the preservation
thereof is no longer desirable in the conduct of the business of Company or such
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Subsidiary, as the case may be, and that the loss thereof is not disadvantageous
in any material respect to Company or such Subsidiary.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
----------------------------------------------
A. Company will, and will cause each of its Subsidiaries to, pay
all taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including,
without limitation, claims for labor, services, materials and supplies) for sums
that have become due and payable and that by law have or may become a Lien upon
any of its properties or assets, prior to the time when any penalty or fine
shall be incurred with respect thereto; provided that no such charge or claim
--------
need be paid if it is being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted, so long as (1) such reserve or
other appropriate provision, if any, as shall be required in conformity with
GAAP shall have been made therefor and (2) in the case of a charge or claim
which has or may become a Lien against any material portion of the Collateral,
such contest proceedings conclusively operate to stay the sale of any such
material portion of the Collateral to satisfy such charge or claim.
B. Company will not, nor will it permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with any
Person (other than Company or any of its Subsidiaries) except pursuant to
arrangements allocating the obligations to contribute amounts for the payment of
income taxes and the benefits of any credits or other reductions of tax payments
so as to approximate the income taxes that would be payable by Company on a
stand-alone basis if no consolidated tax returns were filed by the parties to
such arrangements.
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
------------------------------------
A. MAINTENANCE OF PROPERTIES. Company will, and will cause each
of its Subsidiaries to, maintain or cause to be maintained in good repair,
working order and condition, ordinary wear and tear excepted, all material
properties used or useful in the business of Company and its Subsidiaries
(including, without limitation, all Intellectual Property) and from time to time
will make or cause to be made all appropriate repairs, renewals and replacements
thereof.
B. INSURANCE. Company will maintain or cause to be maintained,
with financially sound and reputable insurers, such public liability insurance,
third party property damage insurance, business interruption insurance and
casualty insurance with respect to liabilities, losses or damage in respect of
the assets, properties and businesses of Company and its Subsidiaries as is
carried or maintained under similar circumstances in similar locations by
corporations engaged in similar businesses, in each case in such amounts (giving
effect to self-insurance), with such deductibles, covering such risks and
otherwise on such terms and conditions as shall be customary for corporations
similarly situated in the industry. Without limiting the generality of the
foregoing, Company will maintain or cause to be
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maintained replacement value casualty insurance on the Collateral under such
policies of insurance, with such insurance companies, in such amounts, with such
deductibles, and covering such risks as are at all times reasonably satisfactory
to Administrative Agent in its commercially reasonable judgment as is customary
in the industry. Each such policy of insurance shall (a) name Administrative
Agent for the benefit of Lenders as an additional insured thereunder as its
interests may appear and (b) in the case of each business interruption and
casualty insurance policy, contain a loss payable clause or endorsement,
satisfactory in form and substance to Administrative Agent, that names
Administrative Agent for the benefit of Lenders as the loss payee thereunder for
any covered loss in excess of $500,000 and provides for at least 30 days prior
written notice to Administrative Agent of any modification or cancellation of
such policy; provided, however, that, so long as no Event of Default shall have
-------- -------
occurred and be continuing, insurance proceeds received by Administrative Agent
as such loss payee shall be applied to the Revolving Loans, or, if directed by
Company, remitted to the Company to be used for the replacement or repair of any
lost, destroyed or damaged assets, equipment or other property covered by such
insurance.
6.5 INSPECTION RIGHTS; LENDER MEETING.
---------------------------------
A. INSPECTION RIGHTS. Company shall, and shall cause each of its
Subsidiaries to, subject to the confidentiality requirements of this Agreement,
permit any authorized representatives designated by any Lender to visit and
inspect any of the properties of Company or of any of its Subsidiaries, to
inspect, copy (at such Lender's expense) and take extracts from its and their
financial and accounting records, and to discuss its and their affairs, finances
and accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours as may reasonably be requested.
B. LENDER MEETING. Company will, upon the request of
Administrative Agent or Requisite Lenders, participate in a meeting of
Administrative Agent and Lenders once during each Fiscal Year to be held at
Company's corporate offices (or at such other location as may be agreed to by
Company and Administrative Agent) at such time as may be agreed to by Company
and Administrative Agent.
6.6 COMPLIANCE WITH LAWS, MAINTENANCE OF FCC LICENSES, ETC.
-------------------------------------------------------
A. COMPLIANCE WITH LAWS. Company shall comply, and shall cause
each of its Subsidiaries to comply, with the requirements of all applicable
laws, rules, regulations and orders of or from any federal, state or local
governmental or regulatory authority, agency or court (including without
limitation the FCC Licenses, the Communications Act and State Telecommunications
Laws), and all orders, decisions, judgments and decrees of or from any court,
arbitral or regulatory body in proceedings or actions to which Company or any of
its Subsidiaries is a party or by which it is bound, noncompliance with which
could reasonably be expected to cause, individually or in the aggregate, a
Material Adverse Effect.
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B. MAINTENANCE OF FCC LICENSES. Company shall maintain, and
shall cause each of its Subsidiaries to maintain, all Governmental
Authorizations (including without limitation all FCC Licenses issued to and held
by Company or any of its Subsidiaries) necessary or required to own, operate,
control, construct, acquire or dispose of their respective properties (including
without limitation any Cellular System), to conduct their respective businesses
or to comply with the FCC's regulatory, reporting or other requirements, the
violation of or the failure to maintain could reasonably be expected to cause,
individually or in the aggregate, a Material Adverse Effect.
C. LICENSE SUBSIDIARIES. Company shall, and shall cause its
Subsidiaries to, use their respective best efforts to obtain the FCC's approval
of each of the FCC License Subsidiary Applications. Within fifteen (15) days
following the FCC's approval of each of the FCC License Subsidiary Applications,
Company shall, and shall cause its Subsidiaries to, consummate the assignment to
the License Subsidiaries of the Principal FCC Licenses that are the subject of
such approvals.
6.7 EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY COLLATERAL
-----------------------------------------------------------------
DOCUMENTS BY CERTAIN SUBSIDIARIES AND FUTURE SUBSIDIARIES.
---------------------------------------------------------
A. EXECUTION OF SUBSIDIARY GUARANTY AND PERSONAL PROPERTY
COLLATERAL DOCUMENTS. In the event that any Person becomes a domestic
Subsidiary of Company after the date hereof, Company will promptly notify
Administrative Agent of that fact and Company shall execute and deliver a Pledge
Amendment (as such term is defined in the Company Pledge Agreement) to the
Company Pledge Agreement, and cause such Subsidiary to execute and deliver to
Administrative Agent a counterpart of the Subsidiary Guaranty, a Subsidiary
Pledge Agreement and a Subsidiary Security Agreement, and to take all such
further actions and execute all such further documents and instruments
(including without limitation actions, documents and instruments comparable to
those described in subsection 4.1I) as may be necessary or, in the opinion of
Administrative Agent, desirable to create in favor of Administrative Agent, for
the benefit of Lenders, a valid and perfected First Priority Lien on all of the
personal property assets of such Subsidiary described in the applicable forms of
Collateral Documents; provided, however, that Company need not cause such
-------- -------
domestic Subsidiary to execute and deliver such Subsidiary Guaranty counterpart
or such Subsidiary Pledge Agreement or to grant such valid and perfected First
Priority Lien to the extent such actions are not permitted by the terms of any
Incurred Permitted Acquisition Indebtedness or any Assumed Permitted Acquisition
Indebtedness.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company
shall deliver to Administrative Agent, together with such Loan Documents, (i)
certified copies of such Subsidiary's Certificate or Articles of Incorporation,
together with a good standing certificate from the Secretary of State of the
jurisdiction of its incorporation and each other state in which such Person is
qualified as a foreign corporation to do business and, to the extent generally
available, a certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes from the appropriate taxing authority of
each of such jurisdictions, each to be dated a recent date prior to their
delivery to Administrative
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Agent, (ii) a copy of such Subsidiary's Bylaws, certified by its corporate
secretary or an assistant secretary as of a recent date prior to their delivery
to Administrative Agent, (iii) a certificate executed by the secretary or an
assistant secretary of such Subsidiary as to (a) the fact that the attached
resolutions of the Board of Directors of such Subsidiary approving and
authorizing the execution, delivery and performance of such Loan Documents are
in full force and effect and have not been modified or amended and (b) the
incumbency and signatures of the officers of such Subsidiary executing such Loan
Documents, and (iv) a favorable opinion of counsel to such Subsidiary, in form
and substance satisfactory to Administrative Agent and its counsel, as to (a)
the due organization and good standing of such Subsidiary, (b) the due
authorization, execution and delivery by such Subsidiary of such Loan Documents,
(c) the enforceability of such Loan Documents against such Subsidiary, (d) such
other matters (including without limitation matters relating to the creation and
perfection of Liens in any Collateral pursuant to such Loan Documents) as
Administrative Agent may reasonably request, all of the foregoing to be
satisfactory in form and substance to Administrative Agent and its respective
counsel.
6.8 INTEREST RATE PROTECTION.
------------------------
Within ninety (90) days after the Closing Date, Company shall obtain
and shall thereafter maintain in effect for a period of not less than two years
one or more Interest Rate Agreements with respect to the Loans, in an aggregate
notional principal amount of not less than 50% of the Loans borrowed on the
Closing Date, which Interest Rate Agreements shall have the effect of
establishing a maximum interest rate of not more than the Adjusted Eurodollar
Rate in effect on the Closing Date plus 2.00% per annum with respect to such
----
notional principal amount, each such Interest Rate Agreement to be in form and
substance reasonably satisfactory to Administrative Agent and with a term of not
less than two years. Administrative Agent shall determine in good faith the
extent to which Company's outstanding Hedge Agreements on the Closing Date may
be applied to reduce the obligations of Company to obtain Interest Rate
Agreements under this subsection 6.8.
SECTION 7. NEGATIVE COVENANTS
Holdings and Company covenant and agree that, so long as any of the
Commitments hereunder shall remain in effect and until payment in full of all of
the Loans and other Obligations and the cancellation or expiration of all
Letters of Credit, unless Requisite Lenders shall otherwise give prior written
consent, Holdings and Company shall perform, and shall cause each of their
Subsidiaries to perform, all covenants in this Section 7.
7.1 INDEBTEDNESS.
------------
Holdings and Company shall not, and shall not permit any of their
respective Subsidiaries to, directly or indirectly, create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with
respect to, any Indebtedness, except:
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(i) Company may become and remain liable with respect to the Obliga
tions;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corre sponding to the Contingent Obligations so extinguished;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Indebtedness in respect of Capital Leases and Purchase Money
Indebtedness in an aggregate principal amount not to exceed $15,000,000 at
any time outstanding; provided that such Capital Leases are permitted under
--------
the terms of subsection 7.9;
(iv) Company may become and remain liable with respect to Indebtedness
to any of its Intercompany Subsidiaries, and any Intercompany Subsidiary of
Company may become and remain liable with respect to Indebtedness to Company
or any other Intercompany Subsidiary of Company; provided that (a) all such
--------
intercompany Indebtedness shall be evidenced by promissory notes, (b) all
such intercompany Indebtedness owed by Company to any of its Intercompany
Subsidiaries shall be subordinated in right of payment to the payment in
full of the Obligations pursuant to the terms of the applicable promissory
notes or an intercompany subordination agreement, and (c) any payment by any
Intercompany Subsidiary of Company under any guaranty of the Obligations
shall result in a pro tanto reduction of the amount of any intercompany
--- -----
Indebtedness owed by such Intercompany Subsidiary to Company or to any of
its Intercompany Subsidiaries for whose benefit such payment is made;
(v) Company may become and remain liable with respect to Indebtedness
evidenced by the Subordinated Notes in an aggregate principal amount not to
exceed $175,000,000;
(vi) Holdings may become and remain liable with respect to Indebtedness
evidenced by the Holdings Discount Notes in an aggregate principal amount
not to exceed $153,400,000.
(vii) Subsidiaries of Company may become and remain liable with respect
to Indebtedness constituting Incurred Permitted Acquisition Indebtedness in
an aggregate principal amount not exceeding $50,000,000 at any time
outstanding;
(viii) Indebtedness described in Schedule 7.1 annexed hereto;
------------
(ix) Subsidiaries of Company may become and remain liable with respect
to Indebtedness constituting Assumed Permitted Acquisition Indebtedness in
an aggregate principal amount not exceeding $15,000,000 at any time
outstanding;
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(x) Company may incur Refinancing Indebtedness to effect a Refinancing
of the Subordinated Notes and Holdings may incur Refinancing Indebtedness to
effect a Refinancing of the Holdings Discount Notes; and
(xi) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to exceed
$100,000,000 at any time outstanding; provided that any Indebtedness
--------
incurred pursuant to this subsection 7.1(xi) (1) shall be unsecured, (2)
shall not include or be cross-defaulted to any financial maintenance tests,
(3) shall not mature earlier than six months after the final maturity date
of the Tranche B Term Loans, and (4) shall contain terms and conditions
customary to high-yield debt Securities; provided further that the Non-
-------- -------
Excluded Net Debt Proceeds from such Indebtedness shall be used as Permitted
Acquisition Cash Financing and/or be applied as a mandatory prepayment
pursuant to subsection 2.4B(iii)(c) only; provided further that any
-------- -------
Indebtedness incurred pursuant to this subsection 7.1(xi) and used for
Permitted Acquisitions shall reduce on a dollar-for-dollar basis the amount
available under the Revolving Loans; provided further that Company and its
-------- -------
Subsidiaries may not incur any Indebtedness under this subsection 7.1(xi)
if, after giving effect to such incurrence of Indebtedness, the Total
Utilization of Revolving Loan Commitments would exceed the difference of (x)
the Revolving Loan Commitments then in effect less (y) an amount equal to
----
the aggregate principal amount of Indebtedness incurred by Company and its
Subsidiaries under this subsection 7.1(xi) then outstanding, if any.
7.2 LIENS AND RELATED MATTERS.
-------------------------
A. PROHIBITION ON LIENS. Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, create, incur, assume or
permit to exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described in Schedule 7.2 annexed hereto;
------------
(iv) Liens securing Indebtedness described in subsection 7.1(iii) on
assets financed by such Indebtedness;
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(v) Liens on cash and Investments made from the proceeds of the issuance
of the Subordinated Notes and the Holdings Discount Notes prior to the
expenditure of such proceeds upon consummation of the Merger; and
(vi) Liens on the assets of an Acquiring Subsidiary of Company to secure
Incurred Permitted Acquisition Indebtedness of such Subsidiary.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Subsidiaries shall knowingly create or assume any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, other than Liens
excepted by the provisions of subsection 7.2A, it shall make or cause to be made
effective provision whereby the Obligations will be secured by such Lien equally
and ratably with any and all other Indebtedness secured thereby as long as any
such Indebtedness shall be so secured; provided that, notwithstanding the
--------
foregoing, this covenant shall not be construed as a consent by Requisite
Lenders to the creation or assumption of any such Lien not permitted by the
provisions of subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific
property encumbered to secure payment of particular Indebtedness or to be sold
pursuant to an executed agreement with respect to an Asset Sale, neither Company
nor any of its Subsidiaries shall enter into any agreement (other than the
Holding Discount Note Indenture, the Subordinated Note Indenture or any other
agreement prohibiting only the creation of Liens securing Subordinated
Indebtedness) prohibiting the creation or assumption of any Lien upon any of its
properties or assets, whether now owned or hereafter acquired, securing payment
of the Obligations or a Refinancing thereof.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein, Company will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company; provided,
--------
however, that Company may, and may permit its Subsidiaries to, create or
- -------
otherwise cause or suffer to exist or become effective such consensual
encumbrances or restrictions to the extent such consensual encumbrances or
restrictions are required by the terms of any Incurred Permitted Acquisition
Indebtedness or any Assumed Permitted Acquisition Indebtedness.
7.3 INVESTMENTS; JOINT VENTURES.
---------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
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<PAGE>
(i) Company and its Subsidiaries may make and own Investments in Cash
Equivalents;
(ii) Company and its Subsidiaries may continue to own the Investments
owned by them as of the Closing Date in any Subsidiaries of Company;
(iii) Company and its Subsidiaries may make intercompany loans to the
extent permitted under subsection 7.1(iv);
(iv) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
(v) Company and its Subsidiaries may continue to own the Investments
owned by them and described in Schedule 7.3 annexed hereto;
------------
(vi) Company and its Subsidiaries may make Investments relating to the
purchase of minority equity interests in Subsidiaries (whether existing as
of or subsequent to the Closing Date) which Company directly or indirectly
owns a majority interest;
(vii) Company and its Subsidiaries may make and own Investments in
Permitted Acquisitions permitted by subsections 7.7(iii) and (vi); and
(viii) Company and its Subsidiaries may make and own other Investments
in an aggregate amount not to exceed at any time $5,000,000.
7.4 CONTINGENT OBLIGATIONS.
----------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Subsidiaries of Company may become and remain liable with respect to
Contingent Obligations in respect of the Subsidiary Guaranty;
(ii) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit;
(iii) Company may become and remain liable with respect to Contingent
Obligations under Hedge Agreements described in Schedule 7.4 and other Hedge
Agreements with respect to Indebtedness in an aggregate notional principal
amount not to exceed at any time the principal amount of the Loans
outstanding;
(iv) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and
110
<PAGE>
purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets;
(v) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations under guarantees in the ordinary course of
business of the obligations of suppliers, customers and licensees of Company
and its Subsidiaries in an aggregate amount not to exceed at any time
$3,000,000;
(vi) Company may become and remain liable with respect to leases of its
Subsidiaries to the extent such leases are permitted by subsection 7.9; and
(vii) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum aggregate
--------
liability, contingent or otherwise, of Company and its Subsidiaries in
respect of all such Contingent Obligations shall at no time exceed
$5,000,000.
7.5 RESTRICTED JUNIOR PAYMENTS.
--------------------------
Holdings and Company shall not, and shall not permit any of their
Subsidiaries to, directly or indirectly, declare, order, pay, make or set apart
any sum for any Restricted Junior Payment; provided that (i) Company may make
--------
regularly scheduled payments of interest in respect of any Subordinated
Indebtedness or any Refinancing thereof in accordance with the terms of, and
only to the extent required by, and subject to the subordination provisions
contained in, the indenture or other agreement pursuant to which such
Subordinated Indebtedness or Refinancing was issued, as such indenture or other
agreement may be amended from time to time to the extent permitted under
subsection 7.15B, and (ii) so long as no Event of Default or Potential Event of
Default shall have occurred and be continuing or shall be caused thereby,
Company may make Restricted Junior Payments to Holdings: (a) in an aggregate
amount not to exceed $100,000 in any Fiscal Year, to the extent necessary to
permit Holdings to pay general administrative costs and expenses; (b) to the
extent necessary to permit Holdings to pay cash interest payments on the
Holdings Discount Notes or any Refinancing thereof when contractually required;
provided that after giving effect to such Restricted Junior Payments under this
- --------
clause (b), without duplication of amounts, Company and its Subsidiaries shall
be in Pro Forma Financial Covenant Compliance; (c) to the extent necessary to
permit Holdings to discharge the consolidated tax and franchise liabilities of
Holdings and its Subsidiaries, in each case so long as Holdings applies the
amount of any such Restricted Junior Payment for such purpose; (d) to the extent
necessary to permit Holdings to pay Transaction Costs; and (e) management fees
payable to Holdings in an annual aggregate amount not exceeding $50,000 in each
calendar year.
7.6 FINANCIAL COVENANTS.
-------------------
A. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the
ratio of (i) Consolidated Annualized EBITDA to (ii) the sum of (x) Consolidated
Interest Expense for any four-Fiscal Quarter period ending on any dates set
forth below plus (y) any Restricted
----
111
<PAGE>
Junior Payments made by Company to Holdings under clause (ii)(b) of the proviso
contained in subsection 7.5 during such same period to be less than the cor
relative ratio indicated:
MINIMUM
PERIOD INTEREST COVERAGE RATIO
----------------- -----------------------
December 31, 1997 1.10:1.00
March 31, 1998 1.15:1.00
June 30, 1998 1.15:1.00
September 30, 1998 1.15:1.00
December 31, 1998 1.20:1.00
March 31, 1999 1.25:1.00
June 30, 1999 1.30:1.00
September 30, 1999 1.30:1.00
December 31, 1999 1.30:1.00
March 31, 2000 1.40:1.00
June 30, 2000 1.45:1.00
September 30, 2000 1.50:1.00
December 31, 2000 1.55:1.00
March 31, 2001 1.65:1.00
June 30, 2001 1.75:1.00
September 30, 2001 1.80:1.00
December 31, 2001 1.80:1.00
March 31, 2002 1.90:1.00
June 30, 2002 2.00:1.00
September 30, 2002 2.00:1.00
December 31, 2002 2.00:1.00
March 31, 2003 1.90:1.00
June 30, 2003 1.90:1.00
September 30, 2003 1.90:1.00
December 31, 2003 1.90:1.00
March 31, 2004 2.00:1.00
June 30, 2004 2.00:1.00
September 30, 2004 2.10:1.00
December 31, 2004 2.25:1.00
March 31, 2005 2.20:1.00
June 30, 2005 2.30:1.00
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<PAGE>
September 30, 2005 2.40:1.00
December 31, 2005 2.50:1.00
March 31, 2006 2.60:1.00
June 30, 2006 2.65:1.00
September 30, 2006 2.80:1.00
; provided that (i) with respect to the foregoing ratio for the compliance
--------
period ending December 31, 1997, Consolidated Interest Expense shall be
calculated as Consolidated Interest Expense for the Fiscal Quarter ending
December 31, 1997 multiplied by 4, (ii) for the compliance period ending March
-------------
31, 1998, Consolidated Interest Expense shall be calculated as Consolidated
Interest Expense for the two Fiscal Quarters ending March 31, 1998 multiplied by
-------------
2 and (iii) for the compliance period ending June 30, 1998, Consolidated
Interest Expense shall be calculated as Consolidated Interest Expense for the
three Fiscal Quarters ending June 30, 1998 multiplied by 1-1/3.
-------------
B. MINIMUM FIXED CHARGE COVERAGE RATIO. Company shall not permit the
ratio of (i) Consolidated Annualized EBITDA to (ii) Consolidated Fixed Charges
for any four-Fiscal Quarter period ending on any dates set forth below to be
less than the correlative ratio indicated:
MINIMUM FIXED
PERIOD CHARGE COVERAGE RATIO
----------------- ---------------------
December 31, 1997 0.75:1.00
March 31, 1998 0.75:1.00
June 30, 1998 0.75:1.00
September 30, 1998 0.75:1.00
December 31, 1998 0.75:1.00
March 31, 1999 0.90:1.00
June 30, 1999 1.00:1.00
September 30, 1999 1.05:1.00
December 31, 1999 1.05:1.00
March 31, 2000 1.10:1.00
June 30, 2000 1.10:1.00
September 30, 2000 1.10:1.00
December 31, 2000 1.10:1.00
March 31, 2001 1.15:1.00
June 30, 2001 1.20:1.00
September 30, 2001 1.25:1.00
December 31, 2001 1.25:1.00
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<PAGE>
March 31, 2002 1.25:1.00
June 30, 2002 1.25:1.00
September 30, 2002 1.25:1.00
December 31, 2002 1.25:1.00
March 31, 2003 1.25:1.00
June 30, 2003 1.25:1.00
September 30, 2003 1.25:1.00
December 31, 2003 1.25:1.00
March 31, 2004 1.25:1.00
June 30, 2004 1.25:1.00
September 30, 2004 1.25:1.00
December 31, 2004 1.25:1.00
March 31, 2005 1.25:1.00
June 30, 2005 1.20:1.00
September 30, 2005 1.20:1.00
December 31, 2005 0.85:1.00
March 31, 2006 0.65:1.00
June 30, 2006 0.55:1.00
September 30, 2006 0.45:1.00
; provided that with respect to the foregoing ratio for compliance periods
--------
ending on and prior to June 30, 1998, Consolidated Fixed Charges shall be
calculated utilizing the Consolidated Interest Expense calculations as provided
in the proviso set forth in subsection 7.6A above and all other component
amounts in "Consolidated Fixed Charges" shall be the actual amounts thereof from
the Closing Date through the respective dates of determination.
C. MAXIMUM LEVERAGE RATIO. Company shall not permit the Consolidated
Leverage Ratio for any period ending on any dates set forth below to exceed the
correlative ratio indicated:
MINIMUM
PERIOD MAXIMUM LEVERAGE RATIO
----------------- ----------------------
December 31, 1997 9.7:1.00
March 31, 1998 9.3:1.00
June 30, 1998 9.1:1.00
September 30, 1998 9.1:1.00
December 31, 1998 9.1:1.00
March 31, 1999 8.4:1.00
June 30, 1999 7.9:1.00
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<PAGE>
September 30, 1999 7.7:1.00
December 31, 1999 7.6:1.00
March 31, 2000 7.0:1.00
June 30, 2000 6.5:1.00
September 30, 2000 6.3:1.00
December 31, 2000 6.2:1.00
March 31, 2001 5.8:1.00
June 30, 2001 5.5:1.00
September 30, 2001 5.3:1.00
December 31, 2001 5.1:1.00
March 31, 2002 4.9:1.00
June 30, 2002 4.6:1.00
September 30, 2002 4.4:1.00
December 31, 2002 4.2:1.00
March 31, 2003 4.1:1.00
June 30, 2003
and each Fiscal Quarter thereafter 4.0:1.00
D. MINIMUM CONSOLIDATED ANNUALIZED EBITDA. Company shall not permit
Consolidated Annualized EBITDA for any period ending on any dates set forth
below to be less than the correlative amount indicated:
MINIMUM CONSOLIDATED
PERIOD ANNUALIZED EBITDA
----------------- --------------------
December 31, 1997 $ 64,900,000
March 31, 1998 67,600,000
June 30, 1998 69,400,000
September 30, 1998 69,300,000
December 31, 1998 70,000,000
March 31, 1999 74,500,000
June 30, 1999 79,100,000
September 30, 1999 79,900,000
December 31, 1999 80,700,000
March 31, 2000 85,800,000
June 30, 2000 91,100,000
September 30, 2000 92,000,000
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<PAGE>
December 31, 2000 92,900,000
March 31, 2001 96,200,000
June 30, 2001 99,500,000
September 30, 2001 100,500,000
December 31, 2001 101,500,000
March 31, 2002 103,600,000
June 30, 2002 105,700,000
September 30, 2002 106,800,000
December 31, 2002 107,900,000
March 31, 2003 109,200,000
June 30, 2003 110,500,000
September 30, 2003 111,600,000
December 31, 2003 112,700,000
March 31, 2004 113,000,000
June 30, 2004 113,000,000
September 30, 2004 113,400,000
December 31, 2004 114,500,000
March 31, 2005 114,800,000
June 30, 2005 115,100,000
September 30, 2005 116,300,000
December 31, 2005 117,500,000
March 31, 2006 117,600,000
June 30, 2006 117,700,000
September 30, 2006 118,900,000
; provided that upon the sale of a Cellular System in an Asset Sale (and
--------
assuming the Net Asset Sale Proceeds from such Asset Sale are not reinvested in
a Permitted Acquisition within the period permitted by the definition of "Asset
Sale" and so long as such proceeds are not so reinvested), the amounts set forth
above shall be reduced by the sum of the contributions to Consolidated
Annualized EBITDA by all Cellular Systems so sold for the two Fiscal Quarter
period immediately preceding the dates of such respective sales.
E. MINIMUM TOTAL DEBT SERVICE RATIO. Company shall not permit the
ratio of (i) Consolidated Annualized EBITDA to (ii) Pro Forma Total Debt Service
for any Fiscal Quarter ending on any dates set forth below to be less than the
correlative ratio indicated:
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<PAGE>
MINIMUM TOTAL
PERIOD DEBT SERVICE RATIO
----------------- ------------------
December 31, 1997 1.05:1.00
March 31, 1998 1.10:1.00
June 30, 1998 1.10:1.00
September 30, 1998 1.10:1.00
December 31, 1998 1.10:1.00
March 31, 1999 1.10:1.00
June 30, 1999 1.10:1.00
September 30, 1999 1.10:1.00
December 31, 1999 1.10:1.00
March 31, 2000 1.20:1.00
June 30, 2000 1.25:1.00
September 30, 2000 1.25:1.00
December 31, 2000 1.25:1.00
March 31, 2001 1.30:1.00
June 30, 2001 1.40:1.00
September 30, 2001 1.40:1.00
December 31, 2001 1.40:1.00
March 31, 2002 1.40:1.00
June 30, 2002 1.40:1.00
September 30, 2002 1.40:1.00
December 31, 2002 1.40:1.00
March 31, 2003 1.40:1.00
June 30, 2003 1.40:1.00
September 30, 2003 1.40:1.00
December 31, 2003 1.40:1.00
March 31, 2004 1.40:1.00
June 30, 2004 1.40:1.00
September 30, 2004 1.40:1.00
December 31, 2004 0.95:1.00
March 31, 2005 0.75:1.00
June 30, 2005 0.60:1.00
September 30, 2005 0.50:1.00
December 31, 2005
and each Fiscal Quarter thereafter 2.50:1.00
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<PAGE>
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
----------------------------------------------------------------
Holdings and Company shall not, and shall not permit any of Company's
Subsidiaries to, alter the corporate, capital or legal structure of Holdings,
Company or any of Company's Subsidiaries, or enter into any transaction of
merger or consolidation, or liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease or sub-lease (as lessor or
sublessor), transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:
(i) the Merger may be consummated and any Subsidiary of Company may be
merged with or into Company or any Subsidiary Guarantor, or be liquidated,
wound up or dissolved, or all or any part of its business, property or
assets may be conveyed, sold, leased, transferred or otherwise disposed of,
in one transaction or a series of transactions, to Company or any Subsidiary
Guarantor; provided that, in the case of such a merger, Company or such
--------
Subsidiary Guarantor shall be the continuing or surviving corporation;
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) Acquiring Subsidiaries may make Permitted Acquisitions, without
the consent of Agents or Lenders, in an aggregate amount up to $200,000,000;
provided that:
--------
(a) the sole consideration that may be used to consummate such
Permitted Acquisitions is any combination of the following: (x)
Permitted Acquisition Cash Financing in an aggregate amount not to
exceed $100,000,000, (y) Permitted Acquisition Equity Financing in an
amount not to exceed $100,000,000, and/or (z) Cellular Systems
(including any property and assets related to such Cellular Systems)
owned and operated by Company or any of its Subsidiaries, which
Cellular Systems shall be exchanged or "swapped" for Cellular Systems
(including any property and assets related to such Cellular Systems)
owned and operated by another Person (other than Company or any of its
Subsidiaries); provided that in the case of exchanges or "swaps" of
--------
Cellular Systems (and any related property and assets), (1) the
aggregate fair market value of all such Cellular Systems owned and
operated by Company and its Subsidiaries being exchanged or "swapped"
shall not exceed $100,000,000 less the aggregate amount of Net Asset
----
Sale Proceeds reinvested by Company and its Subsidiaries in other
Cellular Systems pursuant to subsection 7.7(vi)(c), (2) the total
consideration received by Company or any of its Subsidiaries in
connection with any such exchange or "swap" shall be
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<PAGE>
equal to the fair market value of the Cellular System being exchanged
or "swapped" and (3) any such exchange or "swap" with Affiliates of
Company and its Subsidiaries shall comply with the requirements of
sections 4.11 and 4.15 of the Subordinated Note Indenture after giving
effect to all waivers and amendments thereto;
(b) prior to entering into any binding agreement with respect to any
Permitted Acquisition, Company and its Subsidiaries, after giving
effect to such Permitted Acquisition and using reasonable assumptions
in the opinion of Administrative Agent, shall be in Pro Forma Financial
Covenant Compliance, and Company shall deliver to Administrative Agent
and Lenders a pro forma Compliance Certificate reflecting such Pro
--- -----
Forma Financial Covenant Compliance by Company and its Subsidiaries;
(c) prior to the completion of any Permitted Acquisition, Company
shall, and shall cause its Subsidiaries to, obtain all Governmental
Authorizations and all consents of other Persons (including without
limitation the FCC), in each case that are necessary or advisable in
connection with the transfer of any FCC Licenses and the continued
operation of the Cellular System or business being acquired in
substantially the same manner as conducted prior to the consummation of
such Permitted Acquisition;
(d) contemporaneously with the completion of any Permitted
Acquisition, Company shall, and shall cause its Subsidiaries to, grant
to Administrative Agent (on behalf of Lenders) a valid and perfected
First Priority Lien upon the assets and other property acquired in
connection with such Permitted Acquisition to the extent such assets
and property constitute or are otherwise comparable to the personal
property Collateral given as security under this Agreement; provided,
--------
however, that Company need not, and need not cause its Subsidiaries to,
-------
grant such valid and perfected First Priority Lien to the extent that
such a grant is not permitted by the terms of any Incurred Permitted
Acquisition Indebtedness or any Assumed Permitted Acquisition
Indebtedness;
(e) contemporaneously with or as soon as practicable after the
completion of a Permitted Acquisition, Company shall, and shall cause
its Subsidiaries to, transfer to the License Subsidiaries any Principal
FCC Licenses acquired in connection with the Permitted Acquisition
provided, however, that the Company need not, and need not cause its
-------- -------
Subsidiaries to, transfer to License Subsidiaries such Principal FCC
Licenses to the extent such a transfer is not permitted by the terms of
any Incurred Permitted Acquisition Indebtedness or any Assumed
Permitted Acquisition Indebtedness; and
(f) in the event an Acquiring Subsidiary acquires another Person
(other than Company or any of its Subsidiaries) in connection with a
Permitted
119
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Acquisition, such acquired Person shall (x) be made an Intercompany
Subsidiary of Company or be merged with and into Company or any of its
Subsidiaries and (y) comply with the requirements of subsection 6.7
contemporaneously with the completion of such Permitted Acquisition;
(iv) Company and its Subsidiaries may dispose of obsolete, worn out or
surplus property in the ordinary course of business;
(v) Company and its Subsidiaries may sell or otherwise dispose of assets
in transactions that do not constitute Asset Sales; provided that the
--------
consideration received for such assets shall be in an amount at least equal
to the fair market value thereof; and
(vi) subject to subsection 7.13, Company and its Subsidiaries may make
Asset Sales of assets, including without limitation Cellular Systems and any
related property or assets; provided that
--------
(a) the consideration received for such assets shall be in an amount
at least equal to the fair market value thereof; provided, however,
-------- -------
that with respect to any such Asset Sales with Affiliates of Company
and its Subsidiaries, such Asset Sales shall comply with the then
existing requirements of sections 4.11 and 4.15 of the Subordinated
Note Indenture after giving effect to all waivers and amendments
thereto;
(b) the sole consideration received shall be cash; provided,
--------
however, that with respect to such Asset Sales having a fair market
-------
value not in excess of $100,000,000 in the aggregate, the consideration
received may be another Cellular System or Systems (and any related
property and assets) exchanged or "swapped" for in accordance with
subsection 7.7(iii)(a) and up to $25,000,000 of promissory notes from
the purchaser of such assets (or an Affiliate of such purchaser);
(c) the Net Asset Sale Proceeds of such Asset Sales shall be applied
as mandatory prepayments as required by subsection 2.4B(iii)(a);
provided, however, that with respect to such Net Asset Sale Proceeds in
-------- -------
an amount not to exceed (x) $100,000,000 less (y) the aggregate fair
----
market value of Cellular Systems being exchanged or "swapped" pursuant
to subsection 7.7(iii)(a), such amount of such proceeds may be
reinvested or committed to be reinvested by Company and its
Subsidiaries within 180 days after receipt of such proceeds, and in
fact so reinvested as soon as practical after receipt of any required
consents or approvals from the FCC and, in any event, not later than
360 days after receipt of such proceeds, in another Cellular System of
equal or substantially similar fair market value in connection with a
Permitted Acquisition pursuant to subsection 7.7(iii); and
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(d) prior to entering into any binding agreement with respect to any
such Asset Sale, Company and its Subsidiaries, after giving effect to
such Asset Sale and using reasonable assumptions in the opinion of
Administrative Agent, shall be in Pro Forma Financial Covenant
Compliance, and Company shall deliver to Administrative Agent and
Lenders a pro forma Compliance Certificate reflecting such Pro Forma
--- -----
Financial Covenant Compliance by Company and its Subsidiaries; provided
--------
that the requirements of this clause (d) of subsection 7.7(vi) shall
not be applicable to the initial Asset Sales made after the Closing
Date having aggregate cumulative Net Asset Sales Proceeds not exceeding
$50,000,000.
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
---------------------------------
Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year indicated below, in
an aggregate amount in excess of the corresponding amount (the "MAXIMUM
CONSOLIDATED CAPITAL EXPENDITURES AMOUNT") set forth below opposite such Fiscal
Year:
MAXIMUM CONSOLIDATED
FISCAL YEAR CAPITAL EXPENDITURES
---------------------------------- ------------------------
Closing Date through
December 31, 1997 $15,000,000
Fiscal Year 1998 32,500,000
Fiscal Year 1999 and each Fiscal
Year through Fiscal Year 2005 18,500,000
January 1, 2006
through September 30, 2006 15,000,000
; provided that the Maximum Consolidated Capital Expenditures Amount for any
--------
Fiscal Year shall be increased by an amount equal to the excess, if any, (but in
no event more than 50% of the Maximum Consolidated Capital Expenditures Amount
for the previous Fiscal Year, as adjusted in accordance with this proviso) over
the actual amount of Consolidated Capital Expenditures for such previous Fiscal
Year
7.9 RESTRICTION ON LEASES.
---------------------
Company shall not, and shall not permit any of its Subsidiaries to,
become liable in any way, whether directly or by assignment or as a guarantor or
other surety, for the obligations of the lessee under any lease, whether an
Operating Lease or a Capital Lease (other than intercompany leases between
Company and its Intercompany Subsidiaries), unless, immediately after giving
effect to the incurrence of liability with respect to such lease, the
Consolidated Rental Payments at the time in effect during the then current
Fiscal Year shall not exceed the corresponding amount set forth below opposite
such Fiscal Year:
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MAXIMUM CONSOLIDATED
FISCAL YEAR RENTAL PAYMENTS
-------------------------------- --------------------
Closing Date through
December 31, 1997 $ 5,000,000
Fiscal Year 1998 and each Fiscal
Year through Fiscal Year 2005 10,000,000
January 1, 2006 through
September 30, 2006 10,000,000
7.10 SALES AND LEASE-BACKS.
---------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of any property (whether real, personal or mixed), whether now owned or
hereafter acquired, (i) which Company or any of its Subsidiaries has sold or
transferred or is to sell or transfer to any other Person (other than Company or
any of its Subsidiaries) or (ii) which Company or any of its Subsidiaries
intends to use for substantially the same purpose as any other property which
has been or is to be sold or transferred by Company or any of its Subsidiaries
to any Person (other than Company or any of its Subsidiaries) in connection with
such lease; provided that Company and its Subsidiaries may become and remain
--------
liable as lessee, guarantor or other surety with respect to any such lease if
and to the extent that Company or any of its Subsidiaries would be permitted to
enter into, and remain liable under, such lease under subsection 7.9.
7.11 SALE OR DISCOUNT OF RECEIVABLES.
-------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable other
than such notes or accounts receivable sold for purposes of collection and for
which reserves have been established under GAAP.
7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
---------------------------------------------
Neither Holdings nor Company shall, and neither shall permit any of
its Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any holder of 5%
or more of any class of equity Securities of Holdings or Company or with any
Affiliate of Holdings or Company or of any such holder, on terms that are less
favorable to Holdings, Company or that Subsidiary, as the case may be, than
those that would reasonably expected to be obtained at the time from Persons who
are not such a holder or Affiliate; provided that the foregoing restriction
--------
shall not apply to (i) any transaction between Holdings, Company and any of
their respective Subsidiaries or between any of their respective Subsidiaries,
(ii) reasonable and customary fees paid to members of
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the Boards of Directors of Holdings, Company and their respective Subsidiaries,
and (iii) tax sharing arrangements permitted by subsection 6.3B.
7.13 DISPOSAL OF SUBSIDIARY STOCK.
----------------------------
Except for any sale of 100% of the capital stock or other equity
Securities of any of its Subsidiaries in compliance with the provisions of
subsection 7.7(v), neither Holdings nor Company shall:
(i) directly or indirectly sell, assign, pledge or otherwise encumber or
dispose of any shares of capital stock or other equity Securities of any of
its Subsidiaries, except to qualify directors if required by applicable law;
or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, another Subsidiary of Company, or to qualify
directors if required by applicable law.
7.14 CONDUCT OF BUSINESS.
-------------------
A. COMPANY BUSINESS. From and after the Closing Date, Company
shall not, and shall not permit any of its Subsidiaries to, engage in any
business other than (i) the businesses engaged in by Company and its
Subsidiaries on the Closing Date and similar or related businesses and (ii) such
other lines of business as may be consented to by Requisite Lenders.
B. HOLDINGS BUSINESS. Holdings shall not (i) engage in any
business other than entering into and performing its obligations under and in
accordance with the Loan Documents and Related Agreements to which it is a party
or (ii) own any assets other than (a) the capital stock of Company and (b) Cash
and Cash Equivalents in an amount not to exceed $1,000,000 at any one time for
the purpose of paying general operating expenses of Holdings.
C. LICENSE SUBSIDIARIES. No License Subsidiary shall engage in
any business or incur any liabilities other than the ownership of its FCC
Licenses and the execution, delivery and performance of the Loan Documents and
Related Agreements to which it is a party and activities incidental to the
foregoing.
7.15 AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS; AMENDMENTS OF
------------------------------------------------------------------
DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS; DESIGNATION OF
---------------------------------------------------------------
"DESIGNATED SENIOR INDEBTEDNESS".
--------------------------------
A. AMENDMENTS OR WAIVERS OF CERTAIN RELATED AGREEMENTS. Except as
provided in subsections 7.15B and 7.15D, none of Holdings, Company nor any of
their Subsidiaries will agree to any material amendment to, or waive any of its
material rights
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under, any Related Agreement after the Closing Date without in each case
obtaining the prior written consent of Requisite Lenders to such amendment or
waiver.
B. AMENDMENTS OF DOCUMENTS RELATING TO SUBORDINATED INDEBTEDNESS.
Company shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of any Subordinated Indebtedness, or make any payment
consistent with an amendment thereof or change thereto, if the effect of such
amendment or change is to increase the interest rate on such Subordinated
Indebtedness, change (to earlier dates) any dates upon which payments of
principal or interest are due thereon, change any event of default or condition
to an event of default with respect thereto (other than to eliminate any such
event of default or increase any grace period related thereto), change the
redemption, prepayment or defeasance provisions thereof, change the
subordination provisions thereof (or of any guaranty thereof), or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Subordinated Indebtedness (or a
trustee or other representative on their behalf) which would be materially
adverse to Company or Lenders.
C. DESIGNATION OF "DESIGNATED SENIOR INDEBTEDNESS". Company shall
not designate any Indebtedness (other than the Obligations) as "Designated
Senior Indebtedness" (as defined in the Subordinated Note Indenture) for
purposes of the Subordinated Note Indenture without the prior written consent of
Requisite Lenders.
D. AMENDMENTS OF DOCUMENTS RELATING TO HOLDINGS DISCOUNT NOTES.
Holdings shall not, and shall not permit any of its Subsidiaries to, amend or
otherwise change the terms of the Holdings Discount Notes or the Holdings Note
Indenture, or make any payment consistent with an amendment thereof or change
thereto, if the effect of such amendment or change is to increase the interest
rate on such Holdings Discount Notes, change (to earlier dates) any dates upon
which payments of principal or interest are due thereon, change any payment of
interest permitted to be made in additional Holdings Discount Notes to be made
in cash, change any event of default or condition to an event of default with
respect thereto (other than to eliminate any such event of default or increase
any grace period related thereto), change the redemption, prepayment or
defeasance provisions thereof, or change any collateral therefor (other than to
release such collateral), or if the effect of such amendment or change, together
with all other amendments or changes made, is to increase materially the
obligations of the obligor thereunder or to confer any additional rights on the
holders of Holdings Discount Notes (or a trustee or other representative on
their behalf) which would be materially adverse to Holdings or Lenders.
7.16 FISCAL YEAR.
-----------
Company shall not change its Fiscal Year-end from December 31.
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SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("EVENTS OF DEFAULT")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
---------------------------------
Failure by Company to pay any installment of principal of any Loan
when due, whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise; failure by Company to pay when due any amount payable to an
Issuing Lender in reimbursement of any drawing under a Letter of Credit; or
failure by Company to pay any interest on any Loan or any fee or any other
amount due under this Agreement within five days after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
---------------------------
(i) Failure of Holdings or Company or any of their Subsidiaries to pay
when due any principal of or interest on or any other amount payable in respect
of one or more items of Indebtedness (other than Indebtedness referred to in
subsection 8.1) or Contingent Obligations in an individual principal amount of
$5,000,000 or more or with an aggregate principal amount of $15,000,000 or more,
in each case beyond the end of any grace period provided therefor; or (ii)
breach or default by Holdings or Company or any of their Subsidiaries with
respect to any other material term of (a) one or more items of Indebtedness or
Contingent Obligations in the individual or aggregate principal amounts referred
to in clause (i) above or (b) any loan agreement, mortgage, indenture or other
agreement relating to such item(s) of Indebtedness or Contingent Obligation(s)
in such individual and aggregate principal amounts, if the effect of such breach
or default is to cause, or to permit the holder or holders of that Indebtedness
or Contingent Obligation(s) (or a trustee on behalf of such holder or holders)
to cause, that Indebtedness or Contingent Obligation(s) to become or be declared
due and payable prior to its stated maturity or the stated maturity of any
underlying obligation, as the case may be (upon the giving or receiving of
notice, lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
---------------------------
Failure of Holdings or Company to perform or comply with any term or
condition contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
------------------
Any representation, warranty, certification or other statement made by
Holdings or Company or any of their Subsidiaries in any Loan Document or in any
statement or certificate at any time given by Holdings or Company or any of
their Subsidiaries in writing pursuant hereto or thereto or in connection
herewith or therewith shall be false in any material respect on the date as of
which made; or
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8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
-----------------------------------
Any Loan Party shall default in the performance of or compliance with
any material term contained in this Agreement or any of the other Loan
Documents, other than any such term referred to in any other subsection of this
Section 8, and such default shall not have been remedied or waived within 30
days after the earlier of (i) an officer of Company or such Loan Party becoming
aware of such default or (ii) receipt by Company and such Loan Party of notice
from any Agent or any Lender of such default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
-----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter an order
for relief in respect of Holdings or Company or any of their Material
Subsidiaries in an involuntary case under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect,
which order is not stayed; or any other similar relief shall be granted under
any applicable federal or state law; or (ii) an involuntary case shall be
commenced against Holdings or Company or any of their Material Subsidiaries
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or an order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Holdings or Company or any of their Material Subsidiaries, or over all or a
substantial part of its property, shall have been entered; or there shall have
occurred the involuntary appointment of an interim receiver, trustee or other
custodian of Holdings or Company or any of their Material Subsidiaries for all
or a substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Holdings or Company or any of their Material Subsidiaries, and any
such event described in this clause (ii) shall continue for 60 days unless
dismissed, bonded or discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
---------------------------------------------------
(i) Holdings or Company or any of their Material Subsidiaries shall
have an order for relief entered with respect to it or commence a voluntary case
under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect, or shall consent to the entry of an
order for relief in an involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall consent to the
appointment of or taking possession by a receiver, trustee or other custodian
for all or a substantial part of its property; or Holdings or Company or any of
their Material Subsidiaries shall make any assignment for the benefit of
creditors; or (ii) Holdings or Company or any of their Material Subsidiaries
shall admit in writing its inability to pay its debts as such debts become due;
or
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8.8 JUDGMENTS AND ATTACHMENTS.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving (i) in any individual case an amount in excess of $1,000,000 or (ii)
in the aggregate at any time an amount in excess of $5,000,000 (in either case
not adequately covered by insurance as to which a solvent and unaffiliated
insurance company has acknowledged coverage) shall be entered or filed against
Holdings or Company or any of their Subsidiaries or any of their respective
assets and shall remain undischarged, unvacated, unbonded or unstayed for a
period of 60 days (or in any event later than five days prior to the date of any
proposed sale thereunder); or
8.9 DISSOLUTION.
-----------
Any order, judgment or decree shall be entered against Holdings or
Company or any of their Material Subsidiaries decreeing the dissolution or split
up of Holdings, Company or that Subsidiary and such order shall remain
undischarged or unstayed for a period in excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
----------------------
There shall occur one or more ERISA Events which individually or in
the aggregate results in or might reasonably be expected to result in liability
of Company, any of its Subsidiaries or any of their respective ERISA Affiliates
in excess of $5,000,000 during the term of this Agreement; or there shall exist
an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $10,000,000; or
8.11 CHANGE IN CONTROL.
-----------------
A Change of Control shall have occurred; or
8.12 INVALIDITY OF GUARANTIES; FAILURE OF SECURITY; REPUDIATION OF
-------------------------------------------------------------
OBLIGATIONS.
At any time after the execution and delivery thereof, (i) any Guaranty
made by a Material Subsidiary for any reason, other than the satisfaction in
full of all Obligations, shall cease to be in full force and effect (other than
in accordance with its terms) or shall be declared to be null and void, (ii) any
Collateral Document shall cease to be in full force and effect (other than by
reason of a release of Collateral thereunder in accordance with the terms hereof
or thereof, the satisfaction in full of the Obligations or any other termination
of such Collateral Document in accordance with the terms hereof or thereof) or
shall be declared null and void, or Administrative Agent shall not have or shall
cease to have a valid and perfected First Priority Lien in any substantial
portion of the Collateral purported to be covered thereby, in each case for any
reason other than the failure of any Agent or any Lender to take any action
within its control, or (iii) any Loan Party shall contest the validity
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or enforceability of any Loan Document in writing or deny in writing that it has
any further liability, including without limitation with respect to future
advances by Lenders, under any Loan Document to which it is a party;
8.13 FAILURE TO CONSUMMATE MERGER.
----------------------------
The Merger shall not be consummated in accordance with this Agreement
and the Merger Agreement concurrently with the making of the initial Loans, or
the Merger shall be unwound, reversed or otherwise rescinded in whole or in part
for any reason; or
8.14 FCC LICENSES.
------------
One or more FCC Licenses shall be terminated or revoked or
substantially and adversely modified or Company or any of its Subsidiaries shall
fail to renew any such FCC License at the stated expiration thereof, in each
case such that Company and its Subsidiaries are no longer able to own and/or
operate the related Cellular System or Systems or portions thereof and retain
the revenue received therefrom, and the overall effect of such termination,
revocation or failure to renew would be to reduce the Consolidated Adjusted
EBITDA by ten percent (10%) or more:
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan, the
obligation of Administrative Agent to issue any Letter of Credit and the right
of any Lender to issue any Letter of Credit hereunder shall thereupon terminate,
and (ii) upon the occurrence and during the continuation of any other Event of
Default, Administrative Agent shall, upon the written request or with the
written consent of Requisite Lenders, by written notice to Company, declare all
or any portion of the amounts described in clauses (a) through (c) above to be,
and the same shall forthwith become, immediately due and payable, and the
obligation of each Lender to make any Loan, the obligation of Administrative
Agent to issue any Letter of Credit and the right of any Lender to issue any
Letter of Credit hereunder shall thereupon terminate; provided that the
--------
foregoing shall not affect in any way the obligations of Lenders under
subsection 3.3C(i) or the obligations of Lenders to purchase participations in
any unpaid Swing Line Loans as provided in subsection 2.1A(iv).
Any amounts described in clause (b) above, when received by
Administrative Agent, shall be held by Administrative Agent pursuant to the
terms of the Collateral Account Agreement and shall be applied as therein
provided.
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Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
clause (ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than non-
payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then Requisite Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of Requisite Lenders and are not intended,
directly or indirectly, to benefit Company, and such provisions shall not at any
time be construed so as to grant Company the right to require Lenders to rescind
or annul any acceleration hereunder or to preclude Administrative Agent or
Lenders from exercising any of the rights or remedies available to them under
any of the Loan Documents, even if the conditions set forth in this paragraph
are met.
SECTION 9. AGENTS
9.1 APPOINTMENT.
-----------
A. APPOINTMENT OF AGENTS. BMo is hereby appointed Administrative Agent
and DLJ is hereby appointed as Syndication Agent, each so appointed hereunder
and under the other Loan Documents and each Lender hereby authorizes such Agent
to act as its agent in accordance with the terms of this Agreement and the other
Loan Documents. Administrative Agent agrees to act upon the express conditions
contained in this Agreement and the other Loan Documents, as applicable. The
provisions of this Section 9 are solely for the benefit of each Agent and
Lenders and Company shall have no rights as a third party beneficiary of any of
the provisions thereof. In performing its functions and duties under this
Agreement, each Agent shall act solely as an agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for Company or any of its Subsidiaries.
B. APPOINTMENT OF SUPPLEMENTAL COLLATERAL AGENTS. It is the purpose of
this Agreement and the other Loan Documents that there shall be no violation of
any law of any jurisdiction denying or restricting the right of banking
corporations or associations to transact business as agent or trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement
or any of the other Loan Documents, and in particular in case of the enforcement
of any of the Loan Documents, or in case Administrative Agent deems that by
reason of any present or future law of any jurisdiction it may not exercise any
of the rights, powers or remedies granted herein or in any of the other Loan
Documents or take any other action which may be desirable or necessary in
connection therewith, it may be necessary that
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Administrative Agent appoint an additional individual or institution as a
separate trustee, co-trustee, collateral agent or collateral co-agent reasonably
acceptable to Company (any such additional individual or institution being
referred to herein individually as a "SUPPLEMENTAL COLLATERAL AGENT" and
collectively as "SUPPLEMENTAL COLLATERAL AGENTS").
In the event that Administrative Agent appoints a Supplemental
Collateral Agent with respect to any Collateral, (i) each and every right,
power, privilege or duty expressed or intended by this Agreement or any of the
other Loan Documents to be exercised by or vested in or conveyed to
Administrative Agent with respect to such Collateral shall be exercisable by and
vest in such Supplemental Collateral Agent to the extent, and only to the
extent, necessary to enable such Supplemental Collateral Agent to exercise such
rights, powers and privileges with respect to such Collateral and to perform
such duties with respect to such Collateral, and every covenant and obligation
contained in the Loan Documents and necessary to the exercise or performance
thereof by such Supplemental Collateral Agent shall run to and be enforceable by
either Administrative Agent or such Supplemental Collateral Agent, and (ii) the
provisions of this Section 9 and of subsections 10.2 and 10.3 that refer to
Administrative Agent shall inure to the benefit of such Supplemental Collateral
Agent and all references therein to Administrative Agent shall be deemed to be
references to Administrative Agent and/or such Supplemental Collateral Agent, as
the context may require.
Should any instrument in writing from Company or any other Loan Party
be required by any Supplemental Collateral Agent so appointed by Administrative
Agent for more fully and certainly vesting in and confirming to him or it such
rights, powers, privileges and duties, Company shall, or shall cause such Loan
Party to, execute, acknowledge and deliver any and all such instruments promptly
upon request by Administrative Agent. In case any Supplemental Collateral
Agent, or a successor thereto, shall die, become incapable of acting, resign or
be removed, all the rights, powers, privileges and duties of such Supplemental
Collateral Agent, to the extent permitted by law, shall vest in and be exercised
by Administrative Agent until the appointment of a new Supplemental Collateral
Agent.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
-----------------------------------
A. POWERS; DUTIES SPECIFIED. Each Lender irrevocably authorizes each
Agent to take such action on such Lender's behalf and to exercise such powers,
rights and remedies hereunder and under the other Loan Documents as are
specifically delegated or granted to such Agent by the terms hereof and thereof,
together with such powers, rights and remedies as are reasonably incidental
thereto. Each Agent shall have only those duties and responsibilities that are
expressly specified in this Agreement and the other Loan Documents. Each Agent
may exercise such powers, rights and remedies and perform such duties by or
through its agents or employees. No Agent shall have, by reason of this
Agreement or any of the other Loan Documents, a fiduciary relationship in
respect of any Lender; and nothing in this Agreement or any of the other Loan
Documents, expressed or implied, is intended to or shall be so construed as to
impose upon any Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein.
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B. NO RESPONSIBILITY FOR CERTAIN MATTERS. No Agent shall be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectibility or sufficiency of this Agreement or any
other Loan Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by such Agent to Lenders or by or on
behalf of Company to such Agent or any Lender in connection with the Loan
Documents and the transactions contemplated thereby or for the financial
condition or business affairs of Company or any other Person liable for the
payment of any Obligations, nor shall such Agent be required to ascertain or
inquire as to the perfor mance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or the use of the Letters of Credit or
as to the existence or possible existence of any Event of Default or Potential
Event of Default. Anything contained in this Agreement to the contrary
notwithstanding, no Agent shall have any liability arising from confirma tions
of the amount of outstanding Loans or the Letter of Credit Usage or the
component amounts thereof.
C. EXCULPATORY PROVISIONS. Neither of the Agents nor any of their
respective officers, directors, employees or agents shall be liable to Lenders
for any action taken or omitted by any such Agent under or in connection with
any of the Loan Documents except to the extent caused by such Agent's gross
negligence or willful misconduct. Each Agent shall be entitled to refrain from
any act or the taking of any action (including the failure to take an action) in
connection with this Agreement or any of the other Loan Documents or from the
exercise of any power, discretion or authority vested in it hereunder or
thereunder unless and until such Agent shall have received instructions in
respect thereof from Requisite Lenders (or such other Lenders as may be required
to give such instructions under subsection 10.6) and, upon receipt of such
instructions from Requisite Lenders (or such other Lenders, as the case may be),
such Agent shall be entitled to act or (where so instructed) refrain from
acting, or to exercise such power, discretion or authority, in accordance with
such instructions. Without prejudice to the generality of the foregoing, (i)
each Agent shall be entitled to rely, and shall be fully protected in relying,
upon any communication, instrument or document believed by it to be genuine and
correct and to have been signed or sent by the proper person or persons, and
shall be entitled to rely and shall be protected in relying on opinions and
judgments of attorneys (who may be attorneys for Company and its Subsidiaries),
accountants, experts and other professional advisors selected by it; and (ii) no
Lender shall have any right of action whatsoever against any Agent as a result
of such Agent acting or (where so instructed) refraining from acting under this
Agreement or any of the other Loan Documents in accordance with the instructions
of Requisite Lenders (or such other Lenders as may be required to give such
instructions under subsection 10.6).
D. AGENTS ENTITLED TO ACT AS LENDERS. The agency hereby created shall
in no way impair or affect any of the rights and powers of, or impose any duties
or obligations upon, any Agent in its individual capacity as a Lender hereunder.
With respect to its participation in the Loans and the Letters of Credit, each
Agent shall have the same rights and powers hereunder as any other Lender and
may exercise the same as though it were not
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performing the duties and functions delegated to it hereunder, and the term
"Lender" or "Lenders" or any similar term shall, unless the context clearly
otherwise indicates, include such Agent in its individual capacity. Each Agent
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of banking, trust, financial advisory or other business with Company
or any of its Affiliates as if it were not performing the duties specified
herein, and may accept fees and other consideration from Company for services in
connection with this Agreement and otherwise without having to account for the
same to Lenders.
9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF CREDIT
-------------------------------------------------------------------------
WORTHINESS.
----------
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. No Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and no Agent shall have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.
9.4 RIGHT TO INDEMNITY.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify each Agent, to the extent that such Agent shall not have been
reimbursed by Company, for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses
(including, without limitation, counsel fees and disbursements) or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by or
asserted against such Agent in exercising its powers, rights and remedies or
performing its duties hereunder or under the other Loan Documents or otherwise
in its capacity as Administrative Agent or Syndication Agent, as the case may
be, in any way relating to or arising out of this Agreement or the other Loan
Documents; provided that no Lender shall be liable for any portion of such
--------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from any Agent's gross negligence or
willful misconduct. If any indemnity furnished to any Agent for any purpose
shall, in the opinion of such Agent, be insuffi cient or become impaired, such
Agent may call for additional indemnity and cease, or not commence, to do the
acts indemnified against until such additional indemnity is furnished.
9.5 SUCCESSOR AGENTS AND SWING LINE LENDER.
--------------------------------------
A. SUCCESSOR AGENTS. Administrative Agent may resign by giving 30
days' prior written notice thereof to Syndication Agent, Lenders and Company,
and such
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resignation is only effective upon the appointment of, and acceptance of such
appointment by, a successor Administrative Agent pursuant to this subsection
9.5, which successor must be a financial institution reasonably satisfactory to
Company; provided that Administrative Agent may resign at any time if Company
--------
shall be in default in the payment of any amount owed by Company to
Administrative Agent in such capacity. Administrative Agent may be removed at
any time with or without cause by an instrument or concurrent instruments in
writing delivered to Company and Administrative Agent and signed by Requisite
Lenders. Syndication Agent may resign at any time upon one Business Days' prior
notice thereof to Company and Administrative Agent. Upon any such notice of
resignation of Administrative Agent or Syndication Agent or any such removal of
Administrative Agent, Requisite Lenders shall have the right, upon five Business
Days' notice to Company, to appoint a successor Administrative Agent or
Syndication Agent, as the case may be, which replacement must be a financial
institution reasonably satisfactory to Company. Upon the acceptance of any
appointment as Administrative Agent or Syndication Agent, as the case may be,
hereunder by a successor Administrative Agent or Syndication Agent, as the case
may be, that successor Administrative Agent or Syndication Agent, as the case
may be, shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring or removed Administrative Agent or
Syndication Agent, as the case may be, and the retiring or removed
Administrative Agent or Syndication Agent, as the case may be, shall be dis
charged from its duties and obligations under this Agreement. After any retiring
or removed Administrative Agent's or Syndication Agent's, as the case may be,
resignation or removal hereunder as Administrative Agent or Syndication Agent,
as the case may be, the provisions of this Section 9 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent or Syndication Agent, as the case may be, under this Agreement.
B. SUCCESSOR SWING LINE LENDER. Any resignation or removal of
Administrative Agent pursuant to subsection 9.5A shall also constitute the
resignation or removal of BMo or its successor as Swing Line Lender, and any
successor Administrative Agent appointed pursuant to subsection 9.5A shall, upon
its acceptance of such appointment, become the successor Swing Line Lender for
all purposes hereunder. In such event (i) Company shall prepay any outstanding
Swing Line Loans made by the retiring or removed Administrative Agent in its
capacity as Swing Line Lender, (ii) upon such prepayment, the retiring or
removed Administrative Agent and Swing Line Lender shall surrender the Swing
Line Note held by it to Company for cancellation, and (iii) Company shall issue
and successor Administrative Agent and Swing Line Lender shall accept a new
Swing Line Note to the successor Administrative Agent and Swing Line Lender
substantially in the form of Exhibit VI annexed hereto, in the principal amount
----------
of the Swing Line Loan Commitment then in effect and with other appropriate
insertions and upon such issuance the replacement loan will be funded.
9.6 COLLATERAL DOCUMENTS AND GUARANTIES.
-----------------------------------
Each Lender hereby further authorizes Administrative Agent, on behalf
of and for the benefit of Lenders, to enter into each Collateral Document as
secured party and to be
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the agent for and representative of Lenders under each Guaranty, and
each Lender agrees to be bound by the terms of each Collateral Document and
Guaranty; provided that Administrative Agent shall not (i) enter into or consent
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to any material amendment, modification, termination or waiver of any provision
contained in any Collateral Document or Guaranty or (ii) release any Collateral
(except as otherwise expressly permitted or required pursuant to the terms of
this Agreement or the applicable Collateral Document), in each case without the
prior consent of Requisite Lenders (or, if required pursuant to subsection 10.6,
all Lenders); provided further, however, that, without further written consent
-------- ------- -------
or authorization from Lenders, Administrative Agent may execute any documents or
instruments necessary to (a) release any Lien encumbering any item of Collateral
that is the subject of a sale or other disposition of assets permitted by this
Agreement or to which Requisite Lenders have otherwise consented or (b) release
any Subsidiary Guarantor from the Subsidiary Guaranty if all of the capital
stock or other ownership interest of such Subsidiary Guarantor is, or all or
substantially all of the assets of such Subsidiary Guarantor are, sold to any
Person (other than an Affiliate of Company) pursuant to a sale or other
disposition permitted hereunder or to which Requisite Lenders have otherwise
consented. Anything contained in any of the Loan Documents to the contrary
notwithstanding, Company, Administrative Agent and each Lender hereby agree that
(X) no Lender shall have any right individually to realize upon any of the
Collateral under any Collateral Document or to enforce any Guaranty, it being
understood and agreed that all powers, rights and remedies under the Collateral
Documents and the Guaranties may be exercised solely by Administrative Agent for
the benefit of Lenders in accordance with the terms thereof, (Y) in the event of
a foreclosure by Administrative Agent on any of the Collateral pursuant to a
public or private sale, any Agent or any Lender may be the purchaser of any or
all of such Collateral at any such sale and Administrative Agent, as agent for
and representative of Lenders (but not any Lender or Lenders in its or their
respective individual capacities unless Requisite Lenders shall otherwise agree
in writing) shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold
at any such public sale, to use and apply any of the Obligations as a credit on
account of the purchase price for any collateral payable by Administrative Agent
at such sale and (Z) Administrative Agent shall provide a minimum of ten (10)
days prior written notification to Company and to the FCC before any Cellular
System equipment may be repossessed.
SECTION 10. MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
-------------------------------------------------------------
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its Commitments or
any Loan or Loans made by it or its Letters of Credit or participations therein
or any other interest herein or in any other Obligations owed to it; provided
--------
that no such sale, assignment, transfer or participation shall, without the
consent of Company, be made to Persons which are, or through Joint Ventures or
Affiliates,
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substantially engaged in the business of operating cellular telecommunications
businesses or which derive a material portion of their revenues from such
businesses, or require Company to file a registration statement with the
Securities and Exchange Commission or apply to qualify such sale, assignment,
transfer or participation under the securities laws of any state, or which does
not satisfy the requirements of the definition of Eligible Assignee; provided
--------
further that no such sale, assignment or transfer described in clause (i) above
- -------
shall be effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Administrative Agent and
recorded in the Register as provided in subsection 10.1B(ii); provided further
that no such sale, assignment, transfer or participation of any Letter of Credit
or any participation therein may be made separately from a sale, assignment,
transfer or participation of a corresponding interest in the Revolving Loan
Commitment and the Revolving Loans of the Lender effecting such sale,
assignment, transfer or participation; and provided further that, anything
-------- -------
contained herein to the contrary notwithstanding, the Swing Line Loan Commitment
and the Swing Line Loans of Swing Line Lender may not be sold, assigned or
transferred as described in clause (i) above to any Person other than a
successor Administrative Agent and Swing Line Lender to the extent contemplated
by subsection 9.5. Except as otherwise provided in this subsection 10.1, no
Lender shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment or transfer of, or any
granting of participations in, all or any part of its Commitments or the Loans,
the Letters of Credit or participations therein, or the other Obligations owed
to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter of
--------------------------------
Credit or participation therein, or other Obligation may (a) be assigned in
any amount to another Lender, or to an Affiliate of the assigning Lender or
another Lender, or to a Related Fund, with the giving of notice to Company
and Administrative Agent or (b) be assigned in an aggregate amount of not
less than $5,000,000 (or such lesser amount as shall constitute the
aggregate amount of the Commitments, Loans, Letters of Credit and
participations therein, and other Obligations of the assigning Lender or as
may be consented to by Company and Administrative Agent) to any other
Eligible Assignee with the consent of (x) Company (which consent shall only
be required so long as no Event of Default has occurred and is continuing)
and (y) Administrative Agent with respect to all Lenders (which consent of
Company and Administrative Agent shall not be unreasonably withheld or
delayed). To the extent of any such assignment in accordance with either
clause (a) or (b) above, the assigning Lender shall be relieved of its
obligations with respect to its Commitments, Loans, Letters of Credit or
participations therein, or other Obligations or the portion thereof so
assigned. The parties to each such assignment shall execute and deliver to
Administrative Agent, for its acceptance and recording in the Register, an
Assignment Agreement, together with a processing and recordation fee of
$3,500 payable as agreed between assignor and assignee (to be assessed at
Administrative Agent's election) and such forms, certificates or other
evidence, if any, with respect to United States federal income tax
withholding matters as the assignee under such
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Assignment Agreement may be required to deliver to Administrative Agent
pursuant to subsection 2.7B(iii)(a). Upon such execution, delivery,
acceptance and recordation, from and after the effective date specified in
such Assignment Agreement, (y) 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 Assignment Agreement, shall have the rights
and obligations of a Lender hereunder and (z) the assigning Lender
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment Agreement, relinquish its
rights (other than any rights which survive the termination of this
Agreement under subsection 10.9B) and be released from its obligations under
this Agreement (and, in the case of an Assignment Agreement covering all or
the remaining portion of an assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto; provided that,
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anything contained in any of the Loan Documents to the contrary
notwithstanding, if such Lender is the Issuing Lender with respect to any
outstanding Letters of Credit such Lender shall continue to have all rights
and obligations of an Issuing Lender with respect to such Letters of Credit
until the cancellation or expiration of such Letters of Credit and the
reimbursement of any amounts drawn thereunder). The Commitments hereunder
shall be modified to reflect the Commitment of such assignee and any
remaining Commitment of such assigning Lender and, if any such assignment
occurs after the issuance of the Notes hereunder, the assigning Lender
shall, upon the effectiveness of such assignment or as promptly thereafter
as practicable, surrender its applicable Notes to Administrative Agent for
cancellation, and thereupon new Notes shall be issued to the assignee and to
the assigning Lender, substantially in the form of Exhibit IV-A, Exhibit
------------ -------
IV-B, Exhibit V or Exhibit VI annexed hereto, as the case may be, with
---- --------- ----------
appropriate insertions, to reflect the new Commitments and/or outstanding
Tranche A Term Loans and/or Tranche B Term Loans, as the case may be, of the
assignee and the assigning Lender.
(ii) Acceptance by Administrative Agent; Recordation in Register. Upon
-----------------------------------------------------------
its receipt of an Assignment Agreement executed by an assigning Lender and
an assignee representing that it is an Eligible Assignee, together with the
processing and recordation fee referred to in subsection 10.1B(i) and any
forms, certificates or other evidence with respect to United States federal
income tax withholding matters that such assignee may be required to deliver
to Administrative Agent pursuant to subsection 2.7B(iii)(a), Administrative
Agent shall, if Agents and Company have consented to the assignment
evidenced thereby (in each case to the extent such consent is required
pursuant to subsection 10.1B(i)), (a) accept such Assignment Agreement by
executing a counterpart thereof as provided therein (which acceptance shall
evidence any required consent of Administrative Agent to such assignment),
(b) record the information contained therein in the Register, and (c) give
prompt notice thereof to Company. Administrative Agent shall maintain a copy
of each Assignment Agreement delivered to and accepted by it as provided in
this subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or
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omit to take any action hereunder except action directly affecting (i) the
extension of the scheduled final maturity date of any Loan allocated to such
participation (but not any scheduled payments of principal) or (ii) a reduction
of the principal amount of or the rate of interest payable on any Loan allocated
to such participation, and all amounts payable by Company hereunder (including
without limitation amounts payable to such Lender pursuant to subsections 2.6D,
2.7 and 3.6 to the extent not resulting in greater obligations of Company to
such participant than to Lender selling such participation) shall be determined
as if such Lender had not sold such participation.
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS AND OTHERS. In addition to the
assignments and participations permitted under the foregoing provisions of this
subsection 10.1, any Lender may assign and pledge all or any portion of its
Loans, the other Obligations owed to such Lender, and its Notes to any Federal
Reserve Bank as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any operating circular issued by
such Federal Reserve Bank and, with the consent of Administrative Agent and
Company, any Lender which is a fund may pledge all or any portion of its Loans
and Notes to its trustee in support of such fund's fees, expenses and indemnity
obligations to such trustee; provided that (i) no Lender shall, as between
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Company and such Lender, be relieved of any of its obligations hereunder as a
result of any such assignment and pledge and (ii) in no event shall such Federal
Reserve Bank be considered to be a "Lender" or be entitled to require the
assigning Lender to take or omit to take any action hereunder.
E. INFORMATION. Subject to the provisions of subsection 10.18, each
Lender may furnish any information concerning Company and its Subsidiaries in
the possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants).
F. REPRESENTATIONS OF LENDERS. Each Lender listed on the signature
pages hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
10.2 EXPENSES.
--------
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents and any consents,
amendments, waivers or other modifications thereto (including in each case
reasonable attorneys' fees of one law firm and
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any local counsel engaged by such firm); (ii) all the costs of furnishing all
opinions by counsel for Company (including without limitation any opinions
requested by Lenders as to any legal matters arising hereunder) and of Company's
performance of and compliance with all agreements and conditions on its part to
be performed or complied with under this Agreement and the other Loan Documents
including, without limitation, with respect to confirming compliance with
insurance and solvency requirements; (iii) the reasonable fees, expenses and
disbursements of counsel to Arranger and Syndication Agent in connection with
the negotiation, preparation, execution and administration of the Loan Documents
and any consents, amendments, waivers or other modifications thereto and any
other documents or matters requested by Company; (iv) all the actual costs and
reasonable expenses of creating and perfecting Liens in favor of Administrative
Agent on behalf of Lenders pursuant to any Collateral Document, including
without limitation filing and recording fees, expenses and taxes, stamp or
documentary taxes, search fees, title insurance premiums, and reasonable fees,
expenses and disbursements of counsel to Syndication Agent and Administrative
Agent and of counsel providing any opinions that Administrative Agent may
request in respect of the Collateral Documents or the Liens created pursuant
thereto; (v) the custody or preservation of any of the Collateral; (vi) all
other actual and reasonable costs and expenses incurred by Arranger, Syndication
Agent or Administrative Agent in connection with the syndication of the
Commitments and the negotiation, preparation and execution of the Loan Documents
and any consents, amendments, waivers or other modifications thereto and the
transactions contemplated thereby; and (vii) after the occurrence of an Event of
Default, all costs and expenses, including reasonable attorneys' fees of one law
firm (and local counsel engaged by such firm) incurred by Agents and Lenders in
enforcing any Obligations of or in collecting any payments due from any Loan
Party hereunder or under the other Loan Documents by reason of such Event of
Default (including, without limitation, in connection with the sale of,
collection from, or other realization upon any of the Collateral or the
enforcement of the Guaranties) or in connection with any refinancing or
restructuring of the credit arrangements provided under this Agreement in the
nature of a "work-out" or pursuant to any insolvency or bankruptcy proceedings.
10.3 INDEMNITY.
---------
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Arranger, Agents and Lenders, and the officers,
directors and employees of Arranger, Agents and Lenders (collectively called the
"INDEMNITEES"), from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that Company shall not have any obligation to any
--------
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction.
As used herein, "INDEMNIFIED LIABILITIES" means, collectively, any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees
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and disbursements of counsel for Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened by
any Person, whether or not any such Indemnitee shall be designated as a party or
a potential party thereto, and any fees or expenses incurred by Indemnitees in
enforcing this indemnity), whether direct, indirect or consequential and whether
based on any federal, state or foreign laws, statutes, rules or regulations
(including securities and commercial laws, statutes, rules or regulations), on
common law or equitable cause or on contract or otherwise, that may be imposed
on, incurred by, or asserted against any such Indemnitee, in any manner relating
to or arising out of this Agreement or the other Loan Documents or the Related
Agreements or the transactions contemplated hereby or thereby (including
Lenders' agreement to make the Loans hereunder or the use or intended use of the
proceeds thereof or the issuance of Letters of Credit hereunder or the use or
intended use of any thereof, or any enforcement of any of the Loan Documents
(including any sale of, collection from, or other realization upon any of the
Collateral or the enforcement of the Guaranties).
In case any action or proceeding shall be brought or asserted against
an Indemnitee in respect of which indemnity may be sought against Company under
the provisions of this subsection 10.3, such Indemnitee shall promptly notify
Company in writing and Company shall, if requested by such Indemnitee or if
Company desires to do so, assume the defense thereof, including the employment
of counsel reasonably satisfactory to such Indemnitee. The failure to so notify
Company shall not affect any obligations Company may have to such Indemnitee
under the provisions of this subsection 10.3 or otherwise except to the extent
that Company is adversely affected by such failure. Such Indemnitee shall have
the right to employ separate counsel in such action or proceeding and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnitee unless: (i) Company has agreed to
pay such fees and expenses, (ii) Company has failed to assume the defense of
such action or proceeding and employ counsel reasonably satisfactory to such
Indemnitee or (iii) such Indemnitee shall have been advised in writing by
counsel that under prevailing ethical standards there may be a conflict between
the positions of Company and such Indemnitee in conducting the defense of such
action or proceeding or that there may be legal defenses available to such
Indemnitee different from or in addition to those available to Company, in which
case, if such Indemnitee notifies Company in writing that it elects to employ
separate counsel at the expense of Company, Company shall not have the right to
assume the defense of such action or proceeding on behalf of such Indemnitee;
provided, however, that Company shall not, in connection with any one such
- -------- -------
action or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be responsible hereunder for the reasonable fees and expenses
of more than one such firm of separate counsel, in addition to any local
counsel. Company shall not be liable for any settlement of any such action or
proceeding effected without the written consent of Company (which shall not be
unreasonably withheld).
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum
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portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees
or any of them.
Notwithstanding the foregoing, nothing contained in subsections
2.1D(v) and 5.12 and this subsection 10.3 shall require Company to indemnify any
Lenders (a) from the consequences of such Lender's failure to make any Loan
required to be made by it hereunder or to make any contributions with respect
thereto and Company shall preserve all rights and remedies against such
defaulting Lender or (b) for claims made or threatened to be made by another
Lender.
10.4 SET-OFF; SECURITY INTEREST IN DEPOSIT ACCOUNTS.
----------------------------------------------
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuance of any Event of Default each Lender is hereby authorized
by Company at any time or from time to time, without notice to Company or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including,
but not limited to, Indebtedness evidenced by certificates of deposit, whether
matured or unmatured, but not including trust accounts) and any other
Indebtedness at any time held or owing by that Lender to or for the credit or
the account of Company against and on account of the obligations and liabilities
of Company to that Lender under this Agreement, the Letters of Credit and
participations therein and the other Loan Documents, including, but not limited
to, all claims of any nature or description arising out of or connected with
this Agreement, the Letters of Credit and participations therein or any other
Loan Document, irrespective of whether or not (i) that Lender shall have made
any demand hereunder or (ii) the principal of or the interest on the Loans or
any amounts in respect of the Letters of Credit or any other amounts due
hereunder shall have become due and payable pursuant to Section 8 and although
said obligations and liabilities, or any of them, may be contin gent or
unmatured. Company hereby further grants to each Agent and each Lender a
security interest in all deposits and accounts maintained with such Agent or
such Lender as security for the Obligations.
If, at any time, (i) any Lender shall be a Defaulting Lender and shall
owe a Defaulted Advance to Company, (ii) no Event of Default shall have occurred
and be continuing and neither the Requisite Lenders (determined without regard
for the proviso in the definition thereof) nor Administrative Agent shall have
asserted in writing to Company that an Event of Default shall have occurred and
be continuing and (iii) Company shall be required to make any payment hereunder
or under any Loan Document to or for the account of such Defaulting Lender,
then, unless Company otherwise notifies Administrative Agent, Company shall, to
the fullest extent permitted by law, set off and apply the amount of such
payment against the Defaulted Advance plus interest thereon. Prior to the due
time for any payment with respect to which Company intends to exercise its
rights under this subsection 10.4, Company shall deliver to Administrative Agent
a notice signed by the Company's chairman of the board (if an officer),
president, executive vice presidents, vice presidents, chief financial officer
or treasurer stating that (x) the conditions set forth in clauses (i) and
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(ii) above are satisfied, (y) the amount of the Defaulted Advance and the
applicable Defaulting Lender, and (z) the amount to be set off.
Each Lender specifically acknowledges the provisions of this
subsection 10.4. Each Lender further acknowledges that one of the consequences
of such provisions is that amounts received by Administrative Agent for the
account of Lenders may not be distributed on a Pro Rata basis. Administrative
Agent shall be conclusively entitled to rely on any notice furnished pursuant to
this subsection 10.4 and neither Administrative Agent nor any of its directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by them as contemplated or required by this subsection 10.4 or in
reliance upon any such notice except to the extent of its gross negligence or
wilful misconduct in determining whether any notice under this subsection 10.4
on its face meets the requirements thereof.
10.5 RATABLE SHARING.
---------------
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Administrative Agent and each other Lender of the receipt of such payment and
(ii) apply a portion of such payment to purchase participations (which it shall
be deemed to have purchased from each seller of a participation simultaneously
upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; provided that if all or part of such proportionately
--------
greater payment received by such purchasing Lender is thereafter recovered from
such Lender upon the bankruptcy or reorganization of Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for such
participations shall be returned to such purchasing Lender ratably to the extent
of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so purchased
may exercise any and all rights of banker's lien, set-off or counterclaim with
respect to any and all monies owing by Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation
held by that holder.
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10.6 AMENDMENTS AND WAIVERS.
----------------------
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
--------
waiver or consent which: increases the amount of any of the Commitments or
reduces the principal amount of any of the Loans; increases the maximum amount
of Letters of Credit; changes in any manner the definition of "Class" or the
definition of "Pro Rata Share" or the definition of "Requisite Class Lenders" or
the definition of "Requisite Lenders"; changes in any manner any provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of all Lenders; postpones the scheduled final maturity date (but not
the date of any scheduled installment of principal) of any of the Loans;
postpones the Revolving Loan Commitment Termination Date; postpones the date on
which any interest or any fees are payable; decreases the interest rate borne by
any of the Loans (other than any waiver of any increase in the interest rate
applicable to any of the Loans pursuant to subsections 2.2A or 2.2E) or the
amount of any fees payable hereunder; increases the maximum duration of Interest
Periods permitted hereunder; reduces the amount or postpones the due date of any
amount payable in respect of, or extends the required expiration date of, any
Letter of Credit; changes in any manner the obligations of Lenders relating to
the purchase of participations in Letters of Credit; releases any Lien granted
in favor of Administrative Agent with respect to 25% or more in aggregate fair
market value of the Collateral, other than in accordance with the Loan
Documents; releases Holdings from its obligations under the Holdings Guaranty or
releases any Subsidiary Guarantor from their obligations under the Subsidiary
Guaranty, in each case other than in accordance with the terms of the Loan
Documents; or changes in any manner the provisions contained in subsection 8.1
or this subsection 10.6 shall be effective only if evidenced by a writing signed
by or on behalf of all Lenders; provided, further, that if any matter described
-------- -------
in the foregoing proviso relates only to a Tranche A Term Loan or a Revolving
Loan, the approval of all Lenders who hold Tranche A Term Loans or hold
Revolving Loan Commitments shall be sufficient and, if any matter described in
the foregoing proviso relates only to a Tranche B Term Loan, the approval of all
Lenders who hold Tranche B Term Loans shall be sufficient. In addition, (i) any
amendment, modification, termination or waiver of any of the provisions
contained in Section 4 shall be effective only if evidenced by a writing signed
by or on behalf of Agents and Requisite Lenders, (ii) no amendment,
modification, termination or waiver of any provision of any Note shall be
effective without the written concurrence of the Lender which is the holder of
that Note, (iii) no amendment, modification, termination or waiver of any
provision of subsection 2.1A(iv) or of any other provision of this Agreement
relating to the Swing Line Loan Commitment or the Swing Line Loans shall be
effective without the written concurrence of Swing Line Lender, (iv) no
amendment, modification, termination or waiver of any provision of Section 9 or
of any other provision of this Agreement which, by its terms, expressly requires
the approval or concurrence of Agents shall be effective without the written
concurrence of Agents, and (v) no amendment, modification, termination or waiver
of any provision of subsection 2.4 which has the effect of changing any interim
scheduled payments, voluntary or mandatory prepayments, or Commitment reductions
applicable to either Class
142
<PAGE>
(the "AFFECTED CLASS") in a manner that disproportionately disadvantages such
Class relative to the other Class shall be effective without the written
concurrence of Requisite Class Lenders of the Affected Class (it being
understood and agreed that any amendment, modification, termination or waiver of
any such provision which only postpones or reduces any interim scheduled
payment, voluntary or mandatory prepayment, or Commitment reduction from those
set forth in subsection 2.4 with respect to one Class but not the other Class
shall be deemed to disproportionately disadvantage such one Class but not to
disproportionately disadvantage such other Class for purposes of this clause
(v)). Administrative Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it was given. No
notice to or demand on Company in any case shall entitle Company 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 10.6 shall be binding upon each Lender at the time outstanding, each
future Lender and, if signed by Company, on Company.
10.7 SUCCESSORS AND ASSIGNS.
----------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and permitted assigns and shall inure to the benefit of
the parties hereto and the successors and permitted assigns of Lenders (it being
understood that Lenders' rights of assignment and participation are subject to
subsection 10.1). Neither Company's rights or obligations hereunder nor any
interest therein may be assigned or delegated by Company without the prior
written consent of all Lenders.
10.8 NOTICES.
-------
Unless otherwise specifically provided herein, any notice or other
communi cation herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Agents shall not be effective
--------
until received. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or (i) as
to Company and Agents, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Administrative Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
------------------------------------------------------
A. All representations, warranties and agreements made herein
shall survive the execution and delivery of this Agreement and the making of the
Loans and the issuance of the Letters of Credit hereunder.
143
<PAGE>
B. Notwithstanding anything in this Agreement or implied by law to
the contrary, the agreements of Company set forth in subsections 2.6D, 2.7,
3.5A, 3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in
subsections 9.2C, 9.4, 10.5 and 10.18 shall survive the payment of the Loans,
the cancellation or expiration of the Letters of Credit and the reimbursement of
any amounts drawn thereunder, and the termination of this Agreement; provided
--------
that all agreements of Company set forth in subsection 2.6D and 2.7 shall
terminate on the 60th day after the termination of this Agreement except with
respect to claims for amounts payable under such subsections made to Company
prior to such 60th day after such termination.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of any Agent or any Lender in the
exercise of any power, right or privilege hereunder or under any other Loan
Document shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege. All rights and
remedies existing under this Agreement and the other Loan Documents are
cumulative to, and not exclusive of, any rights or remedies otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
-------------------------------
None of Agents nor any Lender shall be under any obligation to marshal
any assets in favor of Company or any other party or against or in payment of
any or all of the Obligations. To the extent that Company makes a payment or
payments to Administrative Agent or Lenders (or to Administrative Agent for the
benefit of Lenders), or any of Agents or Lenders enforce any security interests
or exercise their rights of setoff, and such payment or payments or the proceeds
of such enforcement or setoff 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, any
other state or federal law, common law or any equitable cause, then, to the
extent of such recovery, the obligation or part thereof originally intended to
be satisfied, and all Liens, rights and remedies therefor or related thereto,
shall be revived and continued in full force and effect as if such payment or
payments had not been made or such enforcement or setoff had not occurred.
10.12 SEVERABILITY.
------------
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obliga tion in any other jurisdiction,
shall not in any way be affected or impaired thereby.
144
<PAGE>
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
----------------------------------------------------------
The obligations of Lenders hereunder are several and no Lender shall
be responsible for the obligations or Commitments of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as 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, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement as provided herein and it shall not be
necessary for any other Lender to be joined as an additional party in any
proceeding for such purpose.
10.14 HEADINGS.
--------
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
--------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
10.16 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND
DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION
AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR
145
<PAGE>
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED
IN ACCORDANCE WITH SUBSECTION 10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT
TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH PROCEEDING IN ANY
SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE
COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1402 OR
OTHERWISE.
10.17 WAIVER OF JURY TRIAL.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE 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. Each party hereto acknowledges that this waiver
is a material inducement to enter into a business relationship, that each has
already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it 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
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE
146
<PAGE>
HEREUNDER. In the event of litigation, this Agreement may be filed as a written
consent to a trial by the court.
10.18 CONFIDENTIALITY.
---------------
Each Lender shall keep confidential all non-public information
obtained pursuant to the requirements of this Agreement, it being understood and
agreed by Company that in any event a Lender may make disclosures to Affiliates
of such Lender or to any Person who evaluates, approves, structures or
administers the Loans on behalf of a Lender and who is subject to the
confidentiality provisions of this subsection 10.18, or disclosures reasonably
required by any bona fide assignee, transferee or participant in connection with
the contemplated assignment or transfer by such Lender of any Loans or any
participations therein; provided that such Affiliates and proposed assignees,
--------
transferees and participants shall be notified that the confidentiality
provisions of this Agreement shall be binding on them or disclosures required or
requested by any govern mental agency or representative thereof or pursuant to
legal process; provided that, unless specifically prohibited by applicable law
--------
or court order, each Lender shall notify Company of any request by any
governmental agency or representative thereof (other than any such request in
connection with any examination of the financial condition of such Lender by
such governmental agency) for disclosure of any such non-public information
prior to disclosure of such information; and provided, further that in no event
-------- -------
shall any Lender be obligated or required to return any materials furnished by
Company or any of its Subsidiaries.
10.19 COUNTERPARTS; EFFECTIVENESS.
---------------------------
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith 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 such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Agents of written or telephonic notification of such execution and authorization
of delivery thereof.
[Remainder of page intentionally left blank]
147
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.
HOLDINGS: PRICE COMMUNICATIONS CELLULAR HOLDINGS, INC.
By: /s/
-------------------------------------
Title: PRESIDENT AND TREASURER
-------------------------------------
Notice Address:
45 Rockefeller Plaza
New York, New York 10020
Attention: Robert Price
Telephone: (212) 757-5600
Telecopy: (212) 397-3755
COMPANY: PRICE COMMUNICATIONS WIRELESS, INC.
By: /s/
-------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
-------------------------------------
Notice Address:
45 Rockefeller Plaza
New York, New York 10020
Attention: Robert Price
Telephone: (212) 757-5600
Telecopy: (212) 397-3755
S-1
<PAGE>
LENDERS: DLJ CAPITAL FUNDING, INC.,
individually and as Syndication Agent
By: /s/
-------------------------------------
Title: Managing Director
-------------------------------------
Notice Address:
277 Park Avenue, 9th Floor
New York, NY 10172
Attention: Tom Newberry
Telephone: 212-892-2409
Telecopy: 212-892-5286
S-2
<PAGE>
BANK OF MONTREAL, CHICAGO BRANCH,
individually and as Administrative Agent
By: /s/ YVONNE BOS
--------------------------------------
YVONNE BOS
Title: SENIOR VICE PRESIDENT
--------------------------------------
Notice Address:
430 Park Avenue
New York, NY 10022
Attention: Yvonne Bos
Telephone: 212-605-1424
Telecopy: 212-605-1648
S-3
<PAGE>
CORESTATES BANK, N.A.,
individually and as Documentation Agent
By: /s/
--------------------------------------
Title: Commercial Officer
--------------------------------------
Notice Address:
1339 Chestnut Street
Philadelphia, CA 19107
Attention: Charles Brinley
Telephone: 215-786-4345
Telecopy: 215-786-7721
S-4
<PAGE>
BANK OF TOKYO-MITSUBISHI TRUST COMPANY
By: /s/ John P. Judge
--------------------------------------
John P. Judge
Title: VP & Department Head
--------------------------------------
Notice Address:
1251 Avenue of the Americas, 12th floor
New York, NY 10020-1104
Attention: John Judge
Telephone: 212-782-4383
Telecopy: 212-782-4935
S-5
<PAGE>
THE FUJI BANK, LIMITED, NEW YORK BRANCH
By: /s/ Teiji Teramoto
------------------------------------
TEIJI TERAMOTO
Title: Vice President & Manager
------------------------------------
Notice Address:
Leveraged Finance
Two World Trade Center, 79th Floor
New York, NY 10048
Attention: Mark Gronich
Telephone: 212-898-2051
Telecopy: 212-898-2399
S-6
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: /s/
-----------------------------------
Title: Senior Vice President
-----------------------------------
Notice Address:
165 Broadway
New York, NY 10006
Attention: Bob Pacifici
Telephone: 212-335-4801
Telecopy: 212-608-3452
with a copy to:
245 Peachtree Center Ave. N.E., Suite 2801
Atlanta, GA 30303
Attention: Tom Meyer
Telephone: 404-659-7100
Telecopy: 404-658-9751
S-7
<PAGE>
NATIONAL WESTMINSTER BANK PLC
By: /s/ Andrew S. Weinberg
-------------------------------------
Andrew S. Weinberg
Title: Vice President
-------------------------------------
Notice Address:
175 Water Street, 26th floor
New York, NY 10038
Attention: Andrew S. Weinberg
Telephone: 212-602-4438
Telecopy: 212-602-4506
S-8
<PAGE>
EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
BY AND AMONG
PRICE COMMUNICATIONS CORPORATION,
PRICE COMMUNICATIONS CELLULAR MERGER CORP.
AND
WIRELESS ONE NETWORK, L.P.
Dated as of June 13, 1997
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE 1 PURCHASE AND SALE OF ASSETS......................... -1-
---------------------------
1.1 Sale and Purchase of Assets................................. -1-
1.2 Excluded Assets............................................. -3-
1.3 Assumed Liabilities......................................... -4-
1.4 Excluded Liabilities........................................ -4-
1.5 Purchase Price Computation and Payment...................... -5-
1.6 Closing Date................................................ -9-
1.7 Closing Date Deliveries..................................... -9-
1.8 Further Assurances.......................................... -12-
ARTICLE 2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER -12-
---------------------------------------------------
2.1 Due Organization; Power and Authority....................... -12-
2.2 Authority................................................... -13-
2.3 No Material Adverse Change.................................. -14-
2.4 Licenses.................................................... -14-
2.5 Title to Property........................................... -14-
2.6 To the best of Seller's knowledge........................... -15-
2.7 Completeness of Assets...................................... -16-
2.8 Palmer Representations...................................... -16-
2.9 Broker or Finder............................................ -16-
2.10 Financing................................................... -16-
2.11 FCC Qualification........................................... -17-
ARTICLE 3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER. -17-
---------------------------------------------------
3.1 Organization of Buyer....................................... -17-
3.2 Authority of Buyer.......................................... -17-
3.3 No Broker or Finder......................................... -18-
3.4 Financing................................................... -18-
3.5 FCC Qualification........................................... -18-
ARTICLE 4 ACTIONS PRIOR TO THE CLOSING DATE................... -18-
---------------------------------
4.1 Investigation of System by Buyer............................ -18-
4.2 Preserve Accuracy of Representations and Warranties......... -19-
4.3 Consents and Approvals...................................... -19-
4.4 FCC Compliance.............................................. -20-
4.5 No Public Announcements..................................... -20-
4.6 Environmental Surveys....................................... -21-
4.7 Hart-Scott-Rodino Act Filings............................... -21-
4.8 Exclusive Dealing........................................... -22-
4.9 Title Insurance and Surveys................................. -22-
4.10 Buyer Commitment Letter..................................... -22-
ARTICLE 5 OTHER AGREEMENTS.................................... -22-
----------------
5.1 Non-Competition Agreements.................................. -22-
5.2 System Employees............................................ -23-
5.3 Transition Services Agreements.............................. -23-
5.4 Financial Statement......................................... -24-
-i-
<PAGE>
ARTICLE 6 CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER........ -24-
--------------------------------------------
6.1 No Misrepresentation or Breach of Covenants and
Warranties.................................................. -24-
6.2 Corporate/Partnership Action................................ -25-
6.3 No Restraint or Litigation.................................. -25-
6.4 Necessary Consents and Permits.............................. -25-
6.5 No Material Adverse Change.................................. -25-
6.6 Palmer Agreement............................................ -25-
6.7 Legal Opinion............................................... -25-
6.8 Other Documentation......................................... -26-
ARTICLE 7 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER....... -26-
---------------------------------------------
7.1 No Misrepresentation or Breach of Covenants and
Warranties.................................................. -26-
7.2 Partnership Action.......................................... -26-
7.3 No Restraint or Litigation.................................. -26-
7.4 Legal Opinion............................................... -26-
7.5 Palmer Agreement............................................ -26-
7.6 Necessary Consents and Permits.............................. -27-
7.7 Other Documentation......................................... -27-
ARTICLE 8 INDEMNIFICATION..................................... -27-
---------------
8.1 Indemnification by Seller................................... -27-
8.2 Indemnification by Buyer.................................... -27-
8.3 Limitation of Damages....................................... -28-
8.4 Notice of Claims............................................ -29-
ARTICLE 9 TERMINATION......................................... -29-
-----------
9.1 Termination................................................. -29-
9.2 Remedies for Termination.................................... -32-
9.3 Risk of Loss................................................ -32-
ARTICLE 10 GENERAL PROVISIONS.................................. -33-
------------------
10.1 Confidential Nature of Information.......................... -33-
10.2 Governing Law............................................... -33-
10.3 Notices..................................................... -33-
10.4 Successors and Assigns...................................... -34-
10.5 Entire Agreement; Amendments................................ -34-
10.6 Waivers..................................................... -34-
10.7 Expenses.................................................... -35-
10.8 Sales and Transfer Taxes.................................... -35-
10.9 Execution of Counterparts................................... -35-
10.10 Bulk Sales Compliance and Other Agreements.................. -35-
-ii-
<PAGE>
SCHEDULES
---------
1.1(a) Fixed Assets
1.1(b) Real Property
1.1(c) Contracts
1.1(d) Licenses
1.1(f) Cellular Telephone Units
1.2 Excluded Assets
2.2 Conflicts/Violations
2.6(c) Undisclosed Liabilities
4.3 Consents
EXHIBITS
--------
1.5(a)(i) Holdback Escrow Agreement
1.7(a)(i) General Assignment and
Warranty Bill of Sale
-iii-
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
This ASSET PURCHASE AGREEMENT ("Agreement"), dated as of June 13, 1997, is
by and among PRICE COMMUNICATIONS CORPORATION, a New York corporation ("Price"),
PRICE COMMUNICATIONS CELLULAR MERGER CORP., a Delaware corporation ("Merger Sub"
and together with Price, the "Seller"), and WIRELESS ONE NETWORK, L.P., a
Delaware limited partnership ("Buyer").
RECITALS
--------
A. Palmer Wireless, Inc., a Delaware corporation ("Palmer"), owns, among
other things, 100% of the issued and outstanding shares of capital stock of
Palmer Wireless Holdings, Inc., a Delaware corporation ("PWHI"). PWHI, in turn,
owns, among other things, 99% of the partnership interests of FMT, Ltd., a
Florida limited partnership ("FMT").
B. FMT owns and operates all of the non-wireline cellular telephone
business and system, including all of the assets used in connection therewith,
serving the Fort Myers, Florida Metropolitan Statistical Area (the "System").
C. Merger Sub, a wholly-owned subsidiary of Price, has entered into an
Agreement and Plan of Merger (as in effect on the date hereof, the "Palmer
Agreement") dated as of May 23, 1997, pursuant to which Seller will, through a
merger transaction (the "Merger"), acquire all of the issued and outstanding
shares of capital stock of Palmer.
D. Upon the effectiveness of the Merger, the parties desire that Seller
will cause FMT to sell all of the assets of the System to Buyer, upon the terms
and subject to the conditions set forth herein.
The parties agree, for good and valuable consideration, as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
---------------------------
1.1 Sale and Purchase of Assets. On the terms and subject to the
---------------------------
conditions set forth in this Agreement, Seller shall, on the Closing Date, cause
FMT and any other Affiliates of Seller, if applicable, to sell, transfer and
assign to Buyer, FMT's, Seller's and such other of Seller's Affiliates entire
right, title and interest in and to all of the assets and rights of FMT, Seller
and any other Affiliates of Seller, if applicable, related to and used in or
located on the real property used in the System as it is currently conducted
(other than the Excluded Assets (as defined in Section 1.2 below)), free and
clear of all liens, security interests, pledges, encumbrances, claims and
equities of every kind (the "Assets"), including, without limitation, the
following:
(a) Fixed Assets and Personal Property. All fixed assets and
----------------------------------
personal property of every type or description owned, used or leased on the
Closing Date, including, without
<PAGE>
limitation, all transmitters/receivers, towers and antennas, switching
equipment, computer hardware and all spare parts, accessories and supplies
related thereto ("Fixed Assets"), including, without limitation, the Fixed
Assets identified on Schedule 1.1(a) attached hereto and made a part
hereof.
(b) Real Property. All real property (and any interest therein and
-------------
improvements thereon) ("Real Property"), including, without limitation, the
Real Property identified on Schedule 1.1(b) attached hereto and made a part
hereof.
(c) Leases, Contracts, Options and Other Obligations. All leases,
------------------------------------------------
contracts, options, manufacturer's warranties and other rights and
obligations held on the Closing Date ("Contracts") (i) set forth on
Schedule 1.1(c) attached hereto and made a part hereof, (ii) existing on
the date hereof and not set forth on Schedule 1.1(c) attached hereto which
require aggregate payments not to exceed $20,000.00 per Contract up to
$200,000.00 in the aggregate for all such Contracts, (iii) any other
Contracts entered into by FMT in the ordinary course of business between
the date hereof and the Closing Date not to exceed individual payments per
Contract of $100,000.00 with aggregate payments of $250,000.00 for all such
Contracts and (iv) any other Contracts approved in writing by Buyer.
(d) Licenses, Certificates, Permits and Authorizations. All
--------------------------------------------------
licenses, certificates, permits and authorizations, and all applications
and construction permits related thereto, (the "Licenses") from the Federal
Communications Commission (the "FCC") and Federal Aviation Administration
("FAA") issued in connection with the System on or before the Closing Date,
including, without limitation the Licenses identified on Schedule 1.1(d)
attached hereto and made a part hereof.
(e) Current Assets. All cash, cash equivalents and marketable
--------------
securities ("Cash"), trade and other accounts receivable and accrued
revenues from third parties who are not Affiliates of Seller or Palmer
("Receivables"), prepaid expenses ("Prepaids"), and deposits ("Deposits"),
as of the Closing Date and related to or generated by the operation of the
System (Cash, Receivables, Prepaids, Deposits and Cellular Phones (as
defined in Section 1.1(f)), are collectively referred to as the "Current
Assets").
(f) Cellular Telephone Units. All cellular telephone units and
------------------------
related components, spare parts and accessories, owned, used or leased and
either (i) related to and used in the System and either maintained in
inventory or shipped by a supplier and en-route for delivery on the Closing
Date and (ii) related to the System and in the custody of customers of the
System (on a rented or leased basis) or repair or service personnel on the
Closing Date ("Cellular Phones"), including, without limitation the
Cellular Phones identified on Schedule 1.1(f) attached hereto and made a
part hereof.
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(g) Other Assets and Rights. All computer software including source
-----------------------
and object codes (to the extent transferable), accounting data, trade
secrets, customer lists, supplier lists, goodwill, causes of action, books
and records (other than the general ledger and account books of original
entry (provided that Seller will provide Buyer with access to such items at
Buyer's reasonable request following the Closing)) and other tangible and
intangible property related to the System on the Closing Date.
For purposes of this Agreement, an "Affiliate" of a Person shall mean any other
Person directly or indirectly owning, controlling or holding, with power to
vote, ten percent (10%) or more of the outstanding voting securities of such
first-named Person; and any other Person ten percent (10%) or more of whose
outstanding voting securities are directly or indirectly controlled by or under
common control with such first-named Person. As used herein, the term
"control," together with "controlled," "controlling" or similar variants used
herein, means the possession, directly or indirectly, of the power to direct or
cause the direction and management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise. "Person" shall mean
an individual, partnership, corporation, association, joint venture, trust or
other entity. On and after the effective date of the Merger, Palmer and its
Affiliates shall be Affiliates of Seller.
1.2 Excluded Assets. Buyer shall not acquire the following assets used in
---------------
or located on the real property used in connection with the System ("Excluded
Assets"):
(a) that certain Office Lease dated February 1, 1990 ("Headquarters
Lease") between University Associates, Ltd., Songy Partners, Ltd.,
successors in interest to University Center Investors, Ltd., as Landlord,
and Palmer, successor in interest to Palmer Cellular Partnership, as Tenant
in connection with Palmer's University Park corporate headquarters (the
"Headquarters") located in Fort Myers, Florida, as amended, and any assets
located therein which are not part of the Assets (such as the cell site
equipment, antenna and lines located on the fifth floor and the roof of the
Headquarters);
(b) those assets described on Schedule 1.2 attached hereto and made a
part hereof;
(c) any Contract for which consent is required but not obtained; and
(d) that certain receivable from Palmer or its Affiliates in the
amount of $3,129,112 (the "Palmer Receivable") and any other accounts
receivable from Palmer or its Affiliates.
1.3 Assumed Liabilities. Concurrent with the transfer of the Assets to
-------------------
Buyer on the Closing Date, Buyer shall assume or
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undertake solely and only the following obligations, commitments and liabilities
of FMT (a) those arising under the Contracts, and then only for those
obligations, commitments and liabilities to the extent they relate to the period
from and after the Closing Date, (b) FMT's trade accounts payable arising in the
ordinary course of business (but only to the extent such payables have been
included in the calculation of Working Capital pursuant to Section 1.5(c)),
including, but not limited to, accounts payable relating to the purchase of
Fixed Assets and Cellular Phones and (c) accrued expenses (such as normal
proratable items such as security deposits, rents, estimated personal property
and real estate taxes and deferred revenue, and wages and payroll costs and
benefits for employees hired by Buyer) but only to the extent such amounts have
been included in the calculation of Working Capital pursuant to Section 1.5(c)
(the items set forth in clauses (b) and (c) are collectively, the "Assumed
Current Liabilities") but only to the extent that the Assumed Current
Liabilities are outstanding and recorded on the books and records of FMT on the
Closing Date and related to or generated by the operation of the System but in
each case excluding any such item which is an Excluded Liability (those items
set forth in clauses (a), (b) and (c) are to be assumed by Buyer, collectively,
the "Assumed Liabilities").
1.4 Excluded Liabilities. Except for the Assumed Liabilities, Buyer will
--------------------
not assume or otherwise be responsible for any liabilities or obligations of
Seller, FMT or any other Affiliates of Seller or FMT, as the case may be,
whether attributable to the System or otherwise, direct or indirect, known or
unknown, absolute or contingent, and, by way of illustration but not limitation,
for any of the following liabilities, obligations or commitments (the "Excluded
Liabilities"):
(a) any foreign, federal, state, county or local income or other tax
arising from the operation of the System or the ownership of the Assets
prior to the Closing Date;
(b) any liability to any Affiliates of Seller or Palmer;
(c) any cost, broker's or finder's fee or expense incurred incident to
the negotiation or preparation of this Agreement or the performance and
compliance with the agreements and conditions contained herein;
(d) any liability, obligation or commitment to creditors or to any
party holding a lien on any assets of Seller, FMT or any other Affiliates
of Seller or FMT, as the case may be,;
(e) any employee obligation (except as provided in Section 1.3)
including, without limitation, any obligation for wages, commissions,
vacation and holiday pay, sick pay, bonuses, severance pay, retiree medical
benefits, withdrawal liability under the Multi-Employer Pension Plan
Amendment Act of 1980, as amended, or any obligation under any collective
bargaining agreement, employment agreement or employment at-will
relationship;
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(f) any liability imposed by the Worker Adjustment Retraining and
Notification Act, 29 U.S.C. 2101 et.seq. ("WARN") in connection with the
notice or failure to provide notice of a plant closing or termination of
employees;
(g) subject to section 10.8, any liability for any sales or transfer
taxes incident to the transactions contemplated hereby;
(h) any liability, obligation or commitment of Seller, FMT or any
other Affiliates of Seller or FMT, as the case may be, incurred after the
Closing Date;
(i) any liability the existence of which would constitute a breach of
any of the representations, warranties and covenants of any party other
than Buyer hereunder;
(j) any liability for violation of any Environmental Law (as defined
in section 4.6) except as otherwise provided in section 4.6;
(k) any liability of Seller under the Palmer Agreement; or
(l) any other liability, obligation or commitment not expressly
assumed by Buyer hereunder.
1.5 Purchase Price Computation and Payment.
--------------------------------------
(a) Computation. The purchase price for the Assets shall be (x) One
-----------
Hundred Sixty-Eight Million Dollars ($168,000,000) plus (y) (I) 0.50
----
multiplied by (II) the Working Capital (as defined in section 1.5(c))
-------------
(clauses (x) and (y) are collectively, the "Purchase Price") payable as
follows:
(i) On the Closing Date, Buyer shall deposit the sum of Three
Million Dollars ($3,000,000.00) ("Holdback Deposit") directly with a
mutually agreed upon escrow agent (the "Deposit Escrow Agent"),
pursuant to a Holdback Escrow Agreement (the "Holdback Agreement") in
the form of Exhibit 1.5(a)(i), which Holdback Deposit shall accrue
interest for the benefit of the parties in the proportion in which the
Holdback Deposit is ultimately distributed and be held for a period of
eighteen months following the Closing, provided that Two Million
Dollars ($2,000,000.00) of the Holdback Deposit shall be disbursed to
Seller, less 110% of the amount of any claims then pending and filed
with the Deposit Escrow Agent and less amounts previously paid from
the Holdback Deposit, on the first year anniversary of the Closing
Date, all as set forth in the Holdback Agreement; and
(ii) the balance of the Purchase Price shall be paid to Seller
by wire transfer of immediately available
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funds on the Closing Date to such bank account or accounts as Seller
shall designate.
(b) Allocation. The parties shall negotiate in good faith to attempt
----------
to agree on an allocation (the "Allocation") of the Purchase Price and
shall attempt to reach agreement on such allocation on or before the
Closing Date. To the extent that the parties agree in writing on an
Allocation, then the parties hereby covenant and agree that neither of them
will take a position on any tax return, before any governmental or
regulatory body charged with the collection of any tax, or in any judicial
or administrative proceeding, that is in any way inconsistent with the
Allocation. If the parties do not agree in writing on an Allocation, then
each party will prepare its own Allocation in good faith.
(c) Working Capital.
---------------
(I) Calculation. Working Capital shall equal Current Assets
-----------
minus Assumed Current Liabilities, subject to the following
-----
adjustments:
(i) Receivables shall be valued for purposes of Working Capital
as follows:
(A) 100% of the accrued revenues and 100% of the face amount
for any Receivables which are 30 days or less past due;
(B) 85% of the face amount for any Receivables which are 31
days or more and 60 days or less past due;
(C) 40% of the face amount for any Receivables which are 61
days or more and 90 days or less past due; and
(D) 0% of the face amount for any Receivables which are 91
days or more past due.
Notwithstanding the foregoing, to the extent that any such
Receivables are in dispute at the time of the Closing Date or
classified under clause (D) of this Section 1.5(c)(i), the entire
Receivable shall be valued under subsection (D) above (and to the
extent that the Receivable is paid, the proceeds will be remitted
to Seller). Receivables shall not include any Excluded Assets,
including the Palmer Receivable.
(ii) The book value of Cellular Phones as of the Closing Date
shall be estimated by Seller and Buyer in good faith based on a lower
of cost (last-in, first-out) or market basis with appropriate
adjustments for obsolete, slow-moving, damaged or defective goods and
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such amount shall be included on the Closing Statement (as defined in
Section 1.5(c)(II) below). As close as practicable to the Closing
Date, Buyer shall take, and Seller shall observe, a physical count of
the inventory of Cellular Phones. Seller shall have full access to
all work papers and records of such physical count. If Buyer's
valuation of the physical inventory differs from the estimate included
on the Closing Statement, the differences shall be resolved in
accordance with the procedures set forth in Section 1.5(c)(II)(C)
below.
(iii) It is intended that Cash shall include all cash, cash
equivalents and marketable securities generated from the System
between January 1, 1997 and the Closing Date except for (W) an amount
equal to $430,269 representing amounts repaid by FMT to Palmer in 1997
on loans from prior years, (X) the Palmer Receivable, (Y) investments
in Assets used in the System and (Z) an amount up to $400,000 per
month which FMT may distribute (beginning June 1, 1997) to Palmer or
its Affiliates, as the case may be (the "Permitted Monthly
Distribution"). To the extent that any Cash, except for the Palmer
Receivable and cumulative Permitted Monthly Distributions, has been
distributed, dividended or paid, or committed to be distributed,
dividended or paid to Palmer or any Affiliate, between January 1, 1997
and the Closing (the "Distributed Cash"), then, for purposes of the
computation of Working Capital, the Distributed Cash shall either (x)
be treated as if it were Cash and be remitted to FMT or (y) the
Working Capital shall decrease by the amount of the Distributed Cash.
To the extent that any Receivables or Inventory have likewise been
distributed to Palmer or any Affiliate between January 1, 1997 and the
Closing Date ("Distributed Other Current Assets"), then for purposes
of the computation of Working Capital, the Distributed Other Current
Assets shall either (x) be treated as if it were Receivables or
Inventory, as the case may be, and be remitted to FMT or (y) the
Working Capital shall decrease by the book value of the Distributed
Other Current Assets. To the extent that any Fixed Asset has likewise
been distributed or otherwise transferred to Palmer or any Affiliate
between January 1, 1997 and the Closing Date ("Distributed Fixed
Asset"), then for purposes of the computation of Working Capital, the
Working Capital shall be reduced by the amount of the net book value
of such Distributed Fixed Asset.
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(iv) Assumed Current Liabilities shall not include any
liabilities which are Excluded Liabilities.
(v) Severance pay actually paid by FMT to employees of FMT on the
Closing Date consistent with the severance pay plan now in effect, a
copy of which has been furnished to Buyer, shall be equally split by
Buyer and Seller. Notwithstanding the foregoing, severance pay shall
not be an Assumed Current Liability nor shall severance pay be
included as part of Working Capital.
(II) Closing Date Statement.
----------------------
(A) Fifteen (15) business days prior to the Closing, Seller
shall provide Buyer with a preliminary good faith calculation of
the Working Capital (the "Closing Statement"), together with
supporting documentation in reasonable detail. The Closing
Statement shall be considered preliminary and such Closing
Statement shall not discharge either party from any obligation it
might otherwise have hereunder with respect thereto in the event
that any amounts reflected thereon prove to be incorrect. There
shall be a continuing duty on the parties to make appropriate
credits and payments to the other party once the amounts are
finally determined and such duty shall survive the Closing.
(B) Buyer shall review the Closing Statement upon its
receipt from Seller. Five (5) business days prior to Closing,
Buyer shall deliver to Seller a statement setting forth any good
faith objections that Buyer may have to the Closing Statement,
together with any supporting documentation reasonably requested
by Seller ("Adjusted Closing Statement"). The payments to be
made at Closing shall be based upon the Adjusted Closing
Statement.
(C) Within ninety (90) days after the Closing, Buyer or
Seller, as the case may be, shall notify the other party in
writing (the "Dispute Notice(s)") of any dispute as to the
Adjusted Closing Statement or any supporting documentation
furnished in connection therewith or in connection with the
Closing Statement. Buyer and Seller shall provide one another
with such additional information relating to the Closing
Statement and the Adjusted Closing Statement as each party shall
reasonably request. Within fifteen (15) days after delivery of
the last of the Dispute Notices, Seller and Buyer shall attempt
to resolve such dispute in good faith, and if the parties cannot
agree within thirty (30) days after Delivery of the last of the
Dispute Notices such dispute shall be resolved by a
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<PAGE>
nationally known independent firm of certified public accountants
jointly chosen by Buyer and Seller. The written decision of such
accounting firm shall be final and binding on the parties hereto
and shall not be subject to dispute or review. Any fees or
expenses payable to such accounting firm shall be shared equally
between Seller and Buyer. Any amounts payable by Seller pursuant
to this Section 1.7(C)(II)(C) shall be payable from the Holdback
Deposit up to an amount equal to $250,000, and if the amounts
payable by Seller are in excess of $250,000, the difference shall
be payable by transfer of immediately available federal funds to
such bank account as Buyer shall designate. Any amounts payable
by Buyer shall be payable by transfer of immediately available
federal funds to such bank account as Seller shall designate. If
any amounts prorated as of the Closing Date as Assumed Current
Liabilities are not finally known within such time (such as real
estate taxes), these items shall be re-adjusted as soon as the
final numbers are known.
1.6 Closing Date. Subject to the provisions of Section 9.1 hereof, the
------------
completion of the purchase of the Assets is intended to be contemporaneous with,
but deemed immediately subsequent to, the consummation of the transactions
contemplated by the Palmer Agreement, which, in any event shall be on a date
after the HSR Termination and Final Approvals (as both terms are defined in
Section 6.4) have been received, unless such time is extended or shortened as
may be agreed upon by Buyer and Seller, and after the conditions set forth in
Articles 6 and 7 have been satisfied, at the location of the Closing of the
Palmer Agreement, or at such other place or at such other time as shall be
agreed upon in writing by Buyer and Seller (such date and time being hereafter
called the "Closing" or "Closing Date"). In the event that the Palmer Agreement
has closed prior to the Closing Date, then the Closing Date shall occur after
the conditions set forth in Articles 6 and 7 have been satisfied, at a location
and time as shall be agreed upon in writing by Buyer and Seller.
1.7 Closing Date Deliveries.
-----------------------
(a) Seller's Deliveries. On the Closing Date, Seller shall deliver to
-------------------
Buyer the following:
(i) general assignments and warranty bills of sale executed by
FMT and other Affiliates of Seller and FMT, as the case may be,
transferring the Assets to Buyer, in the form of Exhibit 1.7(a)(i),
(ii) recordable warranty deed(s) and/or assignments of leases to
transfer the Real Property and any leased real property to Buyer,
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<PAGE>
(iii) state, county and local transfer tax declarations for the
Real Property transferred to Buyer, a certificate that the applicable
Seller, FMT, or Affiliates of Seller and FMT, as the case may be, is
not a foreign person within the meaning of Section 1445 of the Code,
and any required state or local environmental disclosure forms in
connection with the transfer of the Real Property to Buyer,
(iv) terminations of all agreements with Affiliates (including
Affiliates of Palmer) dated the date prior to the Closing Date (other
than those agreements with Affiliates which Buyer may expressly agree
to assume in writing at or prior to Closing) which terminations shall
be obtained without cost or penalty to Buyer,
(v) a termination of that certain Option Agreement dated as of
July 10, 1996 between Garbo Communications, Inc. and Wireless One
Technologies, Inc. relating to the F Block license for a PCS mobile
telephone system in the Ft. Myers, Florida Basic Trading Area,
(vi) the Holdback Agreement,
(vii) certificates of the Secretary or an Assistant Secretary or
a General Partner of Seller, FMT, or their Affiliates, as the case may
be, dated the Closing Date: (i) as to the incumbency and signatures
of the officers or representatives executing this Agreement and each
of the ancillary agreements and any other certificate or other
document to be delivered pursuant hereto or thereto, together with
evidence of the incumbency of such Secretary or Assistant Secretary or
General Partner; and (ii) certifying attached resolutions of the Board
of Directors and shareholders and or Partners of such entity, which
authorize and approve the execution and delivery of this Agreement and
each of the ancillary agreements to which any of Seller, FMT or their
Affiliates is a party and the consummation of the transactions
contemplated hereby and thereby,
(viii) Original Certificates of Incorporation of Seller and
Certificate of Limited Partnership of FMT (certified by the Delaware
and Florida Secretaries of State, as the case may be, within two (2)
weeks prior to the Closing and by the Secretary of such entities as of
the Closing) and By-Laws of Seller and Partnership Agreement of FMT
(certified by the Secretaries or General Partner, as the case may be,
of such entities as of the Closing),
(ix) good standing certificates of Seller and Certificate of
Existence of FMT dated as of the Closing,
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(x) releases (including UCC-3 termination statements and mortgage
releases) executed by any and all lenders and other secured parties
having security interests in any of the Assets,
(xi) if necessary, an escrow agreement conveying all of the
deliveries required to be delivered by Seller to an escrow agent (the
"Closing Escrow ") pending receipt of all deliveries required to be
delivered to Seller by Buyer,
(xiv) the Switch Sublease, Headquarters Sublease, Headquarters
Roof Lease and PBX Sublease (as such terms are defined in Section 5.3
hereof), and
(xv) all of the documents, instruments and opinions required to
be delivered by Seller pursuant to Article 6 hereof.
(b) Buyer's Deliveries. On the Closing Date, Buyer shall deliver to
------------------
Seller the following:
(i) the Purchase Price in accordance with the terms of Section
1.5,
(ii) an assumption of the Assumed Liabilities,
(iii) the duly executed Holdback Escrow Agreement,
(iv) certificate of the General Partner of Buyer dated the
Closing Date: (i) as to the incumbency and signatures of the officers
or representatives executing this Agreement and each of the ancillary
agreements and any other certificate or other document to be delivered
pursuant hereto or thereto, together with evidence of the incumbency
of such General Partner; and (ii) certifying attached resolutions of
the Partners of such entity, which authorize and approve the execution
and delivery of this Agreement and each of the ancillary agreements to
which Buyer is a party and the consummation of the transactions
contemplated hereby and thereby,
(v) Original Certificate of Limited Partnership of Buyer
(certified by the Delaware Secretary of State within two (2) weeks
prior to the Closing and by the General Partner of Buyer as of the
Closing) and Partnership Agreement of Buyer (certified by the General
Partner of Buyer as of the Closing),
(vi) Certificate of Existence of Buyer dated as of the Closing,
(vii) if necessary, an escrow agreement conveying all of the
deliveries required to be delivered
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by Buyer to the Closing Escrow pending receipt of all deliveries
required to be delivered to Buyer by Seller,
(viii) the Switch Sublease, Headquarters Sublease, Headquarters
Roof Lease and PBX Sublease (as such terms are defined in Section 5.3
hereof), and
(ix) all of the documents, instruments and opinions required to
be delivered by Buyer pursuant to Article 7.
1.8 Further Assurances. It is believed and intended that FMT currently
------------------
owns and operates all of the assets used or useful in the conduct of the System
as it has been and is currently conducted. It is conceivable, however, that
certain Assets may, on or prior to the Closing, be owned or used by Affiliates
of FMT. Therefore, on the Closing Date, Seller shall (i) deliver or cause to be
delivered to Buyer such other bills of sale, endorsements, assignments and other
good and sufficient instruments of conveyance and transfer, in form satisfactory
to Buyer and its counsel, as Buyer may reasonably request or as may be otherwise
reasonably necessary to vest in Buyer all the right, title and interest in, to
or under any or all of the Assets, (ii) take all steps as may be reasonably
necessary to put Buyer in actual possession and control of all the Assets and
(iii) terminate all agreements without penalty between FMT and Seller or its
Affiliates. Further, from time to time following the Closing, Seller shall
execute and deliver, or cause to be executed and delivered, to Buyer such other
instruments of conveyance and transfer as Buyer may reasonably request or as may
be otherwise necessary to more effectively convey and transfer to, and vest in,
Buyer and put Buyer in possession of, any part of the Assets, and, in the case
of licenses, certificates, approvals, authorizations, agreements, contracts,
leases, easements and other commitments included in the Assets which cannot be
transferred or assigned effectively without the consent of third parties which
consent has not been obtained prior to the Closing, to cooperate with Buyer at
its request in endeavoring to obtain such consent promptly.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND
-------------------------------
COVENANTS OF SELLER
-------------------
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, Seller hereby jointly and severally
represents, warrants and covenants to Buyer and agrees as follows:
2.1 Due Organization; Power and Authority. Each of Merger Sub and Price
-------------------------------------
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware, and is duly qualified to transact business as a
foreign corporation in each jurisdiction where the ownership of its assets or
the conduct of its operation requires such qualification. FMT is currently, or
as of the Closing will be, a duly organized and validly existing limited
partnership under the laws of the State of Florida and is
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currently, or as of the Closing will be, qualified as a foreign limited
partnership in each jurisdiction where the ownership of its assets or the
conduct of its operation requires such qualification. FMT currently has, or as
of the Closing will have, full partnership power and authority, to own, lease or
otherwise hold the Assets, to operate and use the Assets, to carry on the
operation of the System as it is now and has been conducted and to consummate
the transactions contemplated hereby and to comply with the terms, conditions
and provisions hereof.
2.2 Authority. Seller has full power and authority to enter into this
--- ---------
Agreement, to consummate the transactions contemplated hereby and to comply with
the terms, conditions and provisions hereof.
The execution, delivery and performance of this Agreement by Seller (and,
if applicable by its Affiliates on and after the Closing), including, without
limitation, the deliveries and other agreements of Seller and its Affiliates
contemplated hereby, have been duly authorized and approved by the boards of
directors of each Seller and do not require any further authorization or consent
of any third party or of any governmental authority except as may be expressly
set forth herein. This Agreement is, and each other agreement or instrument of
Seller and Affiliates contemplated hereby will be, the legal, valid and binding
agreement of Seller and Affiliates, enforceable in accordance with its terms.
Neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated hereby will conflict with or
result in any violation of or constitute a default under any term of (a) the
Certificates or Articles of Incorporation or By-Laws of Seller or Seller's
Affiliates or (b) except as set forth on Schedule 2.2, any agreement, including,
but not limited to, the Palmer Agreement, mortgage, debt instrument, indenture,
franchise, license, permit, authorization, lease or other instrument, judgment,
decree, order, law or regulation by which Seller is bound, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
Assets. As of the Closing Date, except as set forth on Schedule 2.2, the sale of
the Assets by FMT will not conflict with or result in any violation of or
constitute a default under any term of (i) the Certificates of Limited
Partnership of Limited Partnership Agreement of FMT or (ii) to the best of
Seller's knowledge on the date hereof and without any such qualification as of
the Closing Date, any agreement, mortgage, debt instrument, indenture,
franchise, license, permit, authorization, lease or other instrument, judgment,
decree, order, law or regulation by which FMT is bound, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
Assets.
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2.3 No Material Adverse Change. The following is made (i) to the best of
--------------------------
Seller's knowledge on the date hereof and (ii) without such qualification as of
the Closing Date:
Since December 31, 1996, there has been (i) no material adverse change in
the Assets (individually or in the aggregate), or the assets and operations
of the System, and (ii) no damage, destruction, loss or claim, whether or
not covered by insurance, or pending or threatened condemnation or other
taking in excess of $100,000.00, individually or otherwise, adversely
affecting in any material respect the Assets or the System.
2.4 Licenses. The following is made (i) to the best of Seller's knowledge
--------
on the date hereof and (ii) without such qualification (unless contained in the
text) as of the Closing Date:
Seller, FMT, Palmer or their Affiliates, as the case may be, is, to the
best of Seller's knowledge, currently, and as of the Closing Date will be
(without such knowledge qualifier), the exclusive holder of all
authorizations, grants, permits and other licenses (collectively, "Seller
Licenses") necessary for the operation of the System, including, without
limitation, all licenses or construction permits from the FCC and FAA, and
all certificates in connection with the System and otherwise, all of which
are in full force and effect and are not subject to any pending or
threatened challenge, revocation, amendment or forfeiture. No default or
breach exists with respect to any of the Seller Licenses and no event or
condition exists which but for the lapse of time or notice or both would
constitute a default or breach with respect to any of the Seller Licenses.
True and correct copies of all material reports relating to the Seller
Licenses have been and will be timely filed with the appropriate body (and
the failure to timely file immaterial reports will not affect the transfer
of the Licenses), and true and correct copies of such material reports have
been and will be delivered to Buyer. Schedule 1.1(d) lists all Seller
Licenses from the FCC, correct copies of which have previously been
delivered to Buyer (other than microwave licenses not in writing).
2.5 Title to Property. The following is made (i) to the best of Seller's
-----------------
knowledge on the date hereof and (ii) without such qualification (unless
contained in the text) as of the Closing Date:
Seller, FMT and their Affiliates have good and marketable title to all of
the Assets free and clear of all liens, claims, charges, encumbrances,
security interests, mortgages, easements, defects in title, covenants and
other restrictions of any kind, except, in the case of Real Property, (a)
for liens of taxes not yet due and payable, (b) as shown on title insurance
policies previously delivered to Buyer by Seller or FMT and (c) for those
liens, which cannot be discharged by the
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payment of money, which do not and could not reasonably be expected to,
individually or in the aggregate, interfere in any material respect with
the intended use of such property or materially impair the value of such
property (collectively, the "Permitted Exceptions"). Delivery to Buyer on
the Closing Date of the instruments of transfer contemplated by Section 1.7
will thereby transfer to Buyer good and marketable title to the Assets,
free and clear of and subject to no liens, claims, charges, encumbrances,
security interests, mortgages, easements, defects in title, covenants or
other restrictions of any kind except for the Permitted Exceptions.
2.6 To the best of Seller's knowledge:
(a) Financial Statements. Seller has heretofore provided to Buyer
--------------------
unaudited balance sheets, statements of income and cash flows for the
System for the fiscal years ended December 31, 1994 through 1996, and for
each month period during calendar year 1997 (collectively, the "Financial
Statements"). The Financial Statements have been prepared in conformity
with generally accepted accounting principles consistently applied and
present fairly in all material respects the assets, liabilities, financial
position and results of operations of the System for the respective periods
covered thereby.
(b) Operations Since December 31, 1996. Since December 31, 1996, the
----------------------------------
System has been conducted in the usual and ordinary course of business.
(c) No Undisclosed Liabilities. The Assets and the System are not
--------------------------
subject to any material liability, commitment or obligation (including,
without limitation, unasserted claims whether known or unknown), whether
absolute, contingent, accrued or otherwise, except as set forth in (a)
Schedule 2.6(c), (b) the Financial Statements (with respect to actual
dollar amounts and not merely line items), (c) pursuant to the Contracts or
(d) incurred in the ordinary course of business since the date of the
Financial Statements.
(d) Real Property. Schedule 1.1(b) contains a brief description of
-------------
each parcel of Real Property (whether owned or leased) used in the System
and of each option held or given by Seller, Palmer, FMT or their Affiliates
to acquire any Real Property used in the System. True, complete and
correct copies of all existing policies of title insurance in Seller's
possession with respect to each such parcel have heretofore been delivered
to Buyer. The applicable member of Seller, FMT or their Affiliates, as the
case may be, has good and marketable title in fee simple absolute to all
such Real Property owned by it and to all buildings, structures and other
improvements thereon, in each case free and clear of all liens, claims,
charges, encumbrances, security interests, mortgages, easements, defects in
title, covenants and other restrictions or encroachments of any kind,
except for the
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Permitted Exceptions. All such Real Property and its use conforms in all
material respects with all laws, regulations, rules, ordinances, codes,
licenses, deed restrictions and covenants of record, franchises and permits
(including, without limitation, electrical, building, zoning, environmental
and occupational safety and health requirements), and no notice of any
violation of such matters relating to such assets or their use has been
received by Palmer, Seller, FMT or their Affiliates, as the case may be.
2.7 Completeness of Assets. The following is made (i) to the best of
----------------------
Seller's knowledge on the date hereof and (ii) without such qualification as of
the Closing Date:
The Assets constitute all of the assets used in the operation of the System
as it is now conducted (other than Excluded Assets and normal dispositions
of property in the ordinary course, provided that such dispositions are
replaced with comparable or better replacement assets).
2.8 Palmer Representations. Sections 3.7, 3.8, 3.9, 3.10, 3.11, 3.12,
----------------------
3.13, 3.14, 3.15, 3.16, 3.17, 3.18, 3.20 and 3.21 of the Palmer Agreement (the
"Palmer Reps") are hereby (a) incorporated herein by reference to the best of
Seller's knowledge as and to the extent such representations and warranties
relate to the System and the Assets and (b) deemed modified (as between Buyer
and Seller) so that, to the extent that any of the Palmer Reps are qualified by
(i) a "materiality" standard, "materiality" shall refer to the System and the
Assets and not in the context of Palmer and its Affiliates taken as a whole and
(ii) by a monetary standard, that standard shall be multiplied by .19. Buyer
shall be entitled to rely on the Palmer Reps as they relate to the System and
the Assets to the same extent that Seller is entitled to rely on the Palmer Reps
pursuant to the terms of the Palmer Agreement. The Palmer Agreement is in full
force and effect with no breaches or defaults thereon and no notice of any such
breaches has been received by Seller or sent to Palmer, and no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a default or breach.
Seller has delivered to Buyer a true and correct copy of the Palmer Agreement.
2.9 Broker or Finder. Neither Seller nor any party acting on its behalf
----------------
has paid or become obligated to pay any fee or commission to any broker, finder
or intermediary for or on account of the transactions contemplated by this
Agreement.
2.10 Financing. Seller has delivered to Buyer letters from DLJ Capital
---------
Funding, Inc. indicating such banker's commitment to obtain $500,000,000 in bank
financing and term sheets with respect to $250,000,000 of Notes to be issued to
finance the acquisition pursuant to the Palmer Agreement.
2.11 FCC Qualification. Seller is and will be on the Closing Date legally,
-----------------
technically and financially (subject to section 2.10)
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qualified under the Communications Act of 1934 and all material rules,
regulations and policies of the FCC to acquire, own and operate Palmer under the
terms of the Palmer Agreement. There are no facts or proceedings which would
reasonably be expected to disqualify Seller under the Communications Act of 1934
or otherwise from acquiring or operating Palmer or would cause the FCC not to
grant a Final Approval (as defined in section 6.4). Seller has no knowledge of
any material fact or circumstance relating to it or any of its Affiliates which
would reasonably be expected to (a) cause the filing of any objection at the FCC
or (b) lead to a delay in the processing by the FCC of the transfer of the
Licenses. To its knowledge, no waiver of any FCC rule or policy as same relates
to Seller is necessary to be obtained for the Final Approval.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
--------------------------------------------------
As an inducement to Seller to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer hereby represents, warrants and
covenants to Seller and agrees as follows:
3.1 Organization of Buyer. Buyer is a limited partnership duly formed and
---------------------
validly existing under the laws of the State of Delaware and has full
partnership power and authority to own, lease or otherwise hold its properties
and assets and to carry on its business as now conducted.
3.2 Authority of Buyer. Buyer has full power and authority to enter into
------------------
this Agreement, to consummate the transactions contemplated hereby and to comply
with the terms, conditions and provisions hereof.
The execution, delivery and performance of this Agreement by Buyer,
including, without limitation, the deliveries and other agreements of Buyer
contemplated hereby, have been duly authorized and approved by its partners and
do not require any further authorization or consent of any third party (except
for its senior secured lender) or of any governmental authority except as
expressly set forth herein. This Agreement is, and each other agreement or
instrument of Buyer contemplated hereby will be, the legal, valid and binding
agreement of Buyer, enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement nor the consummation
of the transactions contemplated hereby will conflict with or result in any
violation of or constitute a default under any term of the Certificate of
Limited Partnership or Partnership Agreement of Buyer, or any agreement,
mortgage, debt instrument, indenture, franchise, license, permit, authorization,
lease or other instrument, judgment, decree, order, law or regulation by which
Buyer is bound.
3.3 No Broker or Finder. Neither Buyer nor any party acting on its behalf
-------------------
has paid or become obligated to pay any fee or
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commission to any broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement.
3.4 Financing. Buyer has delivered to Seller a letter from its principal
---------
lender indicating such lender's high level of confidence that it will obtain
debt financing equal to the Purchase Price. Buyer believes that it will have
available on the Closing Date sufficient funds to pay the Purchase Price. Seller
understands that Buyer intends to obtain debt financing for the entire Purchase
Price.
3.5 FCC Qualification. Buyer is and will be on the Closing Date legally,
-----------------
technically and financially (subject to section 3.4) qualified under the
Communications Act of 1934 and all material rules, regulations and policies of
the FCC to acquire, own and operate the Assets and the System. There are no
facts or proceedings which would reasonably be expected to disqualify Buyer
under the Communications Act of 1934 or otherwise from acquiring or operating
any of the Assets or the System or would cause the FCC not to grant a Final
Approval (as defined in section 6.4). Buyer has no knowledge of any material
fact or circumstance relating to it or any of its Affiliates which would
reasonably be expected to (a) cause the filing of any objection at the FCC or
(b) lead to a delay in the processing by the FCC of the transfer of the
Licenses. To its knowledge, no waiver of any FCC rule or policy as same relates
to Buyer is necessary to be obtained for the Final Approval.
ARTICLE 4
ACTIONS PRIOR TO THE CLOSING DATE
---------------------------------
The respective parties hereto covenant and agree to take the following
actions between the date hereof and the Closing Date:
4.1 Investigation of System by Buyer. Seller shall afford to, and use
--------------------------------
reasonable efforts to, obtain Palmer's consent to allow the officers, employees
and authorized representatives (including, without limitation, independent
public accountants and attorneys) of Buyer and its financing sources reasonable
access and opportunity to review all books and records relating to the System,
contracts, income tax returns, physical inspection of the Assets (including the
Real Property and Leased Real Property for the purpose of conducting the
environmental reviews contemplated in section 4.6, if desired by Buyer, and to
inspect the Fixed Assets), and the right to contact and communicate with key
executive employees of Palmer. Seller shall furnish, and shall use reasonable
efforts to cause Palmer to furnish, to Buyer and its authorized representatives
such additional information in its possession concerning the Assets and the
System as shall be reasonably requested, including, without limitation, all such
information as shall be necessary to enable Buyer and its representatives to
verify the accuracy of the representations and warranties contained in Article 2
and in the Palmer Agreement with respect to the System, and to determine whether
the conditions set forth in Article 6 have been satisfied. It is understood that
Buyer's access
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to the information contemplated in the preceding two sentences is material and
should Palmer or Seller fail to permit Buyer such access, such failure would
provide Buyer the right to terminate this Agreement upon 10 days notice (unless
such access and future assurances of continued access was provided within such
period). Buyer shall be responsible for all of its costs and expenses relative
to its acquisition review. Buyer agrees that it will keep and maintain any and
all information obtained by it, its agents and counsel confidential, and will
not make use of any such information other than for its evaluation of the
transactions contemplated by this Agreement. Buyer shall return all written
information to Seller or Palmer, as the case may be, in the event that the
transactions contemplated by this Agreement do not occur.
4.2 Preserve Accuracy of Representations and Warranties. Each of the
---------------------------------------------------
parties hereto shall refrain from knowingly taking any action which would render
any representation, warranty or covenant contained in Article 2 or 3 of this
Agreement inaccurate as of the Closing Date or from not fulfilling any covenant
set forth in Article 4. Seller shall refrain from knowingly taking any action
which would render any representation, warranty or covenant made by it under the
Palmer Agreement inaccurate or unfulfilled as of the Closing Date. Each party
shall promptly notify the other of any (a) event or condition which would render
any representation or warranty set forth in Article 2 or 3 untrue or in breach
or would cause any covenant in Article 2 or 3 to be unfulfilled, (b) any action,
suit or proceeding that shall be instituted or threatened against such party to
restrain, prohibit or otherwise challenge the legality of any transaction
contemplated by this Agreement or (c) any notice of or existence of any
representation or warranty set forth in Articles III, IV and V of the Palmer
Agreement and any covenant contained in Article VI of the Palmer Agreement being
untrue or unfulfilled. Not in limitation of the foregoing, between the date of
execution of this Agreement and the Closing Date, Seller shall not, without the
prior written approval of Buyer, (i) make, and shall not authorize Palmer, FMT
or their Affiliates to make, any material changes, individually or in the
aggregate, in connection with the System, (ii) take, approve or waive any of the
actions in connection with the System for which Seller's approval or consent is
required under the Palmer Agreement or (iii) amend the Palmer Agreement in any
way which shall impair or adversely affect, individually or in the aggregate, in
any material respect, the System or Assets or any right of Buyer or Seller
hereunder. Seller will also keep Buyer apprised of all actions or inactions of
Palmer or FMT, of which Seller has knowledge, with respect to the System or the
Assets, which may not be considered in the ordinary of business of the System.
4.3 Consents and Approvals. Promptly (and in any event within ten (10)
----------------------
business days) after the execution hereof, Seller and Buyer shall use their best
efforts to prepare and file, and cooperate with each other and Palmer in so
doing, the necessary transfer and consent to assignment applications with the
FCC to transfer the Licenses from FMT to Buyer (with perhaps the intermediate
step of transferring the Licenses form FMT to Seller
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<PAGE>
and then to Buyer). Seller shall use its best efforts promptly to obtain all
other consents from parties to Contracts (without increasing any financial or
other burden on the assignee), and all consents, amendments or permits from
governmental authorities which are required by the terms thereof, this Agreement
or otherwise for the due and punctual consummation of the transactions
contemplated by this Agreement, including, without limitation, the consents
indicated on Schedules 2.2 and 4.3 as material consents (the "Material
Consents"). Seller shall also cooperate in all reasonable respects with and
assist Buyer and its authorized representatives in order to provide an efficient
transfer of the control and management of the System and to avoid any undue
interruption in the activities and operations of the System following the
Closing Date except for the transactions contemplated hereby. If any of the
Contracts require the consent of a third party, and if any such consent has not
been obtained by the Closing or if any attempted assignment would be ineffective
or would affect the Buyer's rights thereunder so that Buyer would not in fact
receive all such rights, Seller (i) shall use its best efforts from and after
Closing to promptly obtain and secure any and all consents and approvals
necessary to effect the valid transfer and assignment of the same to Buyer
without change in any of the material terms or material conditions thereof, (ii)
shall cooperate with Buyer in any reasonable arrangement, which will provide for
Buyer the immediate benefits under any such Contract provided that Buyer pay the
costs under such Contract, (iii) shall continue to maintain its rights with
respect to such Contract in full force and effect, without any compromise or
default thereof, for the benefit of and in accordance with the best interest of
Buyer and (iv) shall provide Buyer with prompt notice and status of any and all
transfers and any and all consents which remain outstanding.
4.4 FCC Compliance. The parties agree that, notwithstanding any provision
--------------
of this Agreement, Buyer shall not, prior to the Closing Date, directly or
indirectly control, supervise, or direct the operation of the System. The
parties further agree to cooperate in good faith and shall take all steps as may
be necessary or proper to expeditiously and diligently prosecute the assignment
application filed with the FCC to a favorable conclusion (subject to Section
9.1) including, but not limited to, the following: (a) appealing or seeking
reconsideration of any FCC denial of such assignment application, or conditional
grant; (b) satisfying any conditions imposed upon such grant to the extent that
such conditions require actions which do not materially alter the benefits or
burdens of either party under this Agreement; and (c) taking all other actions
necessary or appropriate to bring about the transactions contemplated by this
Agreement; provided, however, such actions do not materially alter the benefits
or burdens of either party under this Agreement.
4.5 No Public Announcements. Neither of the parties hereto shall, without
-----------------------
the approval of the other party (which may not be unreasonably withheld), make
any press release or other public announcement concerning the transactions
contemplated by this Agreement, except as and to the extent that such party
shall be so
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<PAGE>
obligated by law, in which case the other party shall be advised and the parties
shall use their best efforts to cause a mutually agreeable release or
announcement to be issued.
4.6 Environmental Surveys. Prior to Closing, Buyer may, at its sole cost
---------------------
and expense, engage an environmental consulting firm of good reputation in the
industry and reasonably acceptable to Seller to conduct a phase I environmental
assessment of any parcel of Real Property and Leased Real Property included in
the Assets (the "Environmental Review") to determine what remedial actions, if
any, are necessary to cause any applicable entity to be in compliance in all
material respects with the Environmental Laws (as defined in the Palmer
Agreement) in the reasonable opinion of the person conducting the Environmental
Review. If such Environmental Review indicates in the reasonable opinion of the
person conducting the Environmental Review that a phase II environmental
assessment or any remedial actions are reasonably necessary to comply in all
material respects with the Environmental Laws, Buyer shall notify Seller in
writing of the actions required and the estimated costs of such actions
("Remediation Costs"). Seller and Buyer shall promptly mutually agree upon
reputable and recognized environmental consultants and engineers to cause FMT to
be in compliance in all material respects with all Environmental Laws and Seller
shall pay all Remediation Costs (including the costs, fees and expenses of such
consultants and engineers) up to $50,000.00 and all Remediation Costs in excess
of $50,000.00 shall be borne equally by Seller (without any adjustment to the
Purchase Price) on the one hand, and Buyer on the other. If the total
Remediation Costs exceed $2,000,000.00, then either party shall have the option
to terminate this Agreement and its obligations hereunder without any liability,
cost or penalty whatsoever unless within ten (10) days of determination of the
need for such expenditures either Seller or Buyer agrees in writing to pay all
additional Remediation Costs in excess of such amount.
4.7 Hart-Scott-Rodino Act Filings. Seller and Buyer shall each cooperate
-----------------------------
and use all reasonable efforts to prepare and file with the Federal Trade
Commission ("FTC") and the Antitrust Division of the United States Department of
Justice ("DOJ") and other regulatory authorities, within twenty (20) days after
the execution and delivery of this Agreement, all requisite applications and
amendments thereto, together with related information, data and exhibits,
necessary to satisfy the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "Hart-Scott Act") with respect to the
transactions contemplated hereby. Seller and Buyer will keep the other party
apprised of the status of any inquiries made of such party by the FTC, the DOJ
or any other governmental agency with respect to this Agreement or the
transactions contemplated hereby. Any filing fees in connection with such filing
shall be split equally between the Seller and Buyer.
4.8 Exclusive Dealing. Seller and its Affiliates shall deal exclusively
-----------------
with Buyer with respect to the sale of the Assets and shall not solicit,
encourage or entertain offers or inquiries (nor
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shall Seller or any of its affiliates authorize or permit any director, officer,
employee, attorney, accountant or other representative or agent to solicit,
encourage or entertain offers or inquiries) from other possible acquiring
companies, persons or entities, provide information to or participate in any
discussions or negotiations with any companies, persons or entities with a view
to an acquisition of all or a substantial portion of the Assets or partnership
interests of FMT. Until the Termination Date, Buyer shall not solicit, encourage
or make offers or inquiries (nor shall Buyer or any of its affiliates authorize
or permit any director, officer, employee, attorney, accountant or other
representative or agent to solicit, encourage or entertain offers or inquiries)
or provide information to or participate in any discussions or negotiations in
such regard, with Palmer or its Affiliates or agents or with any third party
interested in acquiring the stock or assets of Palmer regarding the purchase of
all or a substantial portion of the Assets, the partnership interests of FMT or
the stock of Palmer.
4.9 Title Insurance and Surveys. As soon as practicable after the date
---------------------------
hereof (to the extent not already done so and to the extent in Seller's
possession), Seller shall deliver to Buyer (a) all title insurance commitments
and policies insuring FMT or its Affiliates title to the Real Property and
leased real property and (b) plats of survey of each parcel of Real Property and
leased real property. To the extent that such policies, commitments and surveys
are not in Seller's possession, it will promptly contact Palmer and request
Palmer to deliver any such documents to Buyer. Buyer may obtain any updated
policies and surveys at its sole cost and expense.
4.10 Buyer Commitment Letter. Within forty-five (45) days following the
-----------------------
date hereof, Buyer shall use its reasonable efforts to deliver to Seller a
commitment letter (the "Commitment Letter") from a lender or lenders selected by
Buyer in its sole and absolute discretion on terms and conditions agreed to by
Buyer in its sole discretion which Commitment Letter will provide Buyer with a
binding commitment to provide financing to Buyer at Closing equal to the
Purchase Price, subject to usual and customary conditions of a transaction of
this nature (but not subject to any due diligence investigation by such
lenders).
ARTICLE 5
OTHER AGREEMENTS
----------------
5.1 Non-Competition Agreements. At the Closing, Seller shall enter into a
--------------------------
Non-Competition Agreement (the "Non-Competition Agreement") providing that
Seller and Robert Price and any Affiliate of them (including Palmer) shall not
own, conduct or have any interest in any business providing wireless
telecommunications services, including, without limitation, PCS, but excluding
basic wireline telephone service and paging service within the Fort Myers,
Florida Metropolitan Statistical Area for a period of two (2) years after
Closing, provided, however, that (i) for purposes of this Section 5.1 only, the
definition of "Affiliates" shall not
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include any current director or executive officer of Palmer Communications, Inc.
("PCI") and (ii) Seller or any affiliated assignee thereof may continue to use
the wireless PBX (the "PBX") on the 800 MHz frequency spectrum on the fifth and
sixth floors of the Headquarters provided that such use is limited to phone
calls by Seller's employees and does not cause interference with Buyer's use of
the spectrum. The Non-Competition Agreement shall contain such other terms and
provisions as are mutually acceptable to Buyer and Seller.
5.2 System Employees. Within thirty (30) days after the execution of this
----------------
Agreement, Seller shall deliver to Buyer a list ("Available Employee List") of
System employees. Buyer shall have the right to contact employees of the System
identified on the Available Employee List for the purpose of interviewing and
evaluating such personnel, provided that such contact shall not unreasonably
interfere with operations of the System and, if requested by Palmer, Palmer may
schedule such contact at reasonable times and intervals. On and as of the
Closing Date, Seller will take all action necessary to terminate the employees
of the System identified on the Available Employee List and shall pay such
employees all payroll sums, including, without limitation, vacation pay, "golden
parachute", retiree medical, COBRA, severance pay or other benefits due to them
through the close of business on the Closing Date or arising thereafter and
shall indemnify, defend and hold harmless Buyer from and against all
Indemnifiable Damages (as defined in Section 8.1) resulting or arising from such
sums or from the termination of employment. Buyer may, in its sole discretion
and without obligation, commencing within sixty (60) days prior to the Closing,
offer employment to employees of the System identified on the Available Employee
List on terms and conditions unilaterally proposed by Buyer effective on the
Closing Date. Not less than ten (10) days prior to Closing, Buyer shall provide
a list to Palmer of such employees of the System to whom employment offers have
been or will be made.
5.3 Transition Services Agreements. Promptly after execution of this
------------------------------
Agreement, Seller and Buyer shall jointly determine in good faith the post-
closing services that will be required of Buyer, for Seller's benefit, or
Seller, for Buyer's benefit, and will use their reasonable efforts to agree on
the terms and provisions of agreements embodying such services (or to procure
agreements from third parties, as the case may be), including, without
limitation, (a) an interim billing services agreement for the benefit of Buyer,
(b) a sublease for the North Ft. Myers switch for the benefit of Seller ("Switch
Sublease"), (c) a sublease (subject to landlord consent) for the cell site
currently located on the fifth floor of the Headquarters ("Headquarters
Sublease") and a lease from the landlord for the Headquarters for the cell site
located on the rooftop of the Headquarters ("Headquarters Roof Lease") and (d)
the non-transferable use of Buyer's cellular frequencies for the System for a
wireless PBX operation at the Headquarters for a period not to exceed 10 years,
provided, however, that such use shall not interfere with Buyer's use of such
frequencies, all pursuant to a sublease to be entered into between Buyer and
Seller (the "PBX
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Sublease"), such Switch Sublease, Headquarters Sublease and Headquarters Roof
Lease to have terms of at least one year. Buyer will also provide to certain
employees located at the Headquarters designated by Seller with the use of
"demo" phones for a period of one (1) year following the Closing provided that
(i) the number of demo phones will not exceed 50, (ii) the demo phones will be
for local calls and not long distance or roaming and (iii) the rates will be at
a discount determined by Buyer prior to Closing. It is intended generally that
the compensation aspect of the subleases and other transition service
arrangements contemplated in this section 5.3 shall reimburse the service-
providing party for its reasonable expenses but is not intended to generate a
profit, provided that to the extent such agreements extend beyond a term of six
(6) months after the Closing Date, the party providing such services shall be
entitled to a reasonable profit beginning after such date.
5.4 Financial Statements/Notices. Between the date hereof and the Closing
----------------------------
Date, to the extent Seller receives the same from Palmer, Seller shall provide
Buyer within thirty (30) days following the end of each calendar month unaudited
balance sheets and related statements (for the month ended and year-to-date) of
income for the System prepared in accordance with GAAP (other than normal year-
end and other adjustments and accruals which will not be included in such
statements). In addition, between the date hereof and the Closing Date, Seller
shall provide to Buyer copies of all notices, correspondence and other
information and data received by Seller from Palmer or any other source in any
way relating to or affecting the System.
ARTICLE 6
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
--------------------------------------------
The obligations of Buyer under this Agreement shall be subject to the
satisfaction, on or prior to the Closing Date, of the conditions set forth
below.
6.1 No Misrepresentation or Breach of Covenants and Warranties. All of
----------------------------------------------------------
Seller's covenants and agreements contained herein shall have been performed and
fulfilled in all material respects; each of the representations and warranties
of Seller contained or referred to herein shall be true and correct in all
material respects on the Closing Date as though made on the Closing Date, except
for changes therein specifically permitted by this Agreement or resulting from
any transaction expressly consented to in writing by Buyer, and except that
where a covenant or a representation or warranty is already qualified by
"materiality" or words of similar import, the covenant, representation or
warranty shall be fulfilled, true and correct in all respects; and there shall
have been delivered to Buyer a certificate or certificates to that effect, dated
the Closing Date, signed on behalf of Seller, by its President or any duly
authorized officer.
6.2 Corporate/Partnership Action. Seller, FMT and their Affiliates shall
----------------------------
have taken all corporate or partnership, as the
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case may be, action necessary to approve the transactions contemplated by this
Agreement prior to the execution of this Agreement, and, upon execution of this
Agreement, Seller, FMT and their Affiliates shall have furnished Buyer with
certified copies of the resolutions adopted by the Board of Directors or
Partners, as the case may be, of such applicable entity, in form and substance
satisfactory to counsel for Buyer, in connection with such transactions.
6.3 No Restraint or Litigation. No action, suit, investigation or
--------------------------
proceeding shall have been instituted or threatened by any governmental or
regulatory agency to restrain, prohibit or otherwise challenge the legality or
validity of the transactions contemplated hereby and no order, decree, judgment
or injunction shall have been entered by any court, governmental or regulatory
agency to restrain or prohibit the consummmation of the transactions
contemplated hereby.
6.4 Necessary Consents and Permits. At the Closing, (i) Seller shall have
------------------------------
obtained all Material Consents together with any required consents of third
parties to material Contracts which were entered into between the date hereof
and the Closing, (ii) the expiration of all waiting periods under the Hart-
Scott-Rodino Act (the "HSR Termination") shall have occurred, (iii) the Final
Approval (as defined below) of the FCC and the State Commissions for the
transfer and assignment of the Licenses and Shares shall have been received and
(iv) the agreements contemplated in section 5.3 shall be delivered. For
purposes hereof, "Final Approval" means that such consents shall no longer be
subject to administrative or judicial appeal, review or reconsideration by the
FCC or any State Commission and shall not be qualified by any conditions which
are or are reasonably likely to be material and adverse to Buyer.
6.5 No Material Adverse Change. There shall have been (i) no material
--------------------------
adverse change in the Assets (individually or in the aggregate), or the assets
and operations of the System and (ii) no damage, destruction, loss or claim,
whether or not covered by insurance, or condemnation or other taking in excess
of $100,000.00, individually or in the aggregate, adversely affecting in any
material respect the Assets or the System.
6.6 Palmer Agreement. The Merger contemplated by the Palmer Agreement
----------------
shall have been consummated.
6.7 Legal Opinion. Buyer shall have received a satisfactory opinion from
-------------
(a) Proskauer Rose LLP, counsel to Seller, in form and substance satisfactory to
counsel to Buyer, as to the accuracy of the representations and warranties made
by Seller in Sections 2.1 and 2.2 (except that counsel will not opine regarding
the need for or receipt of any consents to any agreements of Seller) and (b) FCC
counsel for Seller to the effect that all consents, approvals, authorizations or
orders of the FCC and other governmental authorities required to assign the
Licenses and Assets to Buyer have been obtained, are valid and effective and are
not subject to
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appeal, review or reconsideration and constitute the Final Approval of the FCC.
6.8 Other Documentation. Buyer shall have received all of the documents
-------------------
and showings required to be delivered by Seller at the Closing pursuant to
Section 1.7(a) hereof or otherwise contained herein, and such other
documentation reasonably requested by counsel to Buyer and necessary and
appropriate to complete the transactions contemplated hereby.
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
---------------------------------------------
The obligations of Seller under this Agreement shall be subject to the
satisfaction, on or prior to the Closing Date, of the conditions set forth
below.
7.1 No Misrepresentation or Breach of Covenants and Warranties. All of
----------------------------------------------------------
Buyer's covenants and agreements contained herein shall have been performed and
fulfilled in all material respects; each of the representations and warranties
of Buyer contained or referred to herein shall be true and correct on the
Closing Date as though made on the Closing Date except for changes therein
specifically permitted by this Agreement or resulting from any transaction
expressly consented to in writing by Seller or any transaction contemplated by
this Agreement, and except that where a covenants or a representation or
warranty is already qualified by "materiality" or words of similar import, the
covenant, representation or warranty shall be fulfilled, true and correct in all
respects; and there shall have been delivered to Seller a certificate or
certificates to such effect, dated the Closing Date, and signed on behalf of
Buyer by its General Partner.
7.2 Partnership Action. Buyer shall have taken all partnership action
------------------
necessary to approve the transactions contemplated by this Agreement, and Buyer
shall have furnished Seller with certified copies of resolutions adopted by the
General Partner of Buyer, in form and substance satisfactory to counsel for
Seller, in connection with such transactions.
7.3 No Restraint or Litigation. No action, suit, investigation or
--------------------------
proceeding shall have been instituted or threatened by any governmental or
regulatory agency to restrain, prohibit or otherwise challenge the legality or
validity of the transactions contemplated hereby and no order, decree, judgment
or injunction shall have been entered by any court, governmental or regulatory
agency to restrain or prohibit the consummmation of the transactions
contemplated hereby.
7.4 Legal Opinion. Seller shall have received a satisfactory opinion from
-------------
Gould & Ratner, counsel to Buyer, in form and substance satisfactory to counsel
to Seller opining to the representations and warranties made by Buyer in
Sections 3.1 and 3.2 (except that counsel will not opine regarding the need for
or receipt of any consents to any agreements of Buyer).
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<PAGE>
7.5 Palmer Agreement. The Merger contemplated by the Palmer Agreement
----------------
shall have been consummated.
7.6 Necessary Consents and Permits. At the Closing, the HSR Termination
------------------------------
and Final Approval of FCC and State Commissions shall have been obtained.
7.7 Other Documentation. Seller shall have received the payment of the
-------------------
Purchase Price as set forth in Section 1.5 hereof and all of the documents and
showings required to be delivered by Buyer at the Closing pursuant to Section
1.7(b) hereof or otherwise contained herein, and such other documentation
reasonably requested by counsel to Seller and necessary and appropriate to
complete the transactions contemplated hereby.
ARTICLE 8
INDEMNIFICATION
---------------
8.1 Indemnification by Seller. Subject to Section 8.3, Seller and FMT,
-------------------------
jointly and severally, together with its respective successors and assigns,
shall indemnify and hold Buyer and its successors and assigns harmless from,
against or in respect of the aggregate of all Indemnifiable Damages of Buyer.
For this purpose "Seller" includes Palmer by virtue of Merger Sub's merger into
Palmer. For this purpose, the term "Indemnifiable Damages" of Buyer means the
aggregate of any and all damage, loss, deficiency, liability, expense
(including, but not limited to, any reasonable attorney's fees, expert witness
fees, court costs and expenses), action, suit, proceedings, demand, settlement,
assessment or judgment to or against Buyer arising out of or in connection with:
(a) Any debt, obligation, or liability of Seller, FMT or their
Affiliates which is not expressly assumed by Buyer herein, including,
without limitation, the Excluded Liabilities, whether arising prior to, on
or after the Closing;
(b) Any breach or violation of or non-performance by Seller of any of
its respective representations, warranties, covenants or agreements
contained in this Agreement or in any document, certificate or schedule
required to be furnished pursuant to this Agreement; and
(c) Notwithstanding the provisions of Section 10.10, any violation of
the Bulk Sales Laws or other similar laws requiring notice to governmental
and non-governmental creditors caused by consummation of the transactions
contemplated by this Agreement, but only to the extent such violation
relates to debts, obligations and liabilities which are not Assumed
Liabilities.
8.2 Indemnification by Buyer. Buyer and its successors and assigns shall
------------------------
indemnify and hold harmless Seller from and with respect to all Indemnifiable
Damages (as defined in Section 8.1 above but as it relates to section 8.2)
suffered by Seller,
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together with their successors and assigns, arising out of or in connection
with:
(a) Any debt, obligation, liability or commitment of Seller which is
expressly assumed by Buyer herein;
(b) Any breach or violation of, or non-performance by, Buyer of any of
its representations, warranties, covenants or agreements contained in this
Agreement or in any document, certificate or schedule required to be
furnished pursuant to this Agreement;
(c) Any violation of the Bulk Sales Laws caused by consummation of the
transactions contemplated by this Agreement, but only to the extent such
violation relates to debts, obligations and liabilities expressly assumed
by Buyer herein; and
(d) Any breach by Seller under the Palmer Agreement caused by a breach
by Buyer under this Agreement.
8.3 Limitation of Damages. The foregoing obligations described in
---------------------
Sections 8.1 and 8.2 shall be subject to and limited by the following principles
and limitations:
(a) All representations, warranties and covenants and obligations
contained in Article 2 of this Agreement, except for those contained in
Section 2.8 which shall terminate on the Closing Date, shall survive the
consummation of the transactions contemplated by this Agreement from the
Closing Date through the date that is eighteen (18) months following the
Closing Date and shall thereafter terminate, provided, however, that
notwithstanding the foregoing, the representations and warranties contained
in Sections 2.1, 2.2, 2.5, 2.7 and 2.9 shall be of unlimited duration.
Claims first asserted within the period referred to above shall not be
barred and shall survive indefinitely until such claims are resolved. All
other covenants and agreements set forth in this Agreement shall survive
indefinitely unless otherwise expressly provided herein.
(b) Seller shall not be responsible to Buyer under Section 8.1(b)
unless and until the aggregate of all Indemnifiable Damages suffered by
Buyer exceeds $750,000.00 and then Seller shall be responsible to fully
indemnify Buyer for all Indemnifiable Damages in excess of $750,000.00,
provided, however, that this provision shall not apply to breaches of the
representations and warranties contained in Sections 2.1, 2.2, 2.5, 2.7 and
2.9 which shall be fully indemnifiable notwithstanding the amount of
Indemnifiable Damages.
(c) Notwithstanding anything contained herein to the contrary, from
and after the Closing Date, this Article 8, together with Section 9.2, sets
forth the sole and exclusive
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<PAGE>
remedies of Seller and Buyer in the event of a breach of this Agreement.
Buyer shall not be entitled to reimbursement for any Indemnifiable Damages
under Section 8.1(b) incurred in excess of Three Million Dollars
($3,000,000.00) except that no such limits or exclusiveness of remedies
shall apply either (i) due to Seller's fraud, (ii) for Indemnifiable
Damages contained in Sections 2.1, 2.2, 2.5, 2.7 and 2.9 or (iii) in the
event that Seller does not proceed to Closing as a result of Palmer's
termination of the Palmer Agreement due to Seller's breach or default.
Seller shall not be entitled to reimbursement for any Indemnifiable Damages
under this Agreement in excess of the Purchase Price.
8.4 Notice of Claims. If any claim is made against a party which, if
----------------
sustained, would give rise to a liability of the other hereunder, the party
seeking indemnification (the "claiming party") shall promptly cause notice of
the claim to be delivered to the other party (the "non-claiming party") and
shall afford the non-claiming party and its counsel, at its sole expense, the
opportunity to defend or settle the claim (provided that the claiming party and
its counsel may participate at their sole cost and expense). Any notice of a
claim shall state specifically the representation, warranty, covenant or
agreement with the alleged basis for the claim, and the amount of liability
asserted against the other party by reason of the claim (if such amount can be
reasonably estimated). If such notice and opportunity are not given, or if any
claim is compromised or settled without notice to and consent of the non-
claiming party, no liability shall be imposed on the non-claiming party by
reason of such claim, but if notice is given and the non-claiming party
receiving the notice fails to assume the defense of the claim or fails to admit
in writing its obligation to indemnify the claiming party with respect to such
claim (subject to the terms and conditions of this Agreement), the claim may be
defended, compromised or settled by the claiming party without the non-claiming
party's consent and the non-claiming party shall remain liable under this
Article 8. Notwithstanding anything contained in this Section 8.4 to the
contrary, the non-claiming party may retain control over the defense of any
claim hereunder if such claim is non-monetary or is for injunctive or other
equitable relief which would have a material adverse effect on the claiming
party.
ARTICLE 9
TERMINATION
-----------
9.1 Termination. Anything contained in this Agreement to the contrary
-----------
notwithstanding, this Agreement may be terminated at any time prior to the
Closing Date:
(a) By the mutual written consent of Buyer and Seller;
(b) By Buyer upon the continuing breach or non-fulfillment by Seller
of any of its covenants or agreements or representations or warranties
contained in Article 2 or Article 4 after thirty (30) days' written notice
and
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<PAGE>
opportunity to cure, other than a breach in connection with defects with
the Seller Licenses which shall be cured within the applicable time periods
proscribed by the FCC but in no event later than the Closing Date;
(c) By Seller upon the continuing breach or non-fulfillment by Buyer
of any of its covenants or agreements or representations or warranties
contained in Article 3 or Article 4 after thirty (30) days' written notice
and opportunity to cure;
(d) By Buyer, if any of the conditions set forth in Article 6 of this
Agreement have not been satisfied on or before December 31, 1997 (or
December 31, 1997 or, at Buyer's election, such other outside date in the
event that the Termination Date (as defined in the Palmer Agreement) is
extended); provided, however, that the right to terminate this Agreement
under this section 9.1(d) shall not be available to Buyer if Buyer's
failure to fulfill any of its obligations under this Agreement has been the
cause of, or resulted in, the failure of the Closing to occur on or before
the Closing Date;
(e) By Seller, if any of the conditions set forth in Article 7 of this
Agreement have not been satisfied on or before December 31, 1997 (or
December 31, 1997 or such other outside date in the event that the
Termination Date (as defined in the Palmer Agreement) is extended);
provided, however, that Seller's right to terminate this Agreement under
this section 9.1(e) shall not be available to Seller if Seller's failure to
fulfill any of its obligations under this Agreement has been the cause of,
or resulted in, the failure of the Closing to occur on or before the
Closing Date;
(f) By Seller, if the Commitment Letter is not delivered by Buyer to
Seller within forty-eight (48) days from the date hereof, provided that
Seller has furnished to Buyer written notice of Seller's intent to
terminate the Agreement by 5:00 p.m. eastern time on or before fifty-five
(55) days after the date hereof;
(g) In the event of a failure of the condition set forth in Section
6.6 or 7.5, the following shall apply:
(i) in the event of such failure due to a breach or default by
Palmer under the Palmer Agreement, which breach or default does not
substantially relate to the System, this Agreement shall automatically
terminate if Seller chooses, in its sole discretion, to and does
terminate the Palmer Agreement. In the event of the applicability of
this clause (i) or clause (ii) below, then (x) in the event the Palmer
Agreement is terminated, but then Seller and Palmer (or Affiliates of
either) enter into another or similar transaction contemplated by the
Palmer Agreement within three (3) months following
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<PAGE>
such termination, then this Agreement shall, at Buyer's option, be re-
instated, with appropriate changes for the timing of the Closing
(provided that if the Palmer Agreement is reinstated and the price
paid per share under the reinstated agreement is different than
$17.50, then the Purchase Price will be adjusted, upward or downward,
by the percentage that the price per share has changed from $17.50)
and/or (y) in the event that Seller receives any proceeds under
Section 9.3(b) of the Palmer Agreement or under any Option Agreement
between Seller and PCI to acquire the stock of Palmer owned by PCI, or
any other agreement entered into between Seller and palmer (or
Affiliates thereof) in connection with the Palmer Agreement, Buyer
shall be entitled to 19% of the fees and other amounts to which Seller
is entitled thereunder;
(ii) In the event of such failure due to a breach or default by
Palmer under the Palmer Agreement which relates substantially to the
System, Buyer shall have the right, in its sole discretion, to either
(a) cause Seller to waive any such default and waive the corresponding
breach of representation or warranty under this Agreement caused
thereby and require Seller to keep the Palmer Agreement in full force
and effect in accordance with its terms (provided that this clause (a)
will only be applicable if an existing uncured breach or default by
Palmer under the Palmer Agreement relating to the balance of Palmer
unrelated to the System or Assets does not exist and does not have a
material adverse effect on Palmer or Seller under the Palmer
Agreement) or (b) terminate this Agreement and, if Seller terminates
the Palmer Agreement, retain the right to (I) receive a percentage of
fees as set forth in section 9.1(e)(i)(y) above and (II) reinstate
this Agreement as provided in section 9.1(g)(i)(x) in the event that
Seller chooses to terminate the Palmer Agreement; and
(iii) In the event of such failure due to a breach or default by
Seller under the Palmer Agreement, such failure shall be deemed a
breach of this Agreement by Seller and Buyer shall be entitled to
pursue all available legal and equitable remedies as a result of such
breach or reinstate this Agreement as provided in section 9.1(g)(i)(x)
in the event that Seller or Palmer chooses to terminate the Palmer
Agreement.
(iv) In the event of a breach or default by Palmer under the
Palmer Agreement, Seller will pursue, within its reasonable discretion
and judgment, all available remedies at law or in equity, including
the remedy set forth in section 9.3(b) of the Palmer Agreement.
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<PAGE>
9.2 Remedies for Termination.
------------------------
(a) By Seller. In the event of the existence of Seller's right to
---------
terminate pursuant to Section 9.1(c) hereof, Seller may at its sole
election (i) waive such right and close (without waiving its rights to
recover damages pursuant to Article 8) or (ii) terminate the Agreement and
seek all remedies entitled by law (subject to section 8.3(c)). In the event
of Seller's termination pursuant to Section 9.1(e) hereof due to Buyer's
failure to deliver the Purchase Price, Seller's remedy is limited to that
set forth in section 8.3(c). In the event of Seller's termination pursuant
to Section 9.1(f) hereof, this Agreement will terminate without any
liability to any party.
(b) By Buyer. If Buyer has the right to terminate this Agreement
--------
pursuant to section 9.1(b), Buyer may at its sole election either (i) waive
such right and close (without waiving its rights to recover damages
pursuant to Article 8) or (ii) terminate the Agreement and seek all
remedies entitled by law including the remedy of specific performance, it
being acknowledged that the Assets and the System are unique and monetary
damages would not be wholly adequate.
(c) Generally. A termination of this Agreement will not release
---------
either party from breach of this Agreement which occurs prior to such
termination, except to the extent that such party's liability is limited or
released as expressly set forth in Section 8.3(c) or 9.2.
9.3 Risk of Loss. The risk of any loss to the Assets and all liability
------------
with respect to injury and damage occurring in connection therewith shall be the
sole responsibility of Seller, Palmer, FMT and their Affiliates, as the case may
be, until the completion of the Closing. If any material part of such
properties shall be damaged by fire or other casualty (and not repaired or
replaced by comparable or better assets) prior to the completion of the Closing
hereunder, Buyer shall have the right and option:
(a) to terminate this Agreement, without liability to Seller;
(b) to proceed with Closing hereunder, in which event such casualty
shall not constitute a breach by Seller of any representation, warranty or
covenant in this Agreement or a breach by Palmer of any representation,
warranty or covenant under the Palmer Agreement, and, at Buyer's election,
receive a credit against the Purchase Price for the value of the property
so damaged, or be entitled to receive and retain the insurance proceeds
arising from such casualty; or
(c) to delay Closing (up to 30 days) until the damaged or destroyed
Asset is repaired or replaced.
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<PAGE>
ARTICLE 10
GENERAL PROVISIONS
------------------
10.1 Confidential Nature of Information. Each party hereto agrees
----------------------------------
that it will treat in confidence all documents, materials and other information
which it shall have obtained regarding any other party during the course of the
negotiations leading to the consummation of the transactions contemplated
hereby, the investigation provided for herein and the preparation of this
Agreement and other related documents, and, in the event the transactions
contemplated hereby shall not be consummated, all copies of nonpublic documents
and material which have been furnished in connection therewith shall be promptly
returned to the party furnishing the same, shall continue to be treated as
confidential information and shall not be used for the benefit of the party who
returned such confidential information.
10.2 Governing Law. This Agreement shall be governed by and
-------------
interpreted in accordance with the laws of the State of Florida and the
applicable rules and regulations of the FCC without giving effect to the
provisions, policies or principles of the State of Florida relating to choice or
conflict of laws. This Agreement has been fully negotiated by parties of equal
bargaining power and no inference or construction should be made against the
drafting party.
10.3 Notices. All notices or other communications required or
-------
permitted hereunder shall be in writing and shall be deemed given or delivered
when delivered personally, or when sent by registered or certified mail or
prepaid overnight courier or by legible facsimile addressed as follows:
If to Buyer, to:
Wireless One Network, L.P.
James A. Dwyer, Jr.
2100 Electronics Lane
Fort Myers, FL 33912
Facsimile: (941) 489-1928
with a copy to:
Gould & Ratner
222 North LaSalle Street, Suite 800
Chicago, IL 60601-1086
Attn: Fredric D. Tannenbaum, Esq.
Facsimile: (312) 236-3241
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<PAGE>
If to Seller, to:
Price Communications Corporation
45 Rockefeller Plaza
Suite 3200
New York, New York 10020
Attn: Robert Price
Facsimile: (212) 397-3755
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, NY 10036-8299
Attn: Peter G. Samuels, Esq.
Facsimile: (212) 969-2900
or to such address as such party may indicate by a notice delivered to the other
parties hereto. Notice is deemed received the same day (in the case of personal
delivery), three (3) days after mailing (in the case of registered mail) and the
next business day (in the case of overnight courier or facsimile transmission).
10.4 Successors and Assigns.
----------------------
(a) The rights of the parties under this Agreement shall not be
assignable, except that Buyer may assign its rights hereunder to (i) an
affiliated entity or entities in which it or its affiliates owns a
controlling interest or (ii) to a lender for collateral purposes, provided
that any such assignment shall not cause a material delay of the receipt of
a Final Approval or delay the Closing beyond the Termination Date.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their successors and permitted assigns. Nothing in
this Agreement, expressed or implied, is intended or shall be construed to
confer upon any person other than the parties and successors and assigns
permitted by this Section 10.4 any right, remedy or claim under or by
reason of this Agreement.
10.5 Entire Agreement; Amendments. This Agreement and the Schedules and
----------------------------
Exhibits referred to herein and the documents delivered pursuant hereto, contain
the entire understanding of the parties hereto with regard to the subject matter
contained herein or therein, and supersede all prior agreements, understandings
or intents between or among any of the parties hereto. The parties hereto, by
mutual agreement in writing, may amend, modify and supplement this Agreement.
10.6 Waivers. Any term or provision of this Agreement may be waived, or
-------
the time for its performance may be extended, by the party or parties entitled
to the benefit thereof. The failure of any party hereto to enforce at any time
any provision of this
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<PAGE>
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
10.7 Expenses. Each party hereto will pay all costs and expenses
--------
incident to its negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions contained herein
on its part to be performed or complied with, including, without limitation, the
fees, expenses and disbursements of its counsel and accountants.
10.8 Sales and Transfer Taxes. Any sales and transfer taxes imposed in
------------------------
connection with the transactions contemplated by this Agreement shall be equally
split between Buyer and Seller. Payment of such sales and transfer taxes shall
be made to the party required under applicable law to collect and/or pay such
taxes.
10.9 Execution of Counterparts. This Agreement may be executed in one or
-------------------------
more counterparts, each of which shall be considered an original instrument, but
all of which shall be considered one and the same agreement, and shall become
binding when one or more counterparts have been agreed upon by each of the
parties and delivered to Seller and Buyer.
10.10 Bulk Sales Compliance and Other Agreements. As an inducement to
------------------------------------------
Buyer, the parties hereto hereby waive compliance with the procedures of Article
6 of the Florida Uniform Commercial Codes or other bulk sales laws.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above.
BUYER:
WIRELESS ONE NETWORK, L.P.
By: WON, INC., Its General Partner
By: ___________________________
Its: _________________
SELLER:
PRICE COMMUNICATIONS CORPORATION
By: _______________________________
Its: ________________
PRICE COMMUNICATIONS CELLULAR MERGER CORP.
By: _______________________________
Its: ________________
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<PAGE>
EXHIBIT 1.5(A)(I)
-----------------
HOLDBACK ESCROW AGREEMENT
-------------------------
This Holdback Escrow Agreement ("Escrow Agreement") dated as of
____________ ___, 1997, by and among PRICE COMMUNICATIONS CORPORATION, a New
York corporation ("Price"), PRICE COMMUNICATIONS CELLULAR MERGER CORP., a
Delaware corporation ("Merger Sub" and together with Price, the "Seller"), and
WIRELESS ONE NETWORK, L.P., a Delaware limited partnership ("Buyer") and [THE
FIRST NATIONAL BANK OF CHICAGO/NBD], as escrow agent (the "Escrow Agent").
RECITALS
--------
A. Seller and Buyer have entered into an Asset Purchase Agreement dated as
of June 13, 1997 (the "Purchase Agreement") which, subject to the satisfaction
of certain terms and conditions, provides for the execution, delivery and
performance of this Escrow Agreement. All capitalized undefined terms used
herein shall have the same meanings ascribed to them in the Purchase Agreement;
B. The Purchase Agreement contemplates the delivery of Three Million
Dollars ($3,000,000.00) of the Purchase Price on the Closing Date to the Escrow
Agent by Buyer to be held by the Escrow Agent as security for Indemnifiable
Damages, and otherwise in accordance with the terms hereof and thereof.
NOW, THEREFORE, the parties hereto agree as follows:
1. Appointment of Escrow Agent. Seller and Buyer hereby designate and
---------------------------
appoint [The First National Bank of Chicago/NBD] to act as Escrow Agent
hereunder, and Escrow Agent hereby accepts such appointment on the terms and
conditions hereinafter set forth.
2. Receipt of Collateral. The Escrow Agent hereby acknowledges the
---------------------
receipt of Three Million Dollars ($3,000,000.00) plus ______________ Dollars
($______________) from Buyer (such cash, together with the proceeds of any
investment thereof ("Interest"), being hereinafter sometimes collectively
referred to as the "Deposit"), and represents and warrants that such funds
promptly shall be deposited in Account Number _________ of the Escrow Agent at
[The First National Bank of Chicago/NBD], such escrow account (the "Escrow
Account") being designated the "Price/Wireless One Holdback Escrow Account".
3. Investment of Deposit. The Escrow Agent is hereby authorized and
---------------------
directed to hold the Deposit and to deliver such Deposit in accordance with the
terms of this Escrow Agreement. The Escrow Agent is hereby authorized and
directed to invest and reinvest the Deposit in either, or any combination of,
(a) certificates of deposit, which mature in ninety (90) days or less from the
date of purchase by the Escrow Agent, with a bank or trust company organized as
a corporation under the laws of the United States or any state thereof whose
long-term debt securities have either of the two highest ratings for long-term
securities assigned
<PAGE>
by S&P or Moody's, (b) securities, which mature in ninety (90) days or less from
the date of purchase by the Escrow Agent, issued and guaranteed by the United
States government or agencies or instrumentalities thereof, (c) bank deposits
immediately convertible into cash, or (d) money market funds authorized to
invest solely in short-term securities issued or guaranteed as to principal by
the U.S. Government and repurchase agreements with respect to such securities.
4. Disbursement of Holdback Deposit.
--------------------------------
(a) On the first year anniversary of the date hereof Seller and Buyer shall
execute a joint written direction authorizing Escrow Agent to disburse to Seller
an amount equal to the quotient of (X) Two Million Dollars ($2,000,000.00),
minus (Y) the sum of (i) 110% of the estimated amount of Buyer's claims for any
Indemnifiable Damages as described in Section 4(b) below plus (ii) amounts
previously disbursed from the Deposit. For example, if the original Deposit were
$3 million and a claim for Indemnifiable Damages by Buyer of $100,000 were
pending during the first 1 year after Closing, and $50,000 had already been
distributed to Buyer under the terms hereof, the Escrow Agent would distribute
to Seller $1,840,000 (which is ($2 million, minus the product of $100,000 and
110%, and minus $50,000)).
(b) For purposes of this Section 4(b), the following terms have the
meanings set forth below:
(X) "Breach" means any event pursuant to which indemnity may be
sought pursuant to Section 8.1 of the Purchase Agreement.
(Y) "Disbursement Date" means _________ ___, 1998. [1 1/2 years
from this date]
(Z) "Indemnifiable Damages" has the same meaning as set forth in
Section 8.1 of the Purchase Agreement.
(i) If Buyer believes that a Breach exists or has occurred and that
Buyer has incurred or suffered, or may incur or suffer, Indemnifiable
Damages from or by virtue of such Breach, Buyer shall so notify the Escrow
Agent and Seller on or prior to the Disbursement Date in writing (any such
notice being referred to herein as a "Notice of Breach") describing such
Breach or Indemnifiable Damages with reasonable particularity, and, if
known, (x) the amount of such Indemnifiable Damages or (y) the basis for
calculating the amount of such Indemnifiable Damages. If, within twenty
(20) days after Buyer has given any such Notice of Breach, Seller has not
objected to the existence of the Breach or the amount of the Indemnifiable
Damages, if any, stated therein by written notice given to the Escrow Agent
and to Buyer, the existence of the Breach and the amount of any
Indemnifiable
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<PAGE>
Damages described in such Notice of Breach shall be deemed to have been
agreed to by Seller and finally determined as of the last day of such
twenty (20) day period. If Seller objects to the existence of any Breach
or the amount of any Indemnifiable Damages set forth in the Notice of
Breach or if the Notice of Breach does not set forth the amount of any
Indemnifiable Damages, the existence of such Breach or the amount of such
Indemnifiable Damages to which objection is made (or the amount of the
Indemnifiable Damages if not set forth in the Notice of Breach), shall be
finally determined by: (i) the subsequent written agreement of Seller and
Buyer, (ii) a judgment or decree which becomes final and for which any
appeal period shall have elapsed without any appeal having been filed and
not disposed of, or (iii) a final award made under an arbitration
proceeding if the matter is submitted to arbitration pursuant to an
agreement of Seller and Buyer as of the date such award becomes final. The
Escrow Agent shall promptly pay to Buyer (or its successors and assigns as
designated by Buyer) from the Deposit the amount of all Indemnifiable
Damages which have been finally determined in accordance with this
Agreement.
(ii) If on the Disbursement Date (i) there have been no Notices of
Breach or (ii) the existence of every Breach and the amount of all
Indemnifiable Damages claimed in every Notice of Breach delivered to the
Escrow Agent on or prior to such Disbursement Date shall have been finally
determined and all amounts owing to Buyer have been paid to Buyer, the
Escrow Agent shall promptly deliver the Deposit to Seller.
(iii) If on the Disbursement Date the existence of every Breach and
the amount of all Indemnifiable Damages claimed in every Notice of Breach
delivered to the Escrow Agent on or prior to the Disbursement Date shall
not have been finally determined, Buyer shall deliver to the Escrow Agent
and Seller a certificate setting forth Buyer's estimate of the maximum
amount of Indemnifiable Damages which Buyer has incurred or suffered or may
incur or suffer by reason of all Breaches made the subject of all Notices
of Breach which Indemnifiable Damages have not been finally determined as
of the Disbursement Date (the "Estimated Remaining Damages"). Upon receipt
of such certificate, the Escrow Agent shall deliver the excess of (A) 95%
of the remaining Deposit, over (B) the Estimated Remaining Damages, to
Seller and shall retain the balance pending final determination of all such
Indemnifiable Damages. Promptly after the existence of every Breach and
the amount of all Indemnifiable Damages related thereto claimed in every
Notice of Breach delivered to the Escrow Agent on or prior to the
Disbursement Date shall have been finally determined, the Escrow Agent
shall (after paying any amounts due Buyer) promptly deliver the Deposit to
Seller.
-3-
<PAGE>
5. Advice of Counsel. The Escrow Agent may apply for advice to counsel of
-----------------
its choice, and may rely upon such advice as it thereupon receives in writing;
or it may act or refrain from acting in accordance with its best judgment and
shall not, as a result thereof, be answerable to any other person except for
willful misconduct or gross negligence.
6. Responsibility and Exoneration of Escrow Agent. (a) The Escrow Agent,
----------------------------------------------
as such, shall not be responsible or liable to any person, whether or not a
party to this Agreement, for any act or omission of any kind so long as it has
acted in good faith upon the instructions herein contained or upon the
instructions hereafter delivered to it as contemplated by this Agreement or upon
advice of counsel as provided in this Agreement or upon advice of counsel as
provided in Section 5. The Escrow Agent may rely and act upon any certificate
or other document conforming to the applicable provision hereof and believed by
it to be genuine and to have been signed by the proper party. All persons shall
be conclusively bound as against the Escrow Agent by any payment pursuant to,
and in conformity with, the terms of this Agreement.
(b) It is agreed that Escrow Agent shall incur no liability, except for
gross negligence and willful misconduct, in respect of (i) any action taken or
suffered by Escrow Agent in reliance upon any notice, direction, instruction,
consent, statement or other paper or document believed by Escrow Agent to be
genuine and duly authorized or (ii) any action taken or omitted hereunder in
good faith and the exercise of Escrow Agent's own best judgment. Escrow Agent
shall not be responsible for the validity or sufficiency of this Escrow
Agreement or for the validity or sufficiency of any document which may be
delivered to Escrow Agent. Escrow Agent shall not be required to take any
action hereunder involving any expense unless the payment of such expense shall
be made or provided for in a manner satisfactory to Escrow Agent.
(c) Seller and Buyer agree, jointly and severally, to indemnify and hold
Escrow Agent harmless from and against all costs, damages, judgments, attorney's
fees (whether such attorneys shall be regularly retained or specially employed),
expenses, obligations, and liabilities of every kind and nature which Escrow
Agent may incur, sustain, or be required to pay in connection with or arising
out of this Escrow Agreement, and to pay Escrow Agent on demand the amount of
all such costs, damages, judgments, attorney's fees, expenses, obligations and
liabilities.
(d) If Escrow Agent should receive or become aware of any conflicting
demands or claims with respect to the Deposit, this Escrow Agreement, or the
rights of any of the parties hereto, or affected hereby, Escrow Agent shall have
the right in Escrow Agent's sole discretion, without liability for interest or
damages, to discontinue any or all further acts on Escrow Agent's part until
such conflict is resolved to Escrow Agent's satisfaction and/or to
-4-
<PAGE>
commence or defend any action or proceeding for the determination of such
conflict.
7. Amendments. This Agreement may be amended or compliance with its terms
----------
waived only by a document in writing executed by Seller and Buyer and the Escrow
Agent.
8. Fees. The Escrow Agent shall charge fees to Seller and Buyer for the
----
services rendered by Escrow Agent under this Agreement as follows:
________________, and such fee shall be equally split between Seller and Buyer
on the other.
9. Notices. Any notices or other communications required or permitted
-------
hereunder shall be in writing and shall be deemed given or delivered if
delivered personally or if sent by registered or certified mail addressed as
follows:
If to Buyer, to:
Wireless One Network, L.P.
James A. Dwyer, Jr.
2100 Electronics Lane
Fort Myers, FL 33912
Facsimile: (813) 489-1622
with a copy to:
Gould & Ratner
222 North LaSalle Street, Suite 800
Chicago, IL 60601-1086
Attn: Fredric D. Tannenbaum, Esq.
Facsimile: (312) 236-3241
If to Seller, to:
Price Communications Corporation
45 Rockefeller Plaza
Suite 3200
New York, New York 10020
Attn: Robert Price
Facsimile: (212) 397-3755
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, NY 10036-8299
Attn: Peter G. Samuels, Esq.
Facsimile: (212) 969-2900
-5-
<PAGE>
If to the Escrow Agent to:
_________________
_________________
Attn: _______________
or to such other address or to such other person as such party may indicate by a
notice delivered to the other parties hereto. Notice is deemed given and
received the same day (in the case of personal or facsimile delivery provided
that confirmation of transmission is received on a business day between the
hours of 9:00 a.m. and 5:00 p.m. EST) and three (3) days after mailing (in the
case of mail).
10. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and to their respective successors
and assigns and this Agreement is not personal to any party. Nothing contained
herein is intended to confer upon any person other than the parties hereto and
their respective successors and assigns as aforesaid, any rights or remedies
under or by reason of this Agreement.
11. Controlling Law. This Agreement shall be construed and enforced in
---------------
accordance with the laws of the State of Illinois without regard to conflict of
law principles thereof.
12. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be considered an original agreement but all of
which shall be considered one and the same agreement.
13. Interpretation. Titles and headings to Sections herein are inserted
--------------
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement.
14. Resignation. The Escrow Agent may resign at any time hereunder upon
-----------
written notice to Buyer and Seller. The Escrow Agent shall deliver the Deposit
to the successor escrow agent designated in writing by Buyer and Seller, or, if
no such designation has been received by the Escrow Agent, to a court of
competent jurisdiction in Chicago, Illinois.
--BALANCE OF PAGE INTENTIONALLY LEFT BLANK.--
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the
day first above written.
BUYER:
WIRELESS ONE NETWORK, L.P.
By: WON, INC., Its General Partner
By: ___________________________
Its: _________________
SELLER:
PRICE COMMUNICATIONS CORPORATION
By: _______________________________
Its: ________________
PRICE COMMUNICATIONS CELLULAR MERGER CORP.
By: _______________________________
Its: ________________
ESCROW AGENT:
THE FIRST NATIONAL BANK OF CHICAGO
By: _______________________________
Its: __________________
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<PAGE>
EXHIBIT 1.7(a)(i)
-----------------
GENERAL ASSIGNMENT AND WARRANTY BILL OF SALE
--------------------------------------------
THIS GENERAL ASSIGNMENT AND WARRANTY BILL OF SALE (the "Assignment") is
executed and delivered pursuant to, and for the consideration provided in, a
Purchase Agreement ("Purchase Agreement") dated as of June ___, 1997 by and
among PRICE COMMUNICATIONS CORPORATION, a New York corporation ("Price"), PRICE
COMMUNICATIONS CELLULAR MERGER CORP., a Delaware corporation ("Merger Sub"), and
WIRELESS ONE NETWORK, L.P., a Delaware limited partnership ("Buyer"). All
capitalized undefined terms used herein shall have the same meanings ascribed to
them in the Purchase Agreement.
KNOW ALL MEN BY THERE PRESENTS, that FMT, Ltd., a Florida limited
partnership ("FMT") (FMT, Merger Sub and Price are collectively, the "Seller"),
hereby assigns and transfers to Buyer as of the date of this instrument, all of
its right, title and interest in and to the Assets and the System.
Seller warrants to Buyer that Seller has good and marketable title to the
Assets free and clear of all mortgages, security interests, pledges, liens,
charges and encumbrances.
Terms not otherwise defined in this General Assignment and Warranty Bill of
Sale have the meanings assigned to them in the Purchase Agreement.
If there is any conflict between this General Assignment and Warranty Bill
of Sale and the Purchase Agreement, the terms and conditions of the Purchase
Agreement shall control.
IN WITNESS WHEREOF, this General Agreement and Warranty Bill of Sale has
been executed on behalf of Seller as of the ___ day of ________________, 1997.
PRICE COMMUNICATIONS CORPORATION
By: _______________________________
Its: ________________
PRICE COMMUNICATIONS CELLULAR MERGER CORP.
By: _______________________________
Its: ________________
_____________________________
FMT, LTD.,
BY: PALMER WIRELESS HOLDINGS, INC.,
Its General Partner
By: _________________________
Title: _________________
<PAGE>
EXHIBIT 10.3
_______________________________________
ASSET PURCHASE AGREEMENT
DATED OCTOBER 21, 1997
BY AND BETWEEN
MJ CELLULAR COMPANY, L.L.C.,
PRICE COMMUNICATIONS CORPORATION
AND
PRICE COMMUNICATIONS WIRELESS, INC.
_______________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
RECITALS........................................................................ 1
SECTION 1. DEFINITIONS.......................................................... 1
SECTION 2. PURCHASE OF ASSETS; CONSIDERATION.................................... 8
2.1 PURCHASE OF ASSETS........................................... 8
2.2 PURCHASE PRICE............................................... 8
2.3 PAYMENT OF PURCHASE PRICE.................................... 8
2.4 ADJUSTMENTS TO PURCHASE PRICE................................ 8
SECTION 3. ASSUMPTION OF OBLIGATIONS............................................10
3.1 ASSUMPTION OF OBLIGATIONS....................................10
3.2 LIMITATION....................................................10
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER.............................11
4.1 AUTHORITY....................................................11
4.2 AUTHORIZATION AND BINDING OBLIGATION.........................11
4.3 ABSENCE OF CERTAIN CHANGES OR EVENTS.........................11
4.4 SUFFICIENCY OF ASSETS........................................12
4.5 NO CONFLICT OR VIOLATION.....................................13
4.6 CONSENTS.....................................................13
4.7 GOVERNMENTAL AUTHORIZATIONS..................................13
4.8 SELLER QUALIFICATIONS........................................14
4.9 REAL PROPERTY................................................14
4.10 PERSONAL PROPERTY...........................................15
4.11 SUBSCRIBERS AND SUPPLIERS....................................15
4.12 RESALE AND ROAMING AGREEMENTS...............................15
4.13 FINANCIAL STATEMENTS........................................16
4.14 CONTRACTS...................................................16
4.15 INTANGIBLES.................................................16
4.16 TAXES.......................................................17
4.17 INSURANCE...................................................18
4.18 LABOR MATTERS...............................................18
4.19 EMPLOYEE BENEFIT PLANS......................................19
4.20 TRANSACTIONS WITH CERTAIN PERSONS...........................19
4.21 LITIGATION..................................................19
4.22 COMPLIANCE WITH LAWS........................................19
4.23 BANKRUPTCY..................................................20
4.24 ENVIRONMENTAL AND SAFETY COMPLIANCE.........................20
4.25 BROKER......................................................21
4.26 NO OTHER AGREEMENT TO SELL..................................21
4.27 BOOKS AND RECORDS...........................................21
4.28 ACCOUNTS RECEIVABLE.........................................21
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
4.29 CURE......................................................21
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER..............................22
5.1 ORGANIZATION, STANDING AND AUTHORITY......................22
5.2 AUTHORIZATION AND BINDING OBLIGATION......................22
5.3 NO CONFLICT OR VIOLATION..................................22
5.4 CONSENTS..................................................22
5.5 BUYER QUALIFICATIONS......................................23
5.6 LITIGATION................................................23
5.7 COMPLIANCE WITH LAWS......................................23
5.8 BANKRUPTCY................................................23
5.9 BROKER....................................................23
5.10 FINANCIAL CAPABILITY......................................23
SECTION 6. COVENANTS OF SELLER..................................................23
6.1 PRE-CLOSING COVENANTS........................................23
6.2 CLOSING COVENANT..............................................26
SECTION 7. CLOSING COVENANTS OF BUYER...........................................26
7.1 PRE-CLOSING COVENANTS........................................26
7.2 CLOSING COVENANT.............................................27
SECTION 8. SPECIAL COVENANTS AND AGREEMENTS.....................................27
8.1 FCC CONSENT.................................................27
8.2 OTHER CONSENTS..............................................27
8.3 COOPERATION.................................................28
8.4 HSR FILINGS.................................................28
8.5 NOTIFICATION OF CERTAIN MATTERS.............................28
8.6 EMPLOYEES...................................................28
8.7 SCHEDULE REVISION...........................................29
8.8 NON-COMPETE ................................................29
SECTION 9. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER........................29
9.1 CONDITIONS TO OBLIGATIONS OF BUYER..........................29
9.2 CONDITIONS TO OBLIGATIONS OF SELLER.........................32
SECTION 10. CLOSING; CLOSING DELIVERIES.........................................33
10.1 CLOSING; TERMINATION.........................................33
10.2 DELIVERIES BY SELLER.........................................33
10.3 DELIVERIES BY BUYER..........................................34
10.4 FORM OF INSTRUMENTS..........................................35
SECTION 11. ACTIONS BY SELLER AND BUYER AFTER THE CLOSING.......................35
11.1 TAX MATTERS; PAYMENTS OF DEBTS AND LIABILITIES.............35
11.2 CLOSING FINANCIAL STATEMENTS...............................36
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
11.3 SERVICES AGREEMENTS........................................36
SECTION 12. TERMINATION.........................................................36
SECTION 13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
INDEMNIFICATION.....................................................37
13.1 REPRESENTATIONS AND WARRANTIES.............................37
13.2 INDEMNIFICATION BY SELLER..................................37
13.3 INDEMNIFICATION BY BUYER...................................37
13.4 LIMITATION OF DAMAGES......................................38
13.5 PROCEDURE FOR INDEMNIFICATION..............................38
SECTION 14. REMEDIES...........................................................39
14.1 BY SELLER..................................................39
14.2 BY BUYER...................................................39
14.3 GENERALLY..................................................39
14.4 SPECIFIC PERFORMANCE.......................................39
SECTION 15. ARBITRATION........................................................39
SECTION 16. MISCELLANEOUS......................................................40
16.1 ALLOCATION OF PURCHASE PRICE...............................40
16.2 FEES AND EXPENSE...........................................40
16.3 NOTICES....................................................41
16.4 FURTHER ASSURANCES.........................................41
16.5 GOVERNING LAW..............................................41
16.6 HEADINGS...................................................41
16.7 GENDER AND NUMBER..........................................41
16.8 ENTIRE AGREEMENT...........................................41
16.9 SEVERABILITY...............................................42
16.10 BENEFIT AND ASSIGNMENT.....................................42
16.11 CONFIDENTIAL INFORMATION...................................42
16.12 COUNTERPARTS...............................................42
ATTACHMENTS
SELLER'S DISCLOSURE SCHEDULE
ANNEX I - CONSULTING AGREEMENT
ANNEX II - OPERATING AGREEMENTS AND ADDENDA
</TABLE>
-iv-
<PAGE>
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of October
21, 1997 by and between MJ CELLULAR COMPANY, L.L.C., a Delaware limited
LIABILITY COMPANY, ("Buyer") and PRICE COMMUNICATIONS CORPORATION, a New York
Corporation, PRICE COMMUNICATIONS WIRELESS, INC., a Delaware Corporation
("Seller").
RECITALS
--------
WHEREAS, Seller, through its subsidiary Price Communications Wireless
II, Inc. ("PCW"), holds a license bearing the call sign KNKN664 issued by the
Federal Communications Commission to operate the non-wireline cellular radio
telephone system in the Georgia 1 - Whitfield Rural Service Area (Market No.
0371-A) (the "System");
WHEREAS, Seller, through its subsidiary Palmer Wireless Holdings, Inc.
("PWH"), holds the microwave licenses bearing the call signs WMN442, WMN443 and
WMS755 issued by the FCC to operate the System;
WHEREAS, Seller desires to sell and Buyer wishes to buy, on the terms
and conditions set forth in this Agreement, the Assets of Seller identified
herein which are used or useful in the operation of the System;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
SECTION 1. DEFINITIONS.
-----------
The following terms, as used in this Agreement, shall have the meanings
set forth in this Section:
"Assets" means all of Seller's right, title and interest in all of the
------
tangible and intangible assets, real, personal or mixed, now owned or held by
Seller or hereafter acquired by Seller on or prior to the Closing Date and used
or useful in or necessary for the operation of the System, other than the
Excluded Assets but otherwise including, without limitation, the Real Property,
the Personal Property, the Contracts, the Governmental Authorizations, the
Intangibles, the Books and Records, the accounts receivable, the Subscriber
Agreements and all cash and other current assets, as reflected in the Financial
Statements.
"Assignment Application" shall have the meaning assigned to it in Section 8.1.
----------------------
1
<PAGE>
"Balance Sheet Date" means September 30, 1997.
------------------
"Benefit Arrangement" means any employment, consulting, severance or
-------------------
other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including without limitation, any self-insured arrangements), workers'
compensation, disability benefits, supplemental unemployment benefits, vacation
benefits, retirement benefits, life, health, disability or accident benefits
(including without limitation any "voluntary employees' beneficiary association"
as defined in Section 501(c)(9) of the Code providing for the same or other
benefits) or for deferred compensation, profit-sharing bonuses, stock options,
stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which:
(A) is not a Welfare Plan, Pension Plan or Multi-employer Plan,
(B) is entered into, maintained, contributed to or required to be
contributed to, as the case may be, by Seller or its ERISA Affiliate or under
which Seller or its ERISA Affiliate may incur any liability, and
(C) covers any employee or former employee of Seller or its ERISA Affiliate
(with respect to their relationship with such entities).
"Books and Records" means all of the books and records of Seller
-----------------
pertaining to the operation and maintenance of the System, other than the
Excluded Assets but otherwise including without limitation, (i) books and
records relating to the purchase of materials and supplies, invoices, customer
lists, supplier lists, personnel records, billing records and subscriber
information, (ii) public file materials, logs and engineering records, (iii)
plans, diagrams, blueprints, schematics, filings with governmental agencies and
executed copies of Contracts, Subscriber Agreements and maintenance records.
"Business Days" means all days except Saturday, Sunday and the holidays
-------------
recognized by the U.S. Government for its employees.
"Cell Site" means a location that contains, among other things, a low-
---------
power transmitter-receiver that communicates by radio signal with cellular
telephones located in the Market.
"Claimant" means a party claiming indemnification pursuant to Section
--------
13.
"Closing" means the consummation of the transactions contemplated in
-------
this Agreement in accordance with this Agreement.
"Closing Financial Statements" means the balance sheet and the related
----------------------------
statements of income for the System as of, and for the period ended on, the
Closing Date, prepared in accordance with generally accepted accounting
principles
2
<PAGE>
consistently applied throughout the periods covered thereby and presenting
fairly the assets, liabilities and financial position of the System as of the
Closing Date and the results of operations for the period then ended.
"Closing Date" means the date on which the Closing occurs, as determined
------------
pursuant to Section 10.1(a).
"Closing Net Current Asset Payment" shall have the meaning assigned to
---------------------------------
it in Section 2.4(a).
"Code" means the Internal Revenue Code of 1986, as amended, and the
----
regulations promulgated thereunder.
"Communications Act" means the Communications Act of 1934, as amended,
------------------
and the regulations promulgated thereunder.
"Consents" means the FCC Consent, the filings required under the HSR
--------
Act, and the other consents, waivers, permits, and approvals of third parties,
including without limitation governmental authorities, necessary to transfer the
Assets to Buyer or otherwise to consummate the transactions contemplated hereby,
which Consents are set forth in Seller's Disclosure Schedule.
"Consulting Agreement" shall mean that certain agreement between Buyer
---------------------
and PWH for advice and management expertise regarding the general operating,
billing and switching services for the System, to be executed on the date of
Closing of the transaction contemplated by this Agreement.
"Consulting Fee" means the consideration for PWH's services pursuant to
----------------
the Consulting Agreement, which shall be One Million Dollars ($1,000,000) paid
by Buyer to Seller on the Closing Date.
"Contracts" means all contracts, leases (for real or personal property),
---------
non-governmental licenses, commitments, understandings and other agreements,
including any amendments or other modifications thereto, to which Seller is a
party, that relate to the operation of the System, including those described in
Sellers Disclosure Schedule, together with any additions thereto between the
date hereof and the Closing Date, but excludes Subscriber Agreements, Employment
Agreements and Excluded Assets.
"Effective Time" means 12:01 a.m., Washington, D.C. time, on the
--------------
Closing Date.
"Employment Agreements" shall have the meaning assigned to it in
---------------------
Section 4.18.
3
<PAGE>
"Employee Plans" means all Benefit Arrangements, Multi-employer Plans,
--------------
Pension Plans and Welfare Plans, which Employee Plans are set forth in Seller's
Disclosure Schedule.
"Encumbrance" means any conditional sales contract (except for the sale
-----------
of cellular telephone service), claim, lien, pledge, option, charge, easement,
security interest, mortgage, deed of trust, right-of-way, encumbrance or adverse
interest of any kind or character, other than Permitted Encumbrances, relating
to the System.
"Environmental Laws" shall have the meaning assigned to it in Section
------------------
4.24.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means any entity which is (or at any relevant time
---------------
was) a member of a "controlled group of corporations" with, under "common
control" with, or a member of an 'affiliated service group' with Seller as
defined in Sections 413(b), (c), (m), or (o) of the Code.
"Excluded Assets" means the following assets of Seller which are
---------------
retained by Seller and are not being sold or assigned to Buyer hereunder:
(a) the corporate charter, qualifications to conduct business as a
foreign corporation, arrangements with registered agents relating to foreign
qualifications, tax payer and other identification numbers, seals, minute books,
stock transfer books, stock certificates (including blanks), and other documents
relating to the organization, maintenance, and existence of Seller as a
corporation ;
(b) any of the rights of Seller under this Agreement and other
documents executed by the parties as contemplated herein or under any other
agreement between Seller on the one hand and Buyer on the other hand entered
into on or after the date of this Agreement; and
(c) the mobile telephone switching office ("MTSO") including but not
limited to all software, short message service, voicemail, MDS, and the
equipment associated therewith located in Columbus, Georgia and Fort Myers,
Florida.
"FCC" means the Federal Communications Commission.
---
"FCC Authorizations" means those authorizations issued by the FCC to
------------------
operate the non-wireline cellular radio telephone system for the Market, which
FCC Authorizations are set forth in Seller's Disclosure Schedule.
"FCC Consents" means actions by the FCC granting its consent to the
------------
consummation of the transactions contemplated by this Agreement.
4
<PAGE>
"Final Order" means a written action or order issued by the FCC or other
-----------
governmental authority (A) which has not been reversed, stayed, enjoined, set
aside, annulled, or suspended and (B) with respect to which (i) no requests have
been filed and are still pending for administrative or judicial review,
reconsideration, appeal, or stay, and the time for filing any such requests and
the time for the FCC or other governmental authority to set aside the action on
its own motion have expired, (ii) in the event of review, reconsideration, or
appeal, the time for further review, reconsideration, or appeal has expired, and
(iii) in the event of a stay, such stay has been dismissed and the time for
review, reconsideration or appeal thereof has expired.
"Financial Statements" means the balance sheets as of September 30,
--------------------
1997, and December 31 of 1996 and 1995, and related statements of income, of
Seller for the System as of and for the period ending September 30, 1997 and the
twelve month periods ended as of December 31, 1996 and 1995, all of which are
contained in Seller's Disclosure Schedule.
"FTC" means the Federal Trade Commission.
---
"Governmental Authorizations" means all licenses, permits, franchises,
---------------------------
and other authorizations issued by federal, state, or local governmental
authorities in connection with the operation of the System (including the FCC
Authorizations), and all applications for modification, extension or renewal
thereof, which Governmental Authorizations are set forth in Seller's Disclosure
Schedule.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended.
"Indemnitor" means a party from whom indemnification is claimed
----------
pursuant to Section 13 hereof.
"Intangibles" means any and all copyrights, trademarks, trade names,
-----------
patents, permits, privileges, proprietary information, technical information and
licenses, data, machinery and equipment warranties, customer lists, and other
intangible property rights and interests applied for, issued to, or owned by
Seller or under which Seller is licensed or franchised and used or useful in the
operation of the System, other than Excluded Assets but otherwise including
without limitation those listed in Seller's Disclosure Schedule, together with
any additions thereto between the date hereof and the Closing Date.
"Liabilities" means liabilities, obligations or commitments of any
-----------
nature, absolute, accrued, contingent or otherwise, known or unknown, whether
matured or unmatured, as reflected on the Financial Statements.
"Market" means the Georgia 1 - Whitfield Rural Service Area (Market No.
------
0371-A), as defined by the FCC.
5
<PAGE>
"Multi-employer Plan" means any "multi-employer plan," as defined in
-------------------
Sections 4001(a)(3) or (3)(37) of ERISA, (A) which Seller or its ERISA Affiliate
maintains, administers, contributes to or is required to contribute to, or after
September 25, 1980, maintained, administered, contributed to or was required to
contribute to, or under which Seller or its ERISA Affiliate may incur any
liability and (B) which covers any employee or former employee or Seller or its
ERISA Affiliate (with respect to their relationship with such entities).
"Net Current Assets" means current assets less current liabilities to be
------------------
assigned by Seller and assumed by Buyer hereunder, determined in accordance
with generally accepted accounting principles.
"Pension Plan" means any "employee pension benefit plan" as defined in
------------
Section 3(2) of ERISA (other than a Multi-employer Plan) (A) which Seller or its
ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, within the five years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute to, or under which
Seller or its ERISA Affiliate may incur any liability and (B) which covers any
employee or former employee of Seller or its ERISA Affiliate (with respect to
their relationship with such entities).
"Permitted Encumbrances" means any liens for Taxes, assessments, or
----------------------
other governmental charges or levies that are not yet due and payable or which
are being contested in good faith in appropriate proceedings.
"Person" means any person or entity, whether an individual, trustee,
------
corporation, general partnership, limited partnership, limited liability
company, trust, unincorporated organization, business association, firm, joint
venture, governmental agency or authority.
"Personal Property" means any and all machinery, equipment, radios,
-----------------
transmitters, towers, antennas, lines, switching equipment, test equipment,
cellular telephone inventory, tools, vehicles, furniture, leasehold
improvements, office equipment, plant, inventory, and other tangible personal
property owned or held by Seller and used or useful in the operation of the
System, other than Excluded Assets, but otherwise including without limitation
the property identified and described as part of the Personal Property in
Seller's Disclosure Schedule, together with any additions thereto between the
date hereof and the Closing Date.
"Pollutant" shall mean any hazardous or toxic substances, including
---------
without limitation, petroleum products or by-products, any flammable explosives,
radioactive materials, hazardous materials, hazardous wastes, asbestos, PCBs,
phosphates, lead or other heavy metals, chlorine, radon gas, "hazardous
substance", as defined in the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended ("CERCLA"), "hazardous material" as
defined in the Hazardous Materials Transportation Act, as amended, "hazardous
waste" as defined in the Resource
6
<PAGE>
Conservation and Recovery Act, as amended, and regulations adopted and
publications promulgated pursuant to said laws.
"Pro-forma Closing Balance Sheet" shall have the meaning assigned to
-------------------------------
it in Section 2.4(a).
"Real Property" means all real estate and all interests in real
-------------
property, including all fee interests, all leaseholds, easements, licenses,
rights to access, and rights of way, and all improvements thereon, owned or held
by Seller and used or useful in the operation of the System, which Real Property
is identified and described in Seller's Disclosure Schedule, together with any
additions thereto between the date hereof and the Closing Date.
"Real Property Leases" shall have the meaning assigned to it in Section
---------------------
4.9.
"SEC" means the Securities and Exchange Commission.
---
"Seller's Disclosure Schedule" means Seller's Disclosure Schedule,
----------------------------
attached hereto and incorporated herein by reference.
"Subscriber Agreements" means Seller's agreements for the provision of
---------------------
cellular telephone service and/or cellular telephone equipment to end users.
"System" means the non-wireline cellular radio telephone system that is
------
operated by Seller in the Market.
"Taxes" means all taxes, charges, fees, levies or other assessments,
-----
including without limitation, income, excise, use, transfer, payroll, occupancy,
property, sales, franchise, unemployment and withholding taxes, imposed by the
United States or any state, county, local or foreign government or subdivision
or agency thereof, and any assessments against the Real Property, together with
any interest, penalties or additional taxes attributable to such taxes and other
assessments.
"Termination Notice" means written notice of the termination of this
------------------
Agreement in accordance with the provisions of Section 12.
"To Seller's knowledge" or "to the best of Seller's knowledge" means
--------------------- ---------------------------------
the actual knowledge of Seller and all employees and agents of Seller.
"Welfare Plan" means any "employee welfare benefit plan" as defined in
-------------
Section 3(l) of ERISA, (A) which Seller or its ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or under which
Seller or its ERISA Affiliate may incur any liability and (B) which covers any
employee or former employee of Seller or its ERISA Affiliate (with respect to
their relationship with such entities).
7
<PAGE>
SECTION 2. PURCHASE OF ASSETS: CONSIDERATION.
----------------------------------
2.1 Purchase of Assets. Subject to the terms and conditions set
------------------
forth herein, on the Closing Date, Seller shall sell, assign, transfer and
convey to Buyer, and Buyer shall purchase from Seller, all of the Assets
(including but not limited to accounts receivable) free and clear of all
Encumbrances. Seller will retain, and Buyer will not purchase, the Excluded
Assets.
2.2 Purchase Price. Subject to adjustment as provided in Section 2.4
--------------
below, the total purchase price (the "Purchase Price") to be paid for the Assets
and the Noncompetition Agreements shall be Twenty-Four Million Dollars
($24,000,000.00), of which Twenty-Three Million Nine Hundred Ninety Thousand
Dollars ($23,990,000.00) shall be the consideration for the Assets and Ten
Thousand Dollars ($10,000.00) shall be the consideration for the noncompetition
provision of this Agreement.
2.3 Payment of Purchase Price. Subject to adjustment as provided in
-------------------------
Section 2.4, Buyer shall pay to Seller at Closing the Purchase Price in
immediately available U.S. funds.
2.4 Adjustments to Purchase Price.
-----------------------------
(a) Net Current Assets. The Purchase Price for the Assets shall be
------------------
increased or decreased, as the case may be, by the Net Current Assets as of the
Closing Date (the "Net Current Asset Payment"). The parties agree, that the Net
Current Assets on September 30, 1997 were Two Hundred Fifty-Five thousand
Dollars ($255,000), as established through the Financial Statements. A payment
equal to sixty percent (60%) of the estimated Net Current Asset Payment (the
"Closing Net Current Asset Payment") will be made at Closing based upon a pro-
forma balance sheet prepared by Seller as of the Closing Date, prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods covered thereby and which shall present fairly the
assets, liabilities and financial position of Seller as of the Closing Date, in
the format provided on Schedule 2.4(a) hereto (the "Pro-forma Closing Balance
Sheet"). The actual Net Current Asset Payment will be determined pursuant to
Section 2.4(b).
(b) Net Current Asset Payment.
-------------------------
At least two (2) Business Days prior to the Closing Date, Seller will
provide Buyer with the Pro-forma Closing Balance Sheet and a calculation of the
Closing Net Current Asset Payment, which payment, unless otherwise agreed, shall
in no event exceed sixty percent (60%) of the Net Current Assets as of the then
most recent month end for which a balance sheet has been prepared by Seller in
good faith on a basis consistent with prior periods. The format of the line
items set forth in the September 30, 1997 balance sheet, the Pro-forma Closing
Balance Sheet and the closing balance sheet contained in the Closing Financial
Statements (the "Closing
8
<PAGE>
Balance Sheet") will be the same for purposes of the Net Current Asset Payment
calculation. It is the intention of the parties that the balance sheets will be
as similarly constituted as possible. For example, if a line item for Seller's
prepaid legal fees is excluded on the Closing Balance Sheet and the Pro forma
Closing Balance Sheet, it will also be excluded on the September 30, 1997
balance sheet for purposes of the Net Current Asset Payment calculation.
Additionally, any current Liabilities that will be the responsibility of Seller
to satisfy (e.g. Seller's income taxes or bulk sales taxes) will be excluded
----
for purposes of the Net Current Asset calculation.
(ii) Pursuant to Section 11.2, within forty-five (45) days after the
Closing Date, Seller shall provide to Buyer the Closing Financial Statements,
which shall include a calculation in reasonable detail of the actual Net Current
Asset Payment (the "Tentative Net Current Asset Payment"). Subject to Section
2.4(b)(iii) below, within ten (10) days after Seller's delivery of such Closing
Financial Statements to Buyer, Buyer or Seller, as appropriate, shall pay the
difference between the Closing Net Current Asset Payment and the Tentative Net
Current Asset Payment in cash to the other party.
(iii) If Buyer reasonably believes that the Tentative Net Current Asset
Payment is incorrect, Buyer shall promptly inform Seller in writing of the
disputed amount and the basis for the Buyer's dispute in reasonable detail. If
Seller and Buyer do not agree on the amount of the Tentative Net Current Asset
Payment within ten (10) days thereafter, Seller and Buyer, shall submit such
dispute to Arthur Andersen LLP or a comparable national accounting firm with
experience with cellular telephone companies, as mutually agreed upon by the
parties (the "Accounting Firm"), for its independent calculation of the Net
Current Asset Payment. The parties will request that the Accounting Firm provide
its findings to the parties within forty-five (45) days after submission of the
dispute to the Accounting Firm. The parties will have ten (10) days thereafter
to solve any dispute they have with the findings of the Accounting Firm. At the
end of such ten (10) day period, the Accounting Firm will provide the parties
with its final decision, which decision shall be final, conclusive and binding
on the parties. Within ten (10) days after receipt of such final decision, Buyer
or Seller, as appropriate, shall pay the difference between the Closing Net
Current Asset Payment and the Tentative Net Current Asset Payment in cash to the
other party. The fees and expenses of the Accounting Firm shall be borne one-
half by Buyer and one-half by Seller.
(c) Taxes. Except for taxes which are not yet due (for which the September 30
-----
Financial Statement shall reflect appropriate accrued amounts) all Taxes and
other assessments on the Assets which are due and payable shall be paid by
Seller as of the Closing Date.
9
<PAGE>
SECTION 3. ASSUMPTION OF OBLIGATIONS.
--------------------------
3.1 Assumption of Obligations. Buyer shall assume and undertake to
-------------------------
pay, satisfy or discharge only those Liabilities, obligations and commitments of
Seller which are specifically disclosed on Seller's September 30, 1997 Financial
Statements, including the Contracts listed on Schedule 4.14 and) the Subscriber
Agreements. Buyer shall also assume and be responsible for all Liabilities
arising from the ownership and use of the Assets and the operation of the System
on and after the Closing Date.
3.2 Limitation. Except as set forth in Section 3.1 hereof, Buyer
----------
shall not assume, or otherwise be responsible for, any liabilities or
obligations of Seller, whether actual or contingent, matured or unmatured,
liquidated or unliquidated, known or unknown, whether arising out of occurrences
prior to, at or after the date hereof, which include, without limitation:
(a) Any liability or obligation to or in respect of any employees
or former employees of Seller including without limitation (i) any employment
agreement, whether or not written, between Seller and any person, (ii) any
liability under any Employee Plan at any time maintained, contributed to or
required to be contributed to by or with respect to Seller, or under which
Seller may incur liability, or any contributions, benefits or liabilities
therefor, or any liability with respect to Seller's withdrawal or partial
withdrawal from or termination of any Employee Plan and (iii) any claim of an
unfair labor practice, or any claim under any state unemployment compensation or
worker's compensation law or regulation or under any federal or state employment
discrimination law or regulation, which shall have been asserted on or prior to
the Closing Date or is based on acts or omissions which occurred prior to the
Closing Date;
(b) Any liability or obligation of Seller in respect of any
Taxes;
(c) Any liability arising from any injury to or death of any
person or damage to or destruction of any property, whether based on negligence,
breach of warranty, strict liability, enterprise liability or any other legal or
equitable theory arising from defects in products manufactured or from services
performed by or on behalf of Seller or in connection with the ownership or
operation of the System prior to the Closing Date;
(d) Any liability or obligation of Seller arising out of or
related to any action against Seller, or any action which adversely affects the
Assets or the System and which shall have been asserted prior to the Closing
Date, or to the extent the basis of which shall have arisen prior to the Closing
Date;
(e) Any liability or obligation of Seller resulting from entering
into, performing its obligations pursuant to or consummating the transactions
contemplated by, this Agreement; and
10
<PAGE>
(f) Any liability or obligation under any Contract not listed in
Seller's Disclosure Schedule.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLER.
-----------------------------------------
SELLER REPRESENTS AND WARRANTS TO BUYER AS FOLLOWS:
4.1 Authority. Seller is a corporation, duly organized, and validly
---------
existing under the laws of the State of Delaware and has the requisite corporate
power and authority required to acquire, own, lease, and operate the Assets and
to carry on the business of the System as is now conducted. Seller is duly
qualified as a foreign corporation to do business, and is in good standing, in
Georgia. Seller has the requisite power and authority to execute, deliver, and
perform this Agreement and the documents contemplated hereby according to their
respective terms. Seller is not a participant in any joint venture or
partnership with any other Person relating to the System.
4.2 Authorization and Binding Obligation. Seller has taken all
------------------------------------
corporate action necessary to enter into this Agreement and consummate the
transactions contemplated hereby and perform its obligations hereunder. This
Agreement has been duly executed by Seller and constitutes a legal, valid, and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, except for the effect thereon of any applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws of public policy or policies
affecting the rights of creditors generally. Each agreement executed by Seller
in connection with the Closing will be duly executed and delivered by Seller and
will constitute a legal, valid, and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except for the effect thereon of
any applicable bankruptcy, insolvency, reorganization, moratorium, and similar
laws of public policy or policies affecting the rights of creditors generally.
4.3 Absence of Certain Changes or Events. To Seller's knowledge, since the
------------------------------------
Balance Sheet Date there has not been any:
(a) change in the condition (financial or otherwise) of the
Assets, Liabilities, working capital, reserves, earnings, business or prospects
of Seller, or the System, except for changes contemplated hereby or changes
which have not, individually or in the aggregate, been material and adverse;
(b) (i) material increase in compensation payable or to become
payable to any of the employees of Seller or any bonus payment made or promised
to any such employee other than in the ordinary course of business and
consistent with past practices, or (ii) material change in personnel policies,
insurance, retirement, health or other employee benefits or any other
compensation arrangements affecting such employees;
11
<PAGE>
(c) sale, assignment or transfer of any of the Assets, singly or in the
aggregate (other than in the ordinary course of business and consistent with
past practice when replaced by assets of substantially equivalent value and
function);
(d) cancellation of any indebtedness or waiver of any rights of material
value to Seller, except in the ordinary course of business and consistent with
past practice;
(e) amendment, cancellation or termination of any Contract, Governmental
Authorization or other instrument material to Seller, or entry into any
contract, lease, agreement or understanding which will, singly or in the
aggregate, cause an obligation of Buyer in excess of Twenty Five Thousand
Dollars ($25,000) after Closing except for entry into Subscriber Agreements in
the ordinary course of business and consistent with past practice;
(f) change in accounting methods or practices by Seller;
(g) damage, destruction or loss not covered by insurance, materially and
adversely affecting the Assets, the System or the business of Seller;
(h) imposition of any Encumbrance on any of the Assets, that is material,
singly or in the aggregate, except for Permitted Encumbrances;
(i) agreement (whether written or oral) by Seller to do any of the
foregoing (Section 4.3(a)-(h));
(j) capital expenditures by Seller, or incurrence of an obligation to make
any capital expenditures, involving payments in excess of $50,000 in the
aggregate, other than as set forth in Sellers Disclosure Schedule;
(k) amendment of Seller's Articles of Incorporation or Bylaws;
(l) payment, discharge or satisfaction of Liabilities, other than in the
ordinary course of business and consistent with past practice; or
(m) other event or condition of any character which, in any one case or in
the aggregate, has materially and adversely affected the condition (financial or
otherwise) of the Assets, Liabilities, earnings, business or prospects of
System.
4.4 Sufficiency of Assets. Other than the Excluded Assets, the
----------------------
Assets set forth in Seller's Disclosure Schedule constitute all of the assets,
rights and properties, tangible or intangible, real or personal which are
required for the operation of the System as it is presently conducted.
12
<PAGE>
4.5 No Conflict or Violation. The execution, delivery, and
------------------------
performance by Seller of this Agreement and the documents contemplated hereby
and the consummation of the transactions contemplated hereby: (a) will not
conflict with any provision of Seller's Articles of Incorporation or Bylaws; (b)
will not conflict with or constitute a violation of any applicable statute, law,
rule, code, judgment, order, ordinance, writ, injunction, regulation, decree,
award or ruling of any court or other governmental instrumentality or result in
an event which with notice, lapse of time or both, would result in any such
conflict or violation; (c) provided the FCC Consent are obtained, will not
conflict with, constitute grounds for termination of, result in a breach of,
constitute a default under, or accelerate or permit the acceleration of any
performance required by the terms of any Contract, Governmental Authorization,
or other agreement, instrument, license, or permit to which Seller is a party or
by which Seller is bound or subject, which relates directly or indirectly to the
System, or result in an event which with notice, lapse of time or both, would
result in any such conflict, grounds, breach, default, or acceleration; and (d)
will not result in the imposition of any Encumbrance upon the Assets or any
restriction or charge on the System, or result in an event which with notice,
lapse of time or both would result in any such imposition, restriction or
charge.
4.6 Consents. To Seller's knowledge, except for the Consents set
--------
forth in Seller's Disclosure Schedules and as otherwise agreed to in this
Agreement, no consent, approval, permit, or authorization of, declaration to or
filing or registration with any governmental or regulatory authority or any
other Party (including without limitation any Consent necessary for the valid
assignment of any Contract) is required to be made or obtained in connection
with the execution, delivery and performance of this Agreement by Seller and the
transactions contemplated hereby, including enabling Buyer to own the Assets and
operate the System. Seller has timely filed with the appropriate regulatory
authorities all forms, applications, notifications, or their information and
payments in respect to all federal regulatory filings, including, but not
limited to: (i) annual regulatory fees for cellular and microwave facilities;
(ii) FCC Form 854 registration for all towers exceeding FCC Rule Part 17 (47
C.F.R. (S) 17.7) standards; (iii) TRS Fund Payments; (iv) Universal Service
Fund Worksheet (FCC Form 457); and (v) FCC Form 395/Equal Employment
Opportunities.
4.7 Governmental Authorizations. To Seller's knowledge, Seller's
---------------------------
Disclosure Schedule contains a true and complete list of the Governmental
Authorizations related to the System. Seller has delivered to Buyer true and
complete copies of the Governmental Authorizations. Each Governmental
Authorization has been validly issued to Seller or its subsidiary. To the best
of Sellers knowledge, the Governmental Authorizations comprise all the licenses,
permits, and other authorizations required from governmental and regulatory
authorities for the lawful conduct of the operation of the System. The
Governmental Authorizations are in full force and effect and are unimpaired by
any acts or omissions of Seller, and are valid for the balance of the current
license term, if any, applicable generally to each such Governmental
Authorization. Seller has operated the System in compliance with all terms and
13
<PAGE>
conditions of the Governmental Authorizations and of any renewals thereof
applicable to it except where the failure to so comply would not have a material
adverse effect on Seller's rights to ownership and use of the Assets, or on its
operation of the System. Notwithstanding the materiality provisions contained
in the preceding sentence or the provisions of Section 13.2, Seller shall be
responsible for any forfeitures imposed by the issuers of the Governmental
Authorizations against Buyer after Closing which relate to the operation of the
System prior to the Closing Date. Seller has no reason to believe that any of
the Governmental Authorizations would not be renewed by the granting authority
in the ordinary course. Seller or its subsidiary is the exclusive holder of the
FCC Authorizations. There are no pending or, to the best of Seller's knowledge,
threatened proceedings by or before the FCC which would result in the
revocation, cancellation, suspension or adverse modification of the FCC
Authorizations or the imposition of any forfeiture, nor to the best of Seller's
knowledge are there any facts that would give rise to or form the basis for such
a proceeding. Provided the FCC Consents are obtained and become Final Orders,
Seller has (and on the Closing Date will have) the absolute and unrestricted
right, power and authority under the Communications Act to transfer the Assets
to Buyer upon consummation of the transactions contemplated hereby. To the best
of Seller's knowledge, no renewal of any FCC Authorization would constitute a
major environmental action under the current rules of the FCC. The FCC actions
granting the current FCC Authorizations together with all underlying
construction permits, are Final Orders of the FCC. Seller is not aware of any
reason why (i) those of the FCC Authorizations subject to expiration would not
be renewed in the ordinary course of business or (ii) any of the FCC
Authorizations would be revoked. None of the Governmental Authorizations is
subject to any Encumbrance, other than any liens securing Seller indebtedness,
all of which liens shall be extinguished by Seller prior to or at Closing.
4.8 Seller Qualifications. Seller and its subsidiaries PCW and PWH
---------------------
are legally, technically, financially and otherwise qualified to hold the FCC
Authorizations and upon obtaining the FCC Consents will be so qualified to
consummate the transactions contemplated hereby.
4.9 Real Property. Seller's Disclosure Schedule contains a complete
-------------
description of all of Seller's interests and rights in Real Property used or
useful in the operation of the System. Seller owns one fee simple parcel on
which one cell site has been constructed. Seller leases all of its other Real
Property pursuant to one or more of the Contracts (the "Real Property Leases"),
and each leased Cell Site that is part of the Assets is the subject of a Real
Property Lease. To the best knowledge of Seller, there are no pending or
threatened condemnation proceedings relating to any of the Real Property; all
improvements included in the Real Property are in good operating condition with
no known material defects; no improvements on any Real Property encroach upon
adjoining real estate, and all such improvements are constructed in conformity
with all "setback" lines, easements, and other restrictions, or rights of
record, that have been established by any applicable building or safety codes or
zoning ordinances. To Seller's knowledge, all towers and other structures on
the Real
14
<PAGE>
Property are marked in accordance with the requirements of the FCC
Authorizations, the Federal Aviation Administration and all applicable state and
local laws. Seller has not received any written notice for assessments for
public improvements against any Real Property which remains unpaid. Except as
set forth in Seller's Disclosure Schedule, Seller has not granted any oral or
written lease, sublease or license granting to any Person any right to the
possession, use, occupancy or enjoyment of any of the Real Property. All Real
Property is supplied with utilities and other services necessary for the
operation of such Real Property as currently operated. None of the Real
Property is subject to any Encumbrance that could reasonably be expected to
materially and adversely affect the use or usefulness of the Real Property,
other than any liens securing Seller indebtedness, all of which liens shall be
extinguished by Seller prior to or at Closing. Seller is not aware of any
potential claim or Encumbrance that could materially and adversely affect the
use or usefulness of the Real Property. Seller has delivered to Buyer true and
complete copies of all Real Property Leases as an attachment to Sellers
Disclosure Schedule. Seller has full legal and practical access to all Real
Property. All easements, rights of way, and real property licenses relating to
the Real Property Leases have been properly recorded in the appropriate public
recording offices, to the extent required by law.
4.10 Personal Property. To Seller's knowledge Seller's Disclosure
-----------------
Schedule contains descriptions of all Seller's material Personal Property.
Seller owns and has good title to each item of Personal Property, except for the
Personal Property that is specifically identified in Seller's Disclosure
Schedule as leased pursuant to one of the Contracts. None of the PersonaI
Property is subject to any Encumbrance, except for any liens securing Seller
indebtedness, all of which shall be extinguished by Seller prior to or at
Closing. All of the Personal Property is in good operating condition and repair
(ordinary wear and tear excepted), and is available for immediate use in the
operation of the System. The Personal Property is sufficient to permit the
System to operate in all material respects in accordance with the terms of the
FCC Authorizations.
4.11 Subscribers and Suppliers. Copies of all unexpired Subscriber
-------------------------
Agreements are contained in Seller's Books and Records. As of the Balance Sheet
Date, Seller had approximately Three Thousand Seven Hundred and Fourteen (3,714)
subscriber accounts, each telephone number being a separate account. Except as
set forth in Seller's Disclosure Schedule, Seller has not entered into any
Subscriber Agreements outside the ordinary course of business or for
consideration other than cash. In addition, Seller agrees that, commencing on
the date hereof and through the Closing Date, Buyer is entitled to request that
Seller make certain adjustments to Seller's marketing plan. Buyer shall submit
such suggestions in writing to Seller not later than November 7, 1997. Seller
agrees to implement these recommendations, to the extent that they are deemed
prudent, and Buyer agrees to compensate Seller for the costs incurred in
implementing such adjustments to the marketing plan (the "Additional Marketing
Costs"). Seller shall advise Buyer in writing, not later than November 17,
1997, of the extent of such adjustments and shall provide a written estimate of
the Additional Marketing Costs. Seller shall update the estimate of
15
<PAGE>
Additional Marketing Costs in writing every thirty (30) days. Buyer agrees to
credit, as an asset of the Seller, the Additional Marketing Costs as part of the
calculation of the Net Current Asset Payment, defined in Section 2.4 hereof.
4.12 Resale and Roaming Agreements. Seller is not a party to any
-----------------------------
Resale Agreements. Seller's Disclosure Schedule contains a list of (i) all
carriers with which Seller has roaming agreements and (ii) all special wholesale
and retail rates relating thereto.
4.13 Financial Statements. The Financial Statements are contained in
--------------------
Seller's Disclosure Schedule. To Seller's knowledge, the Financial Statements,
the Pro forma Closing Balance Sheet and the Closing Financial Statements do and
will, as appropriate, fairly present the Assets, Liabilities and financial
condition and results of the System's operations indicated in accordance with
generally accepted accounting principles consistently applied, subject to normal
year-end adjustments in the case of any interim financial statements.
4.14 Contracts. The Contracts listed in Seller's Disclosure Schedule
---------
comprise substantially all of Seller's Contracts (including Real Property
Leases). Seller has delivered to Buyer true and complete copies of all such
Contracts, together with all amendments and extensions to date. To Seller's
knowledge, all such Contracts are in full force and effect, are valid, binding,
and enforceable in accordance with their terms, are paid currently, and have not
been materially impaired by any acts or omissions of Seller. Except as set
forth in Seller's Disclosure Schedule, no material Contract requires the consent
of any other contracting party to the transactions contemplated by this
Agreement. To Seller's knowledge, there is not under any Contract, any material
default by any party thereto or any event that, after notice or lapse of time or
both, would constitute such a material default. Seller is not aware of any
intent by any party to any Contract to terminate or amend the terms thereof, to
refuse to renew the Contract upon expiration of its term, or to renew the
Contract upon expiration only on terms and conditions that could be less
advantageous to the System than those currently pertaining. To Seller's
knowledge, the Contracts contain all the relevant financial and business terms
related to the System, the Assets, and the Liabilities.
4.15 Intangibles. Seller's Disclosure Schedule contains a true and
-----------
complete list of all Seller's Intangibles, all of which are valid, in good
standing, and uncontested. Except as set forth in Seller's Disclosure Schedule,
Seller has no licenses granted by or to it or any other agreements to which it
is a party, relating in whole or in part to any of the Intangibles. Seller owns
and has good title to the Intangibles. None of the Intangibles is subject to
any Encumbrance, except for any liens securing Seller indebtedness, all of which
liens shall be extinguished by Seller prior to or at Closing. Seller has
delivered to Buyer copies of all documents establishing the Intangible. To the
best of Seller's knowledge, Seller is not infringing upon or otherwise acting
adversely to any trademarks, trade names, copyrights, patents, patent
applications, know-how, methods, or processes owned by any other Person or
Persons, and there is
16
<PAGE>
no claim or action pending, or to the best of Seller's knowledge, threatened
with respect thereto. Except as set forth in Seller's Disclosure Schedule, no
Person has a right to receive a royalty or similar payment in respect of any
Intangibles.
4.16 Taxes.
-----
(a) Filing of Tax Returns. Seller has timely filed with the
---------------------
appropriate taxing authorities all returns (including without limitation
information returns and other material information) in respect to all taxes and
other assessments and levies (including all interest and penalties), in respect
of Taxes required to be filed through the date hereof and will timely file any
such returns required to be filed on or prior to the Closing Date unless
otherwise contested in good faith by Seller with notice thereof being given to
Buyer. The tax returns and other information filed are complete and accurate in
all material respects. Except as set forth in Seller's Disclosure Schedule,
Seller has not requested any extension of time within which to file tax returns
(including without limitation information tax returns) in respect of any Taxes.
(b) Payment of Taxes. All Taxes, in respect of periods beginning
----------------
before the Closing Date, have been timely paid, or will be timely paid, or an
adequate accrual has been or will be established therefor, as set forth in the
Financial Statements, and Seller does not have any material liability for Taxes
in excess of the amounts so paid or accrual so established.
(c) Audits, Investigations or Claims. The Federal income tax
--------------------------------
returns of Seller have not been audited by the Internal Revenue Service, and no
material deficiencies for Taxes have been claimed, proposed or assessed by any
taxing or other governmental authority against Seller. There are no pending or,
to the best of Seller's knowledge, threatened audits, investigations or claims
for or relating to any material additional liability in respect of Taxes, and
there are no matters under discussion with any governmental authorities with
respect to Taxes that in the reasonable judgment of Seller, or its counsel, is
likely to result in a material additional liability for Taxes. Audits of
federal, state, and local returns for Taxes by the relevant taxing authorities
which have been completed for any period are set forth on Seller's Disclosure
Schedule and, except as set forth Seller's Disclosure Schedule, Seller has not
been notified that any taxing authority intends to audit a return for any
period. No extension of a statute of limitations relating to Taxes is in effect
with respect to Seller except as set forth in Seller's Disclosure Schedule.
(d) Liens. There are no liens for Taxes (other than for current
-----
Taxes not yet due and payable) on the Assets.
(e) Safe Harbor Lease Property. None of the Assets is property that
--------------------------
is required to be treated as being owned by any other Person pursuant to the so-
called safe harbor lease provisions of former Section 168(f)(8) of the Code.
17
<PAGE>
(f) Security for Tax-Exempt Obligations. None of the Assets directly
-----------------------------------
or indirectly secures any debt, the interest on which is tax-exempt under
Section 103(a) of the Code.
(g) Tax-Exempt Use Property. None of the Assets is "tax-exempt use
-----------------------
property" within the meaning of Section 168(h) of the Code.
(h) Foreign Person. Seller is not a person other than a United States
--------------
person within the meaning of the Code.
(i) No Withholding. The disposition of the Assets contemplated
--------------
hereby is not subject to the tax withholding provisions of Section 3406 of the
Code or of Subchapter A of Chapter 3 of the Code or of any other provision of
law.
4.17 Insurance. Seller's Disclosure Schedule contains a
---------
complete and accurate list of all policies and binders of insurance (showing as
to each policy and binder the carrier, policy number, coverage limits,
expiration dates, annual premiums and a general description of the types of
coverage provided) maintained by Seller. All of such policies are sufficient
for compliance with all requirements of law and all of the Contracts. Seller is
not in default under any of such policies or binders and has not failed to give
any notice or to present any claim under any such policy or binder in a due and
timely fashion. There are no facts known to Seller upon which an insurer is
entitled under existing policies or binders to reduce coverage or increase
premiums under existing policies or binders. There are no outstanding unpaid
claims under any such policies or binders. Such policies or binders provide
replacement cost insurance coverage for all Personal Property and all
improvements upon the Real Property. Such policies and binders are in full
force and effect on the date hereof and shall be kept in full force and effect
by Seller through the Closing Date.
4.18 Labor Matters. Seller has provided Buyer access to all of
-------------
its employment records. Seller has delivered to Buyer true and correct copies
of any employment agreements (the "Employment Agreements") relating to its
employees. Seller (i) is not a party to any labor agreement with respect to its
employees with any labor organization, group or association, and (ii) has not
been notified at any time during the past three years of any attempt by
organized labor or its representatives to make Seller conform to demands of
organized labor relating to its employees or to enter into a binding agreement
with organized labor that would cover the employees of Seller. There is no
unfair labor practice charge, complaint or grievance against Seller pending
before the National Labor Relations Board or any other governmental agency
arising out of Sellers activities, and to the best of Seller's knowledge, there
are no facts or information that would give rise thereto. There is no labor
strike or labor disturbance pending, or the best of Seller's knowledge,
threatened against it, nor is any grievance currently being asserted.
18
<PAGE>
4.19 Employee Benefit Plans. All Employee Plans that
----------------------
cover or have covered employees of Seller are set forth in Seller's Disclosure
Schedule. All Employee Plans maintained by Seller conform in all respects with
the provisions of ERISA and have been administered in compliance with the terms
of such plans and with all filing, reporting and disclosure requirements of the
Code and ERISA. There is no pending or threatened litigation, claim or
assessment against any such Employee Plan. Each Employee Plan that is a
"Pension Plan" is qualified under Section 4001 of the Code. Seller has not, and
no plan fiduciary of any such Employee Plan has, engaged in any transaction in
violation of Section 406(a) or (b) of ERISA or any "prohibited transaction" (as
defined in Section 4975(c)(1) of the Code) for which no exemption exists under
Section 4975(d) of the Code. None of Seller's current employees have been
participants in a Seller-sponsored Multi-employer Plan. Seller has not been
subject to any "withdrawal liability" (as defined in Section 4201 of ERISA) at
any time assessed against Seller with respect to any Multi-employer Plan.
Seller has maintained all Employee Plans with respect to its employees in a
manner that will not give rise to any successor liability to Buyer under ERISA
or the Code.
4.20 Transactions with Certain Persons. Except as set forth in
---------------------------------
Seller's Disclosure Schedule, no partner or employee of Seller, or any member of
any such Person's immediate family, is presently a party to any material
transaction with Seller relating to the System, including without limitation,
any contract, agreement or other arrangement (i) providing for the furnishing of
material services by or to, (ii) providing for the rental of material real or
personal property from or to, or (iii) otherwise requiring material payments to
(other than for services as partners or employees of Seller) any such Person or
any corporation, partnership, trust or other entity in which any such Person has
a substantial interest as a shareholder, officer, director, trustee or partner.
4.21 Litigation. Seller is not subject to any judgment, award,
----------
order, writ, injunction, arbitration decision or decree which adversely affects
the conduct of the business of the System or the Assets or which could
materially adversely affect Seller's ability to perform its obligations
hereunder. There is no litigation, proceeding or investigation pending
including formal or informal complaint or other FCC investigation, or, to the
best of Seller's knowledge, threatened against Seller or relating to the
business or operations of the System in any federal, state or local court, or
before any administrative agency or arbitrator or before any other tribunal duly
authorized to resolve disputes, which could reasonably be expected to have a
material adverse effect upon the business, property, Assets or condition
(financial or otherwise) of the System or which seeks to enjoin or prohibit, or
otherwise questions the validity of, any action taken or to be taken pursuant to
or in connection with this Agreement or which could materially adversely affect
Seller's ability to perform its obligations under this Agreement.
4.22 Compliance With Laws. Seller has not received any notice
--------------------
asserting any material noncompliance by it in connection with the business or
operation of the System with any applicable statute, rule or regulation, whether
federal, state or local. Seller is
19
<PAGE>
not in default with respect to any judgment, order, injunction or decree of any
court, administrative agency or other Governmental Authority or any other
tribunal duly authorized to resolve disputes in any respect material to the
transactions contemplated hereby. Except as set forth on Seller's Disclosure
Schedule, Seller is in compliance with all laws, regulations and governmental
orders applicable to the Assets and the conduct of the business and operations
of the System, the failure to comply with which could have a material adverse
effect on the business, operations or condition (financial or otherwise) of the
System.
4.23 Bankruptcy. No insolvency proceedings of any character,
----------
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
Seller (other than as a creditor) or any of the Assets, are pending, or to the
best of Seller's knowledge, threatened, and Seller has not made any assignment
for the benefit of creditors or taken any action in contemplation of or which
would constitute the basis for the institution of such insolvency proceedings.
4.24 Environmental and Safety Compliance. To Seller's knowledge
-----------------------------------
neither the operation of the business of the System nor the Assets violate in
any material respect any applicable federal, state or local law, rule,
regulation or order relating to air, water or noise pollution, employee health
and safety, or the production, storage, labeling, transportation or disposition
of waste or hazardous or toxic substances (collectively, "Environmental Laws").
Seller has timely obtained all licenses and permits and timely filed all reports
required to be filed under any applicable Environmental Laws, such licenses and
permits being listed in Seller's Disclosure Schedule. Seller has not, and, to
the best of Seller's knowledge, no other Person has, stored any Pollutant on,
beneath or about any of the Real Property. Seller is not aware of any condition
relating to or resulting from the release or discharge of Pollutants into the
soil, surface waters, groundwater, drinking water supplies, navigable waters,
land, surface or subsurface strata, or ambient air which has resulted or could
result in any material damage, loss, cost, expense, claim, demand, order or
liability to or against Seller or Buyer by a governmental authority or other
Party relating to or resulting from the operation of the business of the System,
the Assets or otherwise relating to the Real Property, irrespective of the cause
of such condition. Seller has not received any notice from any governmental
authority or private or public entity advising Seller that it is potentially
responsible for response costs with respect to a release or threatened release
of any Pollutant. Seller has not, and, to the best of Seller's knowledge, no
other Person has, buried, dumped or otherwise disposed of any Pollutants on,
beneath or about any of the Real Property. Seller has not received any notice
of violation of any Environmental Law or zoning or land use ordinance, law or
regulation relating to the operation of the business of the System or the Assets
including, but not limited to, CERCLA, the Toxic Substance Control Act of 1976,
as amended, the Resource Conservation and Recovery Act of 1976, as amended, the
Clean Air Act, as amended, the Federal Water Pollution Control Act, as amended,
or the Occupational Safety and Health Act of 1970, as amended. Seller's
Disclosure Schedule also contains a list and brief description of all
20
<PAGE>
material filings by Seller with, material notices to Seller from, and related
material reports to all governmental authorities administering Environmental
Laws, within three years prior to the date hereof, including without limitation,
filings made, corrective action taken, or citations received by Seller. Except
as set forth in Seller's Disclosure Schedule, no written environmental
assessments or impact statements or reports relating to the Real Property have
been prepared for, or received by, Seller prior to the date hereof.
4.25 Broker. Seller has not employed the services of any broker or
------
any similar Person or entity that will require the payment of any finder's fee,
commission or similar payment in connection with this Agreement or any matter
related hereto. Buyer shall not be liable for any commissions, finder's fees,
or similar payments to any Person or entity acting on Seller's behalf in
connection with this Agreement or any matter relating hereto.
4.26 No Other Agreement to Sell. Seller has no legal obligation,
--------------------------
absolute or contingent, to any other Person to sell the System (in whole or in
part) or the Assets (in whole or in part), or effect any merger, consolidation
or other reorganization of Seller, or to enter into any agreement with respect
thereto.
4.27 Books and Records. Seller has made and kept (and given Buyer
------------------
access to) the Books and Records and accounts, which, in reasonable detail,
accurately and fairly reflect the activities of Seller. The Books and Records
of Seller, located at the System's administrative offices, which have been
examined by Buyer, accurately and adequately reflect all action previously taken
by officers and directors of Seller.
4.28 Accounts Receivable. To Seller's knowledge the accounts
-------------------
receivable reflected in the September 30, 1997 balance sheet contained in the
Financial Statements, and all accounts receivable arising since the Balance
Sheet Date, represent bona fide claims of Seller against debtors for sales,
services performed or other charges arising on or before the date hereof, and
all the goods delivered and services performed which gave rise to said accounts
were delivered or performed in accordance with the applicable orders, Contracts
or customer requirements.
4.29 Cure. For all purposes under this Agreement, the existence or
----
occurrence of any events or circumstances that constitute a breach of a
representation or warranty of Seller made in this Agreement (including, without
limitation, Seller's Disclosure Schedule) on the date of such representation or
warranty is made shall not constitute a breach of such representation or
warranty if such event or circumstance is cured on or prior to the Closing Date
without any damage to the System, the Assets, or the operations of Seller.
21
<PAGE>
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER.
----------------------------------------
BUYER REPRESENTS AND WARRANTS TO SELLER AS FOLLOWS:
5.1 Organization Standing and Authority. Buyer is a limited
-----------------------------------
liability company duly organized, validly existing, and in good standing under
the laws of the State of Delaware. Buyer has the requisite corporate power and
authority to execute, deliver, and perform this Agreement and the documents
contemplated hereby according to their respective terms.
5.2 Authorization and Binding Obligation. Buyer has taken all action
------------------------------------
necessary to enter into this Agreement, consummate the transactions contemplated
hereby and perform its obligations hereunder. This Agreement has been duly
executed and delivered by Buyer, and constitutes a legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms,
except for the effect thereon of any applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting the rights of creditors
generally. Each agreement executed by Buyer in connection with the Closing will
be duly executed and delivered by Buyer, and will constitute a legal, valid, and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except for the effect thereon of any applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting the rights of creditors
generally.
5.3 No Conflict or Violation. The execution, delivery, and
------------------------
performance by Buyer of this Agreement and the documents contemplated hereby and
the consummation of the transactions contemplated hereby: (a) will not conflict
with the Articles of Organization or the Operating Agreement of Buyer, (b) will
not conflict with or result in a violation of any applicable statute, law, rule,
code, judgment, order, ordinance, writ, injunction, regulation, decree, award or
ruling of any court or governmental instrumentality or result in an event which
with notice, lapse of time or both, would result in any such conflict or
violation, or (c) provided the Consents are obtained, will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, permit, franchise
or other authorization issued by federal, state, or local governmental
authorities to which Buyer is a party or by which Buyer is bound or subject, or
result in an event which with notice, lapse of time or both, would result in any
such conflict, grounds, breach, default, or acceleration.
5.4 Consents. Except for the Consents and as otherwise agreed to in
--------
this Agreement, no consent, approval, permit or authorization of, declaration to
or filing or registration with any governmental or regulatory authority or any
other third party is required to be made or obtained by Buyer in connection with
the execution, delivery and performance of this Agreement and the transactions
contemplated hereby, including enabling Buyer to own the Assets and operate the
System.
22
<PAGE>
5.5 Buyer Qualifications. Buyer is legally, technically, financially
--------------------
and otherwise qualified to hold the FCC Authorizations and to consummate the
transactions contemplated hereby. Buyer has no knowledge of any fact that
would, under existing law (including the Communications Act), disqualify Buyer
as an assignee of the FCC Authorizations.
5.6 Litigation. Buyer is not subject to any judgment, award, order,
----------
writ, injunction, judgment, arbitration decision or decree which could
materially adversely affect Buyer's ability to perform its obligations
hereunder. There is no litigation, proceeding or investigation pending or, to
the best of Buyer's knowledge, threatened against Buyer in any federal, state or
local court, or before any administrative agency or arbitrator or before any
other tribunal duly authorized to resolve disputes which seeks to enjoin or
prohibit, or otherwise questions the validity of, any action taken or to be
taken pursuant to or in connection with this Agreement or which could materially
adversely affect Buyer's ability to perform its obligations under this
Agreement.
5.7 Compliance With Laws. Buyer is not in default with respect to
--------------------
any judgment, order, injunction or decree of any court, administrative agency or
other governmental authority or any other tribunal duly authorized to resolve
disputes in any respect material to the transactions contemplated hereby.
5.8 Bankruptcy. No insolvency proceedings of any character,
----------
including without limitation, bankruptcy, receivership, reorganization,
composition, or arrangement with creditors, voluntary or involuntary, affecting
Buyer (other than as a creditor) are pending, or to the best of Buyer's
knowledge, threatened, and Buyer has not made any assignment for the benefit of
creditors or taken any action in contemplation of or which would constitute the
basis for the institution of such insolvency proceedings.
5.9 Broker. Except for Daniels & Associates, for whose commission
------
Buyer shall be responsible, Buyer has not employed the services of any broker or
any similar Person or entity that will require the payment of any finder's fees,
commission or similar payment in connection with this Agreement or any matter
relating hereto. Seller shall not be liable for any commissions, finder's fees,
or similar payments to any Person or entity acting on Buyer's behalf in
connection with this Agreement or any matter related hereto.
5.10 Financial Capability. Buyer will have available on the Closing
--------------------
Date sufficient funds to consummate the transaction contemplated by this
Agreement, including, without limitation, payment of the Consulting Fee.
SECTION 6. COVENANTS OF SELLER.
-------------------
6.1 Pre-Closing Covenants. Seller covenants and agrees with Buyer that
----------------------
for the period from the date hereof through the Closing:
23
<PAGE>
(a) Maintenance of the System. Seller shall carry on its business in the
-------------------------
ordinary course consistent with past practice or materially in accordance with
its 1997 operating budget, including but not limited to subscriber acquisition
and churn numbers. Seller shall maintain the present character and quality of
the business and maintain in all material respects the present customers, market
share and business relations of the System. Buyer shall not, directly or
indirectly, control, supervise or direct the operation of the System. Seller
will continue at all times prior to the Closing Date to control, supervise and
direct the operation of the System until the FCC has granted its consent to the
Assignment Application and Closing has occurred.
(b) Certain Prohibited Transactions. Without limiting the generality of
-------------------------------
subsection (a) above, Seller shall not, without the prior written approval of
Buyer (which approval shall not be unreasonably withheld):
(i) mortgage, pledge or otherwise encumber any of its Assets or sell,
transfer or otherwise dispose of any of its Assets except (y) for the sale or
rental of inventory in the ordinary course of business consistent with past
practice, and (z) for the sale of cellular telephone equipment in the ordinary
course of business and consistent with past practice when replaced by equipment
of substantially equivalent value and function;
(ii) cancel, release or assign any Subscriber Agreements except in
the ordinary course of business and consistent with past practice;
(iii) except as set forth in Seller's Disclosure Schedule, enter into
any contract or commitment relating to the System or the Assets except for entry
into Subscriber Agreements in the ordinary course of business and consistent
with past practice, or amend, terminate, or waive any substantial right under
any Contract (including, without limitation, any lease for real property, tower
space or equipment building space) or Subscriber Agreement;
(iv) change its billing vendor;
(v) make any material change in any method of accounting or
accounting practice;
(vi) suffer any significant write-down of the value of any of the
Assets; make any capital expenditures, or hire or fire any employees, outside
the ordinary course of business and inconsistent with past practice and its 1997
operating budget;
(vii) enter into any agreement to make any commitment or offer to
provide cellular telephone service to subscribers other than in the ordinary
course of business at rates and other terms consistent with past practice;
(viii) waive any material rights relating to the System or the
Assets;
24
<PAGE>
(ix) subject the System or the Assets to any rights of first refusal
by any third Parties;
(x) transfer or grant any right under, or enter into any settlement
regarding the breach or infringement of, any Intangibles or modify any existing
right with respect thereto; or
(xi) do any other act (y) that would cause any representation or
warranty of Seller to be or become untrue in any material respect or (z) that is
not in the ordinary course of business consistent with past practice or its 1997
operating budget.
(c) Governmental Authorizations. Seller shall not cause or permit,
---------------------------
by any act or failure to act, any of the Governmental Authorizations to expire
or to be surrendered or modified, or take any action that would cause any
governmental authority to institute proceedings for the suspension, revocation,
or material and adverse modification of any of the Governmental Authorizations
or fail to prosecute with due diligence any pending applications for any
governmental authority in connection with the operation of the System, or take
any other action within its control that would result in the System being in
noncompliance with the requirements of any law, rule or regulation.
(d) Access to Information. Subject to Section 16.11 hereof, Seller
---------------------
shall give to Buyer and its counsel, accountants, engineers, and other
representatives reasonable access to the System, and to all books and records
relating thereto, and to the officers, employees, and agents of Seller, and to
all Books and Records, and will furnish or cause to be furnished to Buyer and
its representatives all information relating to the Assets, the System, and
Seller that they reasonably request.
(f) Monthly Financials. Seller shall provide Buyer with a balance
------------------
sheet and related statements of income within thirty (30) calendar days after
the end of each month, which financial statements shall fairly present the
Assets, Liabilities and financial condition and results of the System's
operations in accordance with generally accepted accounting principles
consistently applied, subject to normal year-end adjustments.
Maintenance of Assets. Seller shall take all actions necessary to
---------------------
maintain all the Assets in good and working order and in the condition
represented in this Agreement, except for obsolescence, ordinary wear and tear
excepted, and will maintain supplies of inventory and spare parts consistent
with past practice. If any loss, damage, impairment, confiscation, or
condemnation to any of the Assets occurs, Seller shall take all actions
necessary to repair, replace, or restore the Assets to their prior condition as
represented herein as soon thereafter as possible, and the proceeds of any claim
under any insurance policy shall be used solely to repair, replace, or restore
any of the Assets that are lost, damaged, impaired, or destroyed.
25
<PAGE>
(g) Compliance With Laws. Seller shall comply in all material
--------------------
respects with all laws, rules and regulations in connection with the Assets and
the System and the matters related to this Agreement. Upon receipt of notice of
violation of any laws, rule or regulation, Seller shall contest in good faith or
cure the violation prior to the Closing Date.
(h) Insurance. Seller shall take all action necessary to keep in full
---------
force and effect any existing insurance policies, or comparable coverage, for
the Assets and the System as set forth in Seller's Disclosure Schedule.
(i) No Inconsistent Action. Seller shall not take any action that is
----------------------
inconsistent with Seller's obligations under this Agreement or that could hinder
or delay the consummation of the transactions contemplated by this Agreement.
(j) Taxes. Seller shall take all actions necessary to file in a
-----
timely manner all federal, state, and local tax and information returns
hereafter required to be filed by Seller relating to or in connection with the
Assets and the operation of the System, and will pay all Taxes (and any other
charges, duties, penalties, interest, or fines) which become due pursuant to
those returns or pursuant to any assessment which becomes due and payable unless
otherwise disputed in good faith by Seller with notice thereof being provided to
Buyer.
(k) No Shop. As long as this Agreement is in effect, neither Seller
-------
(nor any of its officers, directors, representatives, employees, agents or
affiliates) will, directly or indirectly, solicit, initiate, encourage or
participate in negotiations with respect to, or furnish or cause or permit to be
furnished any information to any Person (other than such parties' respective
affiliates or their representatives) in connection with any inquiry or offer for
any purchase or sale of the System, the Assets or any part thereof.
6.2 Closing Covenant. On the Closing Date, if the conditions set
----------------
forth in Section 9.2 have been satisfied, and if this Agreement has not been
terminated pursuant to Section 12, Seller shall transfer, convey, assign, and
deliver to Buyer the Assets as provided in Section 2 and make the deliveries
provided in Section 10.2.
SECTION 7. CLOSING COVENANTS OF BUYER.
--------------------------
7.1 Pre-Closing Covenants. Buyer covenants and agrees with Seller
---------------------
that between the date hereof and the Closing Date, Buyer shall act so that each
representation and warranty in Section 5 shall continue to be true on and as of
the Closing Date in all material respects as if made on and as of the Closing
Date. Buyer shall not take any action that is inconsistent with Buyer's
obligations under this Agreement or that could hinder or delay the consummation
of the transactions contemplated hereby.
26
<PAGE>
7.2 Closing Covenant. On the Closing Date, if the conditions set
-----------------
forth in Section 9. 1 have been satisfied, and if this Agreement has not been
terminated pursuant to Section 12, Buyer shall purchase the Assets from Seller
as provided in Section 2 and shall make the deliveries provided in Section 10.3.
SECTION 8. SPECIAL COVENANTS AND AGREEMENTS.
--------------------------------
8.1 FCC Consent. The sale of the Assets as contemplated by this
-----------
Agreement is subject to the prior consent and approval of the FCC. Buyer and
Seller have filed with the FCC applications for the FCC Consent (the "Assignment
Application"). Buyer and Seller agree to use their best efforts to: (i)
prosecute the Assignment Application with all reasonable diligence; (ii) amend
the Assignment Application as may be required or desirable to effectuate the
transactions contemplated hereunder; (iii) oppose any petition to deny or other
opposition filed against the Assignment Application; and (iv) otherwise use
their best efforts to obtain a grant of the Assignment Application as
expeditiously as practicable. Neither Buyer nor Seller shall seek, nor cause
any of their agents to seek, and each shall use its best efforts to oppose, any
request for reconsideration, application for review or any other attempt to seek
any form of review of the FCC Consent. The failure by either party to timely
file or diligently prosecute its portion of the Assignment Application as
required by this Section shall be a material breach of this Agreement. All fees
charged by the FCC in connection with filing the Assignment Application shall be
split equally between the parties.
8.2 Other Consents.
--------------
(a) Within ten (10) days of the date of this Agreement, Seller and
Buyer shall join in any applications, filings or registrations required by any
state or local governmental regulatory authority (including, without limitation,
the Georgia Public Service Commission) to request issuance of orders approving
the transactions contemplated by this Agreement (if such orders are requisite to
the completion of these transactions) and diligently and expeditiously take all
steps reasonably necessary to prosecute any such applications. The failure by
either party to timely file or diligently prosecute its portion of any such
applications as required by this Section shall be a material breach of this
Agreement. All filing and grant fees charged by such state regulatory authority
in connection with such applications shall be split equally between the parties.
(b) Seller shall commence, as soon as practicable, all action
reasonably necessary to obtain all other Consents, without any material adverse
change in the terms or conditions of any Contract or Governmental Authorization
that could be materially less advantageous to the System than those pertaining
under the Contract or Governmental Authorization as in effect on the date
hereof. Seller shall promptly advise Buyer of any difficulties experienced in
obtaining any of the Consents and of any conditions proposed, considered, or
requested for any of the Consents.
27
<PAGE>
8.3 Cooperation. The Parties shall cooperate fully with each other
-----------
in connection with any actions required to be taken as part of their obligations
under this Agreement, and will use their best efforts to consummate the
transactions contemplated hereby and to fulfill their obligations hereunder.
8.4 HSR Filings. Within ten (10) days of the date of this Agreement,
-----------
Buyer shall make any and all filings that the parties determine are required
under the HSR Act. All filing and grant fees in connection with such HSR Act
filings shall be paid by Buyer.
8.5 Notification of Certain Matters. Seller and Buyer shall each
-------------------------------
give prompt notice to the other party of (i) the occurrence, or failure to
occur, of any event which occurrence or failure would be likely to cause any
representation or warranty of such party contained in this Agreement to be
untrue or inaccurate in any material respect any time from the date hereof to
the Closing Date and (ii) any material failure of such party to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder, and such party shall use all reasonable efforts to remedy the
same.
8.6 Employees. Seller shall continue to provide its employment
---------
records to Buyer until the Closing. Seller shall terminate the employment of
all of its employees immediately prior to Closing and will pay them for accrued,
unused vacation days and Seller represents and agrees that such termination
shall be without any liability to Buyer. It is Buyer's current intention to
offer employment to all of Seller's employees. Buyer shall provide to Seller a
written list, not less than twenty (20) days prior to the Closing Date, of those
employees of Seller which will be offered a job by Buyer. If Buyer offers
employment to any of Sellers employees, Buyer's offers of employment shall be on
terms and conditions that Buyer shall determine in its sole discretion. Seller
and Buyer acknowledge that any hired employees will be subject to the waiting
period for pre-existing conditions under Buyers group health insurance. Seller
waives any claims against Buyer or any of the employees hired by Buyer arising
from such employment, including without limitation any claims arising from any
employment agreement or non-compete agreement. Nothing contained in this
Agreement shall confer upon any employee hired by Buyer any right with respect
to continued employment by Buyer, nor shall anything contained herein interfere
with the right of Buyer to terminate the employment of any employee hired by
Buyer at any time, with or without cause, or restrict Buyer in the exercise of
its independent business judgment in establishing or modifying any of the terms
and conditions of the employment of the employees hired by Buyer. No provision
of this Agreement shall create any third party beneficiary rights in any
employee hired by Buyer, any beneficiary or dependents thereof, or any
collective bargaining representative thereof, with respect to the compensation,
terms and conditions of employment and benefits that may be provided to such
employee by Buyer or under any benefit plan that Buyer may maintain.
28
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8.7 Schedule Revision. Prior to Closing, Seller shall compile a
-----------------
revised series of Seller's Disclosure Schedules, which revised Seller's
Disclosure Schedules shall reflect accurate and complete information as of the
Closing Date.
8.8 Non-Compete. Except for passive investment at less than a 10%
-----------
shareholder in any publicly traded company, Seller, its officers, affiliates
and subsidiaries shall not for a period of thirty six (36) months from the
Closing Date directly or indirectly, own, manage, operate, join, control,
participate in, advise, or be connected in any manner with any person, firm,
corporation or other entity which is, or becomes engaged in the operation or
management of wireless telephony facilities in the Market. This covenant on the
part of the Seller, its officers, affiliates and subsidiaries shall be construed
as an agreement independent of any other provisions of this Agreement. The
parties hereto agree that this restrictive covenant may be enforced in law or in
equity, including, but not limited to, injunctive relief against Seller. The
parties hereto agree that in the event of the breach of this restrictive
covenant, the Buyer and related entities may not have an adequate remedy at law
other than an injunction, or that damages will be difficult to ascertain as the
result of such breach an that, if an injunction is sought by the Buyer or
related entities, Seller waives any requirement that the Buyer post any bond and
the unsuccessful party agrees to pay the attorneys' fees and court costs in the
event the successful party receives its requested relief.
SECTION 9. CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER.
---------------------------------------------
9.1 Conditions to Obligations of Buyer. All obligations of Buyer to
----------------------------------
purchase the Assets and to complete the related transactions contemplated by
this Agreement are subject to the satisfaction or waiver (in the discretion of
Buyer in respect to the waiver of such conditions) by Buyer, on or prior to the
Closing Date, of each of the following conditions:
(a) Representation, Warranties and Covenants. All representations and
----------------------------------------
warranties of Seller contained in this Agreement shall be true and correct in
all material respects at and as of the Closing Date as though such
representations and warranties were made at and as of the Closing Date, and
Seller shall have performed in all material respects all agreements, covenants
and conditions required hereby to be performed by it, prior to or at the Closing
Date. There shall be delivered to Buyer at Closing a certificate signed by the
president of Seller to the foregoing effect ("Seller's Closing Certificate").
(b) Consents. The FCC Consents shall have become Final Orders and
--------
shall not contain conditions that are material and adverse to the System or the
Buyer. Consents for the assignment of all Real Property Leases listed in
Schedule 4.9 of Seller's Disclosure Schedule shall have been obtained without
any material adverse change in the terms or conditions of any such Real Property
Lease that could be less advantageous to the System than those pertaining under
the Real Property Lease as in effect on the date hereof; provided, however, in
the event Seller is unable to obtain any
29
<PAGE>
Consent for the assignment of any of the Real Property Leases, Seller shall so
notify Buyer prior to Closing. In such event, if Seller has been unable to
obtain two (2) or fewer of such Consents and all other conditions set forth in
this Section 9.1 have been satisfied, Buyer and Seller shall complete the sale
and purchase of the Assets and the related transactions contemplated by this
Agreement. Thereafter, Seller shall have sixty (60) days after Closing to obtain
such Consents. If Seller is unable to obtain such Consents within such sixty
(60) day period, Seller shall have an additional sixty (60) day period to
renegotiate the rental payments of the Real Property Lease(s) in question in
order to obtain such Consents; provided however, Seller shall use its best
efforts to limit any increase in rental payments to a minimum and in no event
shall Seller agree to increase rental payments due under any lease by more than
twenty-five percent (25%) on an annual basis for the term of the lease(s)
including renewal options. Seller shall be obligated to reimburse Buyer for any
increase in rentals of such lease(s) for the longer of three (3) years from the
date of such increase (which date shall not be prior to Closing) or the
remainder of the then current term. Such reimbursement shall be made in lump sum
within ten (10) days after an appropriate amendment to the applicable lease is
signed. If Seller is unable to obtain such Consents within one hundred twenty
(120) days after Closing, Seller and Buyer shall negotiate in good faith to
identify alternative locations for such cell sites that are reasonably
equivalent in location and engineering coverage. Seller shall work with Buyer to
move such cell site(s) within the next sixty (60) days at the sole cost and
expense of Seller. In the event such Seller is unable to deliver such facilities
at Closing, and the lack of such facilities materially impairs the operation or
engineering coverage of the System, [in the reasonable judgment of Buyer,] then
Seller shall reimburse Buyer for the damage caused thereby by submitting Buyer's
claim for damages to arbitration pursuant to Section 15, for a determination of
the compensation to be paid by Seller to Buyer. Notwithstanding the provisions
of Section 15, all fees for such arbitration shall be split equally between the
parties, and each party shall bear its own expenses and attorneys fees. Any such
Real Property Lease or other Contract for which a Consent to the assignment from
Seller to Buyer is not obtained shall remain the responsibility of Seller unless
Buyer specifically agrees in writing to take assignment of such Real Property
Lease or other Contract without the Consent to the assignment.
(c) Governmental Authorizations. Seller, through its subsidiaries
---------------------------
PCW and PWH , shall be the holders of all FCC Authorizations and any other FCC
licenses and permits granted on or before the Closing Date and necessary to
operate the System, and there shall not have been any modification of any of the
FCC Authorizations that could have a materially adverse effect on Seller, PCW,
PWH or the operation of the System. No proceeding shall be pending the effect of
which could be to revoke, cancel, fail to renew, suspend, or modify adversely in
any material respect any of the Governmental Authorizations.
(d) Deliveries. Seller shall have made all the deliveries to Buyer
----------
set forth in Section 10.2.
30
<PAGE>
(e) Opinions of Counsel. Seller shall have delivered to Buyer one
-------------------
or more opinions of Seller's Counsel, dated as of the Closing Date, addressed to
Buyer and providing as follows:
(i) Seller's existence and qualification are as stated in Section 4.1
hereof;
(ii) Seller has full corporate power and authority to consummate the
transactions contemplated by this Agreement;
(iii) This Agreement and the documents contemplated hereby and all
other agreements and undertakings contained in this Agreement have been duly
authorized, executed and delivered, and all such instruments are valid and
enforceable against Seller in accordance with their respective terms except for
the effect of bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors rights generally and the enforceability of
equitable remedies including injunctive relief and specific performance;
(iv) Neither the execution and delivery of this Agreement by Seller
nor the consummation by Seller of the transactions contemplated hereby (i) will
violate, conflict with, or constitute a default under Seller's Articles of
Incorporation or Bylaws, or, to the best knowledge of such counsel, any United
States federal law or regulation applicable to Seller or any agreement
identified to such counsel to which Seller is a party; or (ii) requires the
authorization, consent, order, permit or approval of, or filing with, any United
States federal governmental body under any statute or rule known to such counsel
for consummation by Seller of the transactions contemplated hereby other than
the filings under the HSR Act and the Assignment Application; and
(v) All FCC Consent and orders required for assignment of the FCC
Authorizations to Buyer have been duly issued, are in full force and effect and
are Final Orders. No further consent, approval, authorization or order of the
FCC not obtained and in effect on the date of the opinion is required to assign
the Governmental Authorizations from Seller to Buyer.
(f) Adverse Changes. Between the Balance Sheet Date and the Closing Date
---------------
there shall have been no material adverse change in the Assets, condition
(financial or otherwise) of the business of Seller or the System.
(g) No Governmental Proceeding or Litigation. No suit, action,
----------------------------------------
investigation, inquiry or other proceeding by any governmental authority or
other Person shall have been instituted or threatened that questions the
validity or legality of the transactions contemplated hereby or which would
reasonably be expected to affect materially and adversely the value of the
Assets.
31
<PAGE>
(h) HSR Act. The applicable waiting periods, including any extension
-------
thereof, under the HSR Act shall have expired or shall have been terminated and
neither the U.S. Department of Justice nor the FTC shall have taken any action
to prevent the transactions contemplated by this Agreement.
(i) Non-foreign Affidavit. At Closing, Seller shall furnish to Buyer an
---------------------
affidavit stating, under penalty of perjury, that the indicated number is its
United States taxpayer identification number and that it is not a foreign
person, pursuant to Section 1445(b)(2) of the Code.
9.2 Conditions to Obligations of Seller. The obligations of Seller
-----------------------------------
to sell, transfer and convey the Assets and complete the related transactions
contemplated by this Agreement are subject to the satisfaction or waiver (in the
discretion of Seller with respect to the waiver of such conditions) by Seller,
on or prior to the Closing Date, of each of the following conditions:
(a) Representations, Warranties and Covenants. All representations
-----------------------------------------
and warranties of Buyer contained in this Agreement shall be true and correct in
all material respects as if such representations and warranties were made at and
as of the Closing Date, and Buyer shall have performed in all material respects
all agreements, covenants and conditions required hereby to be performed by it,
prior to or on the Closing Date. There shall be delivered to Seller at Closing a
certificate of the President of Buyer to the foregoing effect ("Buyer's Closing
Certificate").
(b) Deliveries. Buyer shall have made all the deliveries set forth in
----------
Section 10.3.
(c) HSR Act. The applicable waiting period, including any extension
-------
thereof, under the HSR Act shall have expired or shall have been terminated and
neither the U.S. Department of Justice nor the FTC shall have taken any action
to prevent the transactions contemplated by this Agreement.
(d) Services Agreements. Buyer and Seller shall execute the Consulting
-------------------
Agreement and the Services Agreements which are attached hereto as Annex I and
II through which Buyer shall have the right, for five (5) years from the Closing
Date, to receive from Seller certain centralized functions currently being
provided by Seller to the System (including but not limited to switching,
billing, limited backhaul functions and, customer care) on the terms set forth
in the Services Agreements. In addition to the arrangements provided for in the
Consulting Agreement and the Services Agreements, Seller agrees that Buyer shall
have the right, for five (5) years from the Closing Date, to purchase Northern
Telecom cellular equipment from Seller at Seller's cost, plus an administrative
fee of two percent (2%) on orders totaling less than Five Hundred Thousand
Dollars ($500,000) and one percent (1%) on orders totaling Five Hundred
Thousand Dollars ($500,000) or more.
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<PAGE>
SECTION 10. CLOSING; CLOSING DELIVERIES.
---------------------------
10.1 Closing; Termination.
--------------------
(a) Closing Date. The Closing shall take place within five (5) days
------------
after the grant of the FCC Consent becomes a Final Order, on such date as
agreed upon in writing by the parties.
(b) Closing Place. The Closing shall be held at the offices of Patton
-------------
Boggs, L.L.P. in Washington, D.C. or any other place that is agreed upon in
writing by Buyer and Seller.
10.2 Deliveries by Seller. Prior to or on the Closing Date, Seller
--------------------
shall deliver, or cause to be delivered by its affiliates or subsidiaries, to
Buyer the following, in form and substance reasonably satisfactory to Buyer and
its counsel:
(a) All deeds and bills of sale, assignments and other instruments of
conveyance and transfer, effecting the sale, transfer, assignment and conveyance
of the Assets to Buyer (other than the Excluded Assets or any other Assets
specifically excluded herein), including, without limitation, the following:
(i) one or more assignments of lease with respect to the Real Property
Leases;
(ii) one or more bills of conveyance with respect to the Personal
Property;
(iii) one or more assignments with respect to the Contracts and
Subscriber Agreements;
(iv) one or more assignments with respect to the Governmental
Authorizations;
(v) one or more assignments with respect to the Intangibles; and
(vi) such other instruments as shall be reasonably requested by Buyer
to vest in Buyer title to the Assets free and clear from all Encumbrances in
accordance with the provisions hereof.
(b) the Books and Records;
(c) all Consents required pursuant to Section 9.1 (b);
(d) evidence of the satisfaction of any Seller indebtedness, including
UCC-3 termination statements;
33
<PAGE>
(e) Copies of resolutions adopted by the board of directors of Seller, duly
authorizing and approving the execution of this Agreement and the consummation
of the transactions contemplated hereby, certified by its Secretary as being
true and correct on the Closing Date;
(f) Seller's Closing Certificate;
(g) the opinion described in Section 9.1 (e);
(h) certified copies of Seller's Articles of Incorporation and a
Certificate of Existence;
(i) a copy of Seller's Bylaws which have been certified by secretary of
Seller;
(j) all such other documents and instruments as Buyer or its counsel shall
reasonably request and which shall be reasonably required to consummate the
transactions contemplated hereby,
(k) the Non-foreign Affidavit described in Section 9.1(i);
(l) the Pro-forma Closing Balance Sheet and a calculation of the Closing
Net Current Asset Payment pursuant to Section 2.4a revised Seller's Disclosure
Schedule pursuant to Section 8.7; and
(m) the Services Agreements referred to in Section 9.2(d).
10.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer
-------------------
shall deliver to Seller the following, in form and substance reasonably
satisfactory to Seller and its counsel:
(a) The Purchase Price, as adjusted pursuant to Section 2.4, payable
on the Closing Date in cash by wire transfer of immediately available funds to
an account, designated by Seller in writing and delivered to Buyer no later than
two (2) Business Days prior to the Closing Date.
(b) The Consulting Fee, payable by wire transfer of immediately
available funds on the Closing Date to an account designated by Seller through a
written notice delivered to Buyer not less than two (2) days prior to the
Closing Date.
(c) Copies of resolutions adopted by the board of directors of Buyer,
duly authorizing and approving the execution of this Agreement and the
consummation of the transactions contemplated hereby, certified by its Secretary
as being true and correct on the Closing Date;
34
<PAGE>
(d) Buyer's Closing Certificate;
(e) an assumption by Buyer of all the Liabilities set forth in Section
3.1;
(f) a Certificate of Good Standing for Buyer from the appropriate state
authority; and
(g) all such other documents and instruments as Seller or its counsel
shall reasonably request and which shall be reasonably required to consummate
the transactions contemplated hereby.
10.4 Form of Instruments. All of the foregoing instruments shall be in
-------------------
form and substance, and executed and delivered in a manner, reasonably
satisfactory to the Buyer's and Seller's counsel.
SECTION 11. ACTIONS BY SELLER AND BUYER AFTER THE CLOSING.
---------------------------------------------
11.1 Tax Matters: Payments of Debts and Liabilities.
----------------------------------------------
(a) Books and Records. Each party agrees that it will cooperate with
-----------------
and make available to the other party, during normal business hours, all Books
and Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing which are
necessary or useful in connection with any tax inquiry, audit, investigation or
dispute, any litigation or investigation or any other matter requiring any such
Books and Records, information or employees for any reasonable business purpose.
The party requesting any such Books and Records, information or employees shall
bear all of the out-of-pocket costs and expenses (including without limitation
attorneys fees, but excluding reimbursement for salaries and employee benefits)
reasonably incurred in connection with providing such Books and Records,
information or employees. All information received pursuant to this Section
11.1(a) shall be subject to the terms of Section 16.11.
(b) Cooperation and Records Retention. Seller and Buyer shall (i)
---------------------------------
each provide the other with such assistance as may reasonably be requested by
any of them in connection with the preparation of any tax return, audit, or
other examination by any taxing authority or judicial or administrative
proceedings relating to liability for Taxes, (ii) each retain and provide the
other with any records or other information that may be relevant to such return,
audit or examination, proceeding or determination, and (iii) each provide the
other with any final determination of any such audit or examination, proceeding,
or determination that affects any amount required to be shown on any tax return
of the other for any period. Without limiting the generality of the foregoing,
Buyer and Seller shall each retain, until the applicable statutes of limitations
(including any extensions) have expired, copies of all tax returns, supporting
work schedules, and other records or information that may be relevant to such
returns for all tax periods or portions thereof ending on or before the Closing
Date and shall not destroy or otherwise
35
<PAGE>
dispose of any such records without first providing the other party with a
reasonable opportunity to review and copy the same.
(c) Following the Closing Date. Seller shall promptly pay when due
--------------------------
all of its debts and Liabilities, including any liability for income taxes, and
bulk sales taxes, transfer taxes and excluding any debts and Liabilities
expressly assumed by Buyer hereunder; provided, however, this covenant shall not
apply to any debt or Liability or portion thereof, that Seller is contesting in
good faith by appropriate proceedings; and provided further, that Seller shall
pay promptly all or that portion of such contested debt or Liability that is
found to be owing at the completion of such proceedings.
11.2 Closing Financial Statements. Seller shall deliver the
----------------------------
Closing Financial Statements within forty-five (45) days after the Closing Date.
The Closing Financial Statements shall be accompanied by a certificate of the
President of Seller to the effect that such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby and presenting
fairly the assets, liabilities and financial position of the Seller as of the
Closing Date and the results of operations and changes in shareholders' equity
for the period then ended. Buyer and Seller will cooperate in the preparation
or audit, if deemed necessary by Buyer, at Buyer's expense, of any Financial
Statements.
11.3 Services Agreements. After Closing, the parties shall continue
-------------------
to cooperate to implement the terms of the Services Agreements.
SECTION 12. TERMINATION.
-----------
(a) This Agreement shall automatically terminate if a Final Order
granting the FCC Consent is not obtained within twelve (12) months of the date
of this Agreement.
(b) Either party may terminate this Agreement on the Closing Date if
the terminating party is not then in material breach thereof, by sending a
termination notice to the other party declaring that this Agreement shall
terminate and be deemed null and void, upon the occurrence of either of the
following:
(i) If any of the conditions precedent set forth in Section 9 hereof
to the obligations of the terminating party have not been satisfied by the non-
terminating party or waived by the terminating party; or
(ii) If there shall be in effect any judgment, decree, or order that
would prevent or make unlawful the Closing of this Agreement.
36
<PAGE>
SECTION 13. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND
----------------------------------------------
INDEMNIFICATION.
---------------
13.1 Representations and Warranties. All representations and
------------------------------
warranties of the parties hereto contained in this Agreement shall be deemed
continuing representations and warranties and shall survive the Closing for a
period of twelve months from the Closing Date. Any investigations by or on
behalf of any party hereto shall not constitute a waiver as to enforcement of
any representation, warranty, or covenant contained herein. No notice or
information delivered by a party shall affect the other party's right to rely on
any representation or warranty made by the first party or relieve the first
party of any obligations hereunder as the result of a breach of any of its
representations and warranties.
13.2 Indemnification by Seller. Subject to Section 13.4 hereof,
-------------------------
notwithstanding the Closing, Seller hereby agrees to indemnify and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for:
(a) Breach. Any and all losses, Liabilities, or damages
------
(collectively, "Damages") resulting from any untrue representation, breach of
warranty, or nonfulfillment of any covenant by Seller contained herein or in any
certificate, document, or instrument delivered by Seller to Buyer hereunder; and
(b) Ownership. Any and all Damages resulting from the ownership of
---------
the Assets prior to the Effective Time; and
(c) Legal Matters. Any and all actions, suits, proceedings, claims,
-------------
demands, assessments, judgments, costs, and expenses, including reasonable legal
fees and expenses (collectively, "Claims"), incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof, or in enforcing this indemnity; provided, however, that
Seller shall not be required to indemnify and hold harmless Buyer under this
Section 13.2 with respect to any Damages or Claims arising out of any breach of
the representations and warranties contained in Section 4, unless and until
Damages and/or Claims for which such indemnification is sought under this
Section 13.2 shall exceed in the aggregate Twenty-Five Thousand Dollars
($25,000), in which event Seller shall indemnify and hold Buyer harmless for the
full amount of such Damages and/or Claims.
13.3 Indemnification by Buyer. Subject to Section 13.4 hereof,
------------------------
notwithstanding the Closing, Buyer hereby agrees to indemnify and hold Seller
harmless against and with respect to, and shall reimburse Seller for:
(a) Breach. Any and all Damages resulting from any untrue
------
representation, breach of warranty, or nonfulfillment of any covenant by Buyer
contained herein or in any certificate, document, or instrument delivered by
Buyer to Seller hereunder;
37
<PAGE>
(b) Ownership. Any and all Damages resulting from the ownership of
---------
the Assets after the Effective Time; and
(c) Legal Matters. Any and all Claims, incident to any of the
-------------
foregoing or incurred in investigating or attempting to avoid the same or to
oppose the imposition thereof, or in enforcing this indemnity.
13.4 Limitation of Damages. The foregoing obligations described
---------------------
in Section 13.2 and 13.3 shall be subject to and limited by the following
principles and limitations.
(a) All representations and warranties contained in this Agreement
shall survive the consummation of the transactions contemplated by this
Agreement from the Closing Date through the date that is twelve (12) months
following the Closing Date ("Claim Period") and shall thereafter terminate.
Claims first asserted within the Claim Period referred to above shall not be
barred and shall survive indefinitely until such claims are resolved. Any claims
asserted after the Claim Period shall be barred.
13.5 Procedure for Indemnification. The procedure for
-----------------------------
indemnification shall be as follows:
(a) Notice. The Claimant shall promptly give notice to the
------
Indemnitor of any Damage or Claim, whether solely between the parties or brought
by another party, specifying the factual basis for the claim and the amount of
thereof.
(b) Investigation. With respect to claims between the parties,
-------------
following receipt of notice from the Claimant of a claim, the Indemnitor shall
have thirty (30) days to make any investigation of the claim that the Indemnitor
deems necessary or desirable. For the purposes of this investigation, the
Claimant agrees to make available to the Indemnitor and/or its authorized
representatives the information relied upon by the Claimant to substantiate the
claim. If the Claimant and the Indemnitor cannot agree as to the validity and
amount of the claim within the thirty-day (30) period (or any mutually agreed
upon extension thereof), the Claimant may seek appropriate legal remedy.
(c) Control of Claim. With respect to any claim by a third party as
----------------
to which the Claimant is entitled to indemnification hereunder, the Indemnitor
shall have the right at its own expense to participate in or assume control of
the defense of the claim, and the Claimant shall cooperate fully with the
Indemnitor, subject to reimbursement for actual out-of-pocket expenses incurred
by the Claimant as the result of a request by the Indemnitor. If the Indemnitor
elects to assume control of the defense of any third-party claim, the Claimant
shall have the right to participate in the defense of the claim at its own
expense. If the Indemnitor does not elect to assume control or otherwise
participate in the defense of any third party claim, it shall be bound by the
results obtained by the Claimant with respect to the claim.
38
<PAGE>
(d) No Indemnitor shall be liable for any settlement effected without
its written consent.
SECTION 14. REMEDIES.
--------
14.1 By Seller. In the event of the existence of Seller's rights to
---------
terminate pursuant to Section 12(b)(i) hereof, Seller may at its sole election
(i) waive such right and close (without waiving its rights to recover damages
pursuant to Article 8); or (ii) terminate the Agreement and seek all remedies to
which it is entitled by law.
14.2 By Buyer. If Buyer has the right to terminate this Agreement
--------
pursuant to Section 12(b)(i) hereof Buyer may at its sole election either (i)
waive such right and close (without waiving its rights to recover damages
pursuant to Article 8); or (ii) terminate the Agreement and seek all remedies
entitled by law.
14.3 Generally. A termination of this Agreement will not release
---------
either party from breach of this Agreement which occurs prior to such
termination, except to the extent that such party's liability is limited or
released as expressly set forth in this Agreement.
14.4 Specific Performance. The Parties recognize that if Seller
--------------------
fails or refuses to perform under the provisions of this Agreement, monetary
damages alone will not be adequate to compensate Buyer for its injury. Buyer
shall therefore be entitled, in addition to any other remedies that may be
available, including money damages, to obtain specific performance of Seller's
obligations under the terms of this Agreement. If any action is brought by
Buyer against Seller to enforce this Agreement, Seller shall waive the defense
that there is an adequate remedy at law.
SECTION 15. ARBITRATION.
-----------
Within ten (10) days following the date that a dispute arises hereunder,
Buyer and Seller shall select a mutually acceptable arbitrator located in the
Atlanta, GA metropolitan area to resolve such dispute. If the parties are unable
to agree upon the arbitrator within the ten (10) day period, then three
arbitrators shall be selected pursuant to the rules of the American Arbitration
Association. Such arbitration shall be conducted in Atlanta, GA pursuant to the
rules of the American Arbitration Association, and shall be concluded as soon as
reasonable practicable. The arbitrators shall render a written decision, which
shall include findings of fact and conclusions of law. The decision of the
arbitrators shall be final, conclusive and binding on the parties and judgment
thereon may be entered in any Court having jurisdiction. The party not
prevailing shall be responsible for all fees and expenses, including attorneys
fees, in connection with such arbitration.
39
<PAGE>
SECTION 16. MISCELLANEOUS.
-------------
16.1 Allocation of Purchase Price. Buyer and Seller agree that the
----------------------------
Purchase Price shall be allocated, as follows: an (i) Seven Million Two
Hundred Thousand ($7,200,000) for the total tangible assets; (ii) Sixteen
Million Eight Hundred Thousand ($16,800,000) for the FCC Authorizations to
operate the System; and (iii) One Million for the Consulting Fee. In addition,
Buyer and Seller agree that they: (i) shall jointly complete and separately file
in a timely fashion Form 8594 with each of their federal income tax returns for
the year required; and (ii) shall not take any position on any income, transfer
or gains tax return before any governmental agency charged with the collection
of any such tax or in any judicial proceeding that is in any manner inconsistent
with the terms of the agreed upon allocation without the written consent of the
other.
16.2 Fees and Expenses. Seller shall pay any transfer taxes
-----------------
(including any bulk sales taxes), sales taxes, document stamps, or other charges
levied by any governmental entity on account of the transfer and conveyance of
the Assets from Seller to Buyer. Except as otherwise provided in this
Agreement, each party shall pay its own expenses incurred in connection with the
authorization, preparation, execution, and performance of this Agreement,
including all fees and expenses of counsel, accountants, agents, and
representatives.
16.3 Notices. All notices, demands, and requests required or
-------
permitted to be given under the provisions of this Agreement shall be in writing
and shall be deemed to have been duly delivered and received (a) on the date of
personal delivery (which shall include delivery by facsimile if received between
the hours of 9:00 AM and 5:00 PM, local time, on any Business Day), or (b) on
the date of receipt (as shown on the return receipt) if mailed by registered or
certified mail, postage prepaid and return receipt requested. in each case
addressed as follows:
If to Seller, PCW or PWH:
Price Communications Wireless, Inc.
45 Rockefeller Plaza
New York, NY 10020
Attention: Robert Price
Facsimile: (212) 397-3755
With copies (which shall not constitute notice) to:
Patrick Meehan
Price Communications Wireless, Inc.
12800 University Drive, Suite 500
Ft. Myers, FL 33907
Facsimile: 941-433-8213
40
<PAGE>
If to Buyer: MJ Cellular Company, LLC
Bayport One, Suite 400
West Atlantic City, NJ 08232
Attention: Mr. Michael B. Azeez,
President
Facsimile: (609) 645-9696
With copies (which shall not constitute notice) to:
J. Jeffrey Craven
Patton Boggs, L.L.P.
2550 M Street, NW
Washington, DC 20037
Facsimile: 202-457-6315
or to any other or additional persons and addresses as the parties may from time
to time designate in a writing delivered in accordance with this Section 16.3.
16.4 Further Assurances. The parties shall take any actions and
------------------
execute any other documents that reasonably may be necessary or desirable to the
implementation and consummation of this Agreement.
16.5 Governing Law. This Agreement shall be governed, construed, and
-------------
enforced in accordance with the laws of the State of Georgia (without regard to
the choice of law provisions thereof).
16.6 Headings. The headings herein are included for ease of reference
---------
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
16.7 Gender and Number. Words used herein, regardless of the gender
-----------------
and number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine, or neuter, and another number, singular or plural,
as the context requires.
16.8 Entire Agreement. This Agreement, all annexes, schedules and
----------------
exhibits hereto, and all certificates and other documents to be delivered by the
parties pursuant hereto, collectively represent the entire understanding and
agreement between the parties with respect to the subject matter hereof. This
Agreement supersedes that certain Letter of Intent, between the parties or
assignors, dated August 15, 1997 and all prior negotiations and agreements
between the parties. This Agreement cannot be amended, supplemented, or changed
except by an agreement in writing that makes specific reference to this
Agreement and which is signed by the party against which enforcement of any such
amendment, supplement, or modification is sought.
41
<PAGE>
16.9 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 hereof shall not be in any way impaired
or affected, it being intended that all the rights and privileges established
hereunder shall be enforceable to the fullest extent permitted by law.
16.10 Benefit and Assignment. This Agreement shall be binding upon and shall
----------------------
inure to the benefit of the Parties hereto and their respective successors and
permitted assigns. This Agreement may not be assigned by either party without
the written consent of the other party, which consent shall not be unreasonably
withheld or delayed.
16.11 Confidential Information. Neither party shall disclose the
------------------------
transaction contemplated herein until after the date of execution of this
Agreement after which either party may make a public announcement. Copies of
any public announcements shall be provided to the other party via facsimile the
day of such announcement. In connection with the negotiation of this Agreement
and the preparation for the consummation of the transactions contemplated
hereby, each party acknowledges that it has had and will have access to
confidential information relating to the other party. Each party shall treat
such information as confidential, preserve the confidentiality thereof and not
duplicate or use such information, except to advisors, consultants and
affiliates in connection with the transactions contemplated hereby. In the
event of the termination of this Agreement for any reason whatsoever, each party
shall return (or destroy with delivery of a certificate confirming such
destruction) to the other all documents, work papers and other material
(including all copies thereof) obtained in connection with the transactions
contemplated hereby and will use all reasonable efforts, including instructing
its employees and others who have had access to such information, to keep
confidential and not to use any such information, unless such information is
now, or is hereafter disclosed, through no act or omission of such party, in any
manner making it available to the general public. The parties acknowledge, but
do not represent or warrant, that portions of the Assets including but not
limited to subscriber lists and Subscriber Agreements, constitute trade secrets
and confidential business information. Each party agrees not to disclose any
such information to any party other than the other party unless and until such
time as this Agreement is terminated; provided, however, after the Closing Date,
Buyer shall have the right to disclose such information as it deems appropriate
in its sole discretion. This Section 16.11 shall survive Closing for two (2)
years.
16.12 Counterparts. This Agreement may be signed in counterparts
------------
with the same effect as if the signature on each counterpart were upon the same
instrument.
42
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BUYER:
ATTEST: MJ CELLULAR COMPANY, L.L.C.
_______________________ By: _____________________________________
Michael B. Azeez
President, and on behalf of Universal Telecell,
Inc., guarantor of MJ Cellular Company's
obligations hereunder.
SELLER:
ATTEST: PRICE COMMUNICATIONS CORPORATION
_______________________ By: _____________________________________
Robert Price
President
ATTEST: PRICE COMMUNICATIONS WIRELESS, INC.
________________ By:______________________________
Robert Price
Chairman
PRICE COMMUNICATIONS WIRELESS II, INC.
By:__________________________
Robert Price
Chairman
ATTEST: PALMER WIRELESS HOLDINGS, INC.
_______________ By:__________________________
Robert Price
Chairman
43
<PAGE>
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of this 8/th/
day of July, 1997, by and between Price Communications Wireless, Inc. ("PCW"), a
Delaware corporation formerly known as Price Communications Cellular Merger
Corp., and William J. Ryan (the "Executive").
WHEREAS, Palmer Wireless, Inc., a Delaware corporation (the "Company"), and
the Executive are parties to an Amended Employment Agreement dated as of March
21, 1995 (the "Palmer Agreement") pursuant to which the Executive has been
employed as Chief Executive Officer and President of the Company;
WHEREAS, PCW, Price Communications Corporation ("PCC"), the parent
corporation of PCW, and the Company are parties to an Agreement and Plan of
Merger dated as of May 23, 1997 (the "Merger Agreement") pursuant to which PCW
shall merge (the "Merger") with and into the Company, and the Company, which
concurrently with or subsequent to the Merger will change its name to Price
Communications Wireless, Inc., shall be the surviving corporation;
WHEREAS, as a result of the Merger, the Company shall succeed to and become
fully benefitted and bound by all of the rights and obligations of PCW,
including without limitation this Employment Agreement;
WHEREAS, simultaneously with, and conditioned upon the occurrence of, the
Effective Time of the Merger under the Merger Agreement, the Palmer Agreement
shall be hereby automatically terminated and superseded and replaced in its
entirety by this Agreement, and the Company shall employ the Executive and the
Executive shall be employed by the Company from and after the Effective Time, on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Employment. On the terms and conditions set forth in this Agreement,
----------
the Company shall employ the Executive and the Executive shall be employed by
the Company for the term set forth in Section 2 hereof and in the position and
with the duties set forth in Section 3 hereof.
2. Term. The term of this Agreement shall commence on the Effective Time
----
of the Merger, and end on December 31, 1999 (the "Expiration Date"), unless
sooner terminated by either party as hereinafter set forth, provided, that the
--------
parties may at any time agree that the
<PAGE>
Company will continue to engage the Executive as consultant for a period of one
(1) year after December 31, 1999 during which period the Company shall pay to
the Executive an annual salary equal to 50% of the Base Salary (as hereinafter
defined) and during which period the Executive shall be entitled to participate
in such plans and to receive such fringe benefits as are set forth in Exhibit A
---------
attached hereto and made a part hereof.
3. Position and Duties. The Executive shall serve as Chief Executive
-------------------
Officer and President of the Company, with such duties and responsibilities as
the board of directors of PCC (the "Board") and/or the Chief Executive Officer
of PCC may from time to time determine and assign to the Executive. The
Executive shall devote the Executive's reasonable best efforts and substantially
full business time to the performance of the Executive's duties and the
advancement of the business and affairs of the Company.
4. Place of Performance. In connection with the Executive's employment
--------------------
by the Company, the Executive shall be based at the principal executive offices
of the Company, which the Company retains the right to change in its discretion,
or such other place as the Company and the Executive mutually agree, except for
required travel on Company business.
5. Compensation.
------------
5(a). Base Salary. The Company shall pay to the Executive an
-----------
annual base salary (the "Base Salary") at the rate of $500,000 per year. The
Base Salary shall be payable biweekly or in such other installments as shall be
consistent with the Company's payroll procedures.
5(b). Lump Sum Payment. In consideration of the termination of the
----------------
Palmer Agreement and in full discharge of all liabilities and obligations of the
Company thereunder, the Company shall pay to the Executive a single lump sum
payment of $1,403,835 at the EffectiveTime.
5(c). Stock Options. At or promptly after the Effective Time, the
-------------
Company shall cause to be granted to the Executive options to purchase one
hundred thousand (100,000) shares of Common Stock of PCC (the "Options") under
the Price Communications Corporation 1992 Long Term Incentive Plan (the "Option
Plan"). The exercise price per share of the Options shall be the Fair Market
Value, as such term is defined in the Option Plan, of such share on the business
day before the Effective Time. The Options shall become exercisable one year
from the Effective Time. The agreement under which the Options are granted
shall include anti-dilution protections typical for employee stock options in
the event of any stock dividend or distribution, stock split or reverse stock
split, split-up, combination or exchange of shares, recapitalization or similar
change affecting the Common Stock of PCC.
5(d). Bonus. In the event that the Company's 1998 EBITDA (as such
-----
term is defined in Exhibit B hereto) exceeds by at least $1,000,000 its
projected EBITDA target for such year of $81,500,000 (the "Cash Flow Target"),
provided, that the Board shall make equitable adjustments ("Adjustments") in
- --------
good faith in such Cash Flow Target in the event that
2
<PAGE>
the Company sells or purchases material properties during such year, the
Executive and other key employees of the Company (collectively, the "Bonus
Pool") shall be entitled to receive a bonus as follows:
(i) First Tranche. If 1998 EBITDA exceeds the Cash Flow Target,
-------------
subject to any Adjustments, by at least $1,000,000, the Bonus Pool shall be
entitled to receive a total cash bonus equal to 22 1/2 % of the excess (up to an
excess amount of $1,000,000) of 1998 EBITDA above $81,500,000, 5% of which shall
be payable to the Executive and 17 1/2% of which shall be payable to such other
key employees of the Company as the Executive shall determine after consultation
with the Chief Executive Officer of PCC.
(ii) Second Tranche. If 1998 EBITDA exceeds the Cash Flow Target,
--------------
subject to any Adjustments, by at least $2,000,000, the Bonus Pool shall be
entitled to receive a total cash bonus equal to 27 1/2% of the excess (up to an
excess amount of $1,000,000) of 1998 EBITDA above $82,500,000, 5% of which shall
be payable to the Executive and 22 1/2% of which shall be payable to such other
key employees of the Company as the Executive shall determine after consultation
with the Chief Executive Officer of PCC.
(iii) Third Tranche. If 1998 EBITDA exceeds the Cash Flow Target,
-------------
subject to any Adjustments, by at least $3,000,000, the Bonus Pool shall be
entitled to receive a total cash bonus equal to 32 1/2% of the excess (up to an
excess amount of $1,000,000) of 1998 EBITDA above $83,500,000, 5% of which shall
be payable to the Executive and 27 1/2% of which shall be payable to such other
key employees of the Company as the Executive shall determine after consultation
with the Chief Executive Officer of PCC.
(iv) Fourth Tranche. If 1988 EBITDA exceeds the Cash Flow Target,
--------------
subject to any Adjustments, by at least $4,000,000, the Bonus Pool shall be
entitled to receive a total cash bonus equal to 37 1/2% of the excess of 1998
EBITDA above $84,500,000, 5% of which shall be payable to the Executive and 32
1/2% of which shall be payable to such other key employees of the Company as the
Executive shall determine after consultation with the Chief Executive Officer of
PCC.
The Company's 1998 EBITDA shall be determined by the Company's
regularly employed independent certified public accountants, the determination
of which shall be conclusive and binding upon the Company and the Executive.
The Company and the Executive intend to agree upon an appropriate
bonus plan for 1999 prior to the end of the 1998.
5(e). Other Benefits. The Executive shall be entitled to
--------------
participate in such plans and to receive such fringe benefits as are set forth
in Exhibit A attached hereto and made a part hereof.
---------
3
<PAGE>
5(f). Vacation; Holidays. The Executive shall be entitled to all
------------------
public holidays observed by the Company and vacation days in accordance with the
applicable vacation policies for senior executives of the Company, which shall
be taken at a reasonable time or times.
5(g). Withholding Taxes and Other Deductions. To the extent
--------------------------------------
required by law, the Company shall withhold from any payments due Executive
under this Agreement any applicable federal, state or local taxes and such other
deductions as are prescribed by law or Company policy.
6. Expenses. The Company shall reimburse the Executive for all
--------
reasonable expenses incurred by the Executive (in accordance with the policies
and procedures in effect for senior executives for the Company) in connection
with the Executive's services under this Agreement. The Executive shall account
to the Company for such expenses in accordance with policies and procedures
established by the Company.
7. Confidential Information.
------------------------
7(a). The Executive covenants and agrees that the Executive will
not ever, without the prior written consent of the Board or a person authorized
by the Board, publish or disclose to any unaffiliated third party or use for the
Executive's personal benefit or advantage any confidential information with
respect to any of the Company's or any of its affiliates' products, services,
subscribers, marketing techniques, methods or future plans disclosed to the
Executive as a result of the Executive's employment with the Company, to the
extent such information has heretofore remained confidential (except for
unauthorized disclosures) and except as otherwise ordered by a court of
competent jurisdiction.
7(b). The Executive acknowledges that the restrictions contained
in Section 7(a) hereof are reasonable and necessary, in view of the nature of
the Company's business, in order to protect the legitimate interests of the
Company, and that any violation thereof would result in irreparable injury to
the Company. Therefore, the Executive agrees that in the event of a breach or
threatened breach by the Executive of the provisions of Section 7(a) hereof, the
Company shall be entitled to obtain from any court of competent jurisdiction,
preliminary or permanent injunctive relief restraining the Executive from
disclosing or using any such confidential information. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including, without limitation,
recovery of damages from the Executive.
7(c). The Executive shall deliver promptly to the Company on
termination of employment, or at any other time the Company may so request, all
confidential memoranda, notes, records, reports and other documents (and all
copies thereof) relating to the Company's and its affiliates' businesses which
the Executive obtained while employed by, or otherwise serving or acting on
behalf of, the Company or which the Executive may then possess or have under his
or her control.
4
<PAGE>
8. Non-Competition.
---------------
8(a). Non-Competition. The Executive covenants and agrees that
---------------
the Executive will not, during the Executive's employment hereunder and for a
period of one (1) year thereafter (to the extent permitted by law), at any time
and in any state or other jurisdiction in which the Company or any of its
affiliates is engaged or has reasonably firm plans to engage in business, (i)
compete with the Company or any of its affiliates on behalf of the Executive or
any third party; (ii) participate as a director, agent, representative,
stockholder or partner or have any direct or indirect financial interest in any
enterprise which engages in the cellular business or any other business in which
the Company or any of its affiliates is engaged; or (iii) participate as an
employee or officer in any enterprise in which the Executive's responsibility
relates to the cellular business or any other business in which the Company or
any of its affiliates is engaged. The ownership by the Executive of less than
five percent (5%) of the outstanding stock of any corporation listed on a
national securities exchange conducting any such business shall not be deemed a
violation of this Section 8(a).
8(b). Injunctive Relief. In the event the restrictions against
-----------------
engaging in a competitive activity contained in Section 8(a) hereof shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of their extending for too great a period of time or over too great a
geographical area or by reason of their being too extensive in any other
respect, Section 8(a) hereof shall be interpreted to extend only over the
maximum period of time for which it may be enforceable and over the maximum
geographical area as to which it may be enforceable and to the maximum extent in
all other respects as to which it may be enforceable, all as determined by such
court in such action.
8(c). Non-Solicitation. The Executive covenants and agrees that
----------------
the Executive will not, during the Executive's employment hereunder and for a
period of one (1) year thereafter induce or attempt to induce any employee of
the Company or any of the Company's affiliates to render services for any other
person, firm, or corporation.
9. Termination of Employment.
-------------------------
9(a). Death. The Executive's employment hereunder shall terminate
-----
upon the Executive's death.
9(b). By the Company. The Company may terminate the Executive's
--------------
employment hereunder under the following circumstances:
(i) If the Executive shall have been unable to perform all of the
Executive's duties hereunder by reason of illness, physical or mental disability
or other similar incapacity, which inability shall continue for more than three
(3) consecutive months, the Company may terminate the Executive's employment
hereunder.
(ii) The Company may terminate the Executive's employment hereunder
for "Cause." For purposes of this Agreement, "Cause" shall mean (A) willful
refusal by
5
<PAGE>
the Executive to follow a written order of the Board of Directors, (B) the
Executive's willful engagement in conduct materially injurious to the Company or
any of its affiliates, (C) dishonesty of a material nature that relates to the
performance of the Executive's duties under this Agreement, (D) the Executive's
conviction for any felony involving moral turpitude, or (E) unreasonable neglect
or refusal on the part of the Executive to perform the Executive's reasonably
assigned duties and obligations hereunder (unless significantly changed without
Executive's consent). In addition, the Company may terminate the Executive's
employment for "Cause" if the normal business operations of the Company are
rendered commercially impractical as a consequence of an act of God, accident,
fire, labor controversy, riot or civil commotion, act of public enemy, law,
enactment, rule, order, or any act of government or governmental
instrumentality, failure of facilities, or other cause of a similar or
dissimilar nature that is not reasonably within the control of the Company or
which the Company could not, by reasonable diligence, have avoided.
9(c). By the Executive. The Executive may terminate the
----------------
Executive's employment hereunder for "Good Reason." For purposes of this
Agreement, "Good Reason" shall mean (i) the Company's failure to perform or
observe any of the material terms or provisions of this Agreement, and the
continued failure of the Company to cure such default within thirty (30) days
after written demand for performance has been given to the Company by the
Executive, which demand shall describe specifically the nature of such alleged
failure to perform or observe such material terms or provisions; (ii) a material
reduction in the scope of the Executive's responsibilities and duties; (iii) any
relocation of the Executive not consented to by the Executive so that the
Executive is not based in the State of Georgia or in (or within 50 miles of )
the licensed service areas currently served by Palmer Wireless, Inc.; or (iv)
any termination by the Executive in the Executive's sole discretion within one
(1) year after the date of a Change in Control (as hereinafter defined) of PCC
or the Company. For purposes of this Agreement, a "Change in Control" of PCC or
the Company shall be deemed to have occurred if after the Effective Time (A) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than (i) a wholly-
owned subsidiary of PCC; (ii) any person currently a "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of PCC's securities; or (iii) (x)
members of the Price family who own capital stock of PCC on the date hereof, any
affiliate of any such family member that is wholly-owned directly or indirectly
by any such family member, or any "group" (as such term is used in Section 13(d)
of the Exchange Act) that includes one or more of such family members or
affiliates, or (y) PriCellular Corporation, becomes, after the date hereof, the
beneficial owner, directly or indirectly, of securities of PCC representing
fifty (50%) percent or more of the combined voting power of PCC's then
outstanding securities; (B) during any two (2) year period, individuals who at
the beginning of such period constitute the Board, including for this purpose
any new director whose election resulted from a vacancy on the Board caused by
the resignation, mandatory retirement, death, or disability of a director and
was approved by a vote of at least two-thirds (2/3 rds) of the directors then
still in office who were directors at the beginning of the period, cease for any
reason to constitute a majority thereof; (C) PCC consummates a merger or
consolidation of PCC with or into another corporation (other than a corporation
described in clause (ii) or (iii) of clause (A) above), the result of which is
that the stockholders of PCC immediately prior to the consummation of such
merger or consolidation own less than sixty
6
<PAGE>
(60%) percent of the combined voting power of the securities of the corporation
surviving or resulting from the merger or consolidation or of a corporation
owning, directly or indirectly, one hundred (100%) percent of the total equity
of such surviving or resulting corporation; (D) the sale in one or a series of
transactions of all or substantially all of the assets of PCC other than to an
entity described in clause (ii) or (iii) of clause (A) above or an entity of
which the stockholders of PCC immediately prior to the consummation of such sale
own directly or indirectly sixty (60%) percent or more of the combined voting
power of the securities thereof; or (E) any one transaction, or series of
transactions, the result of which is that the Company or substantially all of
the assets of the Company are owned by an entity or entities not owned or
controlled directly or indirectly by PCC, by any entity described in clause (ii)
or (iii) of clause (A) above, or by an entity of which the stockholders of PCC
immediately prior to the completion of such transactions own directly or
indirectly sixty (60%) percent or more of the combined voting power of the
securities thereof.
9(d). Mutual Termination Right. The Executive may terminate the
------------------------
Executive's employment hereunder, or the Company may terminate the Executives's
employment hereunder, in the event of the failure of the Company to achieve the
Cash Flow Target for 1998, subject to any Adjustments.
9(e). Notice of Termination. Any termination of the Executive's
---------------------
employment by the Company or the Executive (other than pursuant to Section 9(a)
hereof) shall be communicated by written "Notice of Termination" to the other
party hereto in accordance with Section 11 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon, if any, and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
9(f). Date of Termination. For purposes of this Agreement, the "Date
-------------------
of Termination" shall mean (i) if the Executive's employment is terminated by
the Executive's death, the date of the Executive's death; (ii) if the
Executive's employment is terminated pursuant to Section 9(b)(i) hereof, thirty
(30) days after Notice of Termination, provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period; (iii) if the Executive's employment is terminated
pursuant to Section 9(b)(ii), 9(c) or 9(d) hereof, the date specified in the
Notice of Termination; and (iv) if the Executive's employment is terminated for
any other reason, the date on which Notice of Termination is given.
10. Compensation Upon Termination.
-----------------------------
10(a). If the Executive's employment is terminated by the Executive's
death, the Company shall pay to the Executive's estate, or as may be directed by
the legal representatives of such estate, the Executive's full Base Salary
through the Date of Termination and all other accrued and unpaid amounts, if
any, to which the Executive is entitled as of the Date of Termination in
connection with any fringe benefits under any plan or program of the Company
pursuant to Section 5(e) hereof, at the time such payments are due, and the
Company shall have no further obligations to the Executive under this Agreement.
7
<PAGE>
10(b). If the Company terminates the Executive's employment pursuant
to Section 9(b)(i) hereof, the Company shall pay the Executive the Executive's
full Base Salary through the Date of Termination and all other accrued and
unpaid amounts, if any, to which the Executive is entitled as of the Date of
Termination in connection with any fringe benefits under any plan or program of
the Company pursuant to Section 5(e) hereof at the time such payments are due,
and the Company shall have no further obligations to the Executive under this
Agreement; provided, that payments so made to the Executive during any period
--------
that the Executive is unable to perform all of the Executive's duties hereunder
by reason of illness, physical or mental illness or other similar incapacity
shall be reduced by the sum of the amounts, if any, payable to the Executive at
or prior to the time of any such payment under disability benefit plans of the
Company and which amounts were not previously applied to reduce any such
payment.
10(c). If the Company terminates the Executive's employment for Cause
as provided in Section 9(b)(ii) hereof, or if the Company or the Executive
terminates this Agreement under Section 9(d) hereof, the Company shall pay the
Executive the Executive's full Base Salary through the Date of Termination and
all other accrued and unpaid amounts, if any, to which Executive is entitled as
of the Date of Termination in connection with any fringe benefits under any plan
or program of the Company pursuant to Section 5(e) hereof at the time such
payments are due, and the Company shall have no further obligations to the
Executive under this Agreement.
10(d). If the Executive terminates the Executive's employment other
than for Good Reason, the Company shall pay the Executive the Executive's full
Base Salary through the Date of Termination and all other accrued and unpaid
amounts, if any, to which Executive is entitled as of the Date of Termination in
connection with any fringe benefits under any plan or program of the Company
pursuant to Section 5(e) hereof at the time such payments are due, and the
Company shall have no further obligations to the Executive under this Agreement.
10(e). If the Company terminates the Executive's employment other
than for Cause, disability or death and other than pursuant to Section 9(d)
hereof, or the Executive terminates the Executive's employment for Good Reason
as provided in Section 9(c)(i), (ii), (iii) or (iv) hereof, the Company shall
pay the Executive (A) the Executive's full Base Salary through the Date of
Termination and all other accrued and unpaid amounts, if any, to which the
Executive is entitled as of the Date of Termination in connection with any
fringe benefits under any plan or program of the Company pursuant to Section
5(e) hereof at the time such payments are due; and (B) the full Base Salary
through the Expiration Date, any other amounts that would have been payable to
the Executive under Section 5(e) hereof from the Date of Termination through the
Expiration Date (or benefits comparable in value to the benefits provided under
Section 5(e)), and any bonus amount provided in the next sentence hereof, at the
time such payments would otherwise have been due in accordance with the
Company's normal payroll practices, and the Company shall have no further
obligations to the Executive under this Agreement. For purposes of clause (B)
of this paragraph, the Executive will be considered to be entitled pursuant to
this Section 10(e) to a bonus amount equal to the cash bonus, if any, payable to
the Executive pursuant to Section 5(d) hereof in respect of the Company's fiscal
year during which the Executive's Date of Termination occurs determined by
multiplying the amount of such bonus by a
8
<PAGE>
fraction of the numerator of which is the number of days elapsed in such fiscal
year prior to such Date of Termination and the denominator of which is 365.
10(f). Mitigation. The Executive shall not be required to mitigate
----------
amounts payable pursuant to Section 10 hereof by seeking other employment
provided, however, that the Company's obligation to continue to provide the
- -------- -------
Executive with fringe benefits pursuant to Section 10(e) above shall cease if
the Executive becomes eligible to participate in fringe benefits substantially
similar to those provided for in this Agreement as a result of the Executive's
subsequent employment during the period that the Executive is entitled to such
fringe benefits.
11. Notices. All notices, demands, requests or other communications
-------
required or permitted to be given or made hereunder shall be in writing and
shall be delivered, telecopied or mailed by first class registered or certified
mail, postage prepaid, addressed as follows:
(a) If to the Company:
Price Communications Wireless, Inc..
c/o Price Communications Corporation
45 Rockefeller Plaza
Suite 2300
New York, New York 10020
Telecopy: (212) 397-3755
Attention: Robert Price
(b) If to the Executive:
William J. Ryan
12800 University Drive
Ft. Myers, Florida 33907-5333
Telecopy: (813) 433-8213
or to such other address as may be designated by either party in a notice
to the other. Each notice, demand, request or other communication that shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes three (3) days after it is deposited in the U.S. mail,
postage prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the telecopy confirmation, the answer back
or the affidavit of messenger being deemed conclusive evidence of such delivery)
or at such time as delivery is refused by the addressee upon presentation.
12. Severability. The invalidity or unenforceability of any one or more
------------
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
13. Survival. It is the express intention and agreement of the parties
--------
hereto that the provisions of Sections 7 and 8 hereof shall survive the
termination of employment of the
9
<PAGE>
Executive. In addition, all obligations of the Company to make payments
hereunder shall survive any termination of this Agreement on the terms and
conditions set forth herein.
14. Assignment. The rights and obligations of the parties to this
----------
Agreement shall not be assignable, except that the rights and obligations of the
Company hereunder shall be assignable in connection with any subsequent merger,
consolidation, sale of all or substantially all of the assets of the Company or
similar reorganization of a successor corporation.
15. Binding Effect. The effectiveness of this Agreement shall be subject
--------------
to and conditioned upon the consummation of the Merger, and this Agreement shall
be of no force and effect if the Merger shall fail to be consummated for any
reason. Subject to any provisions hereof restricting assignment, this Agreement
shall be binding upon the parties hereto and shall inure to the benefit of the
parties and their respective heirs, devisees, executors, administrators, legal
representatives, successors and assigns. This Agreement may not be assigned by
the Executive, and shall not inure to the benefit of or be enforceable by any
person or entity other than as aforesaid, including without limitation any
employee of the Company or member of the "Bonus Pool" referred to above. The
parties recognize that PCC is currently studying a possible reorganization
whereby PCC may become a wholly-owned subsidiary of a newly organized holding
company with stockholders consisting of the stockholders of PCC immediately
prior to such reorganization together with certain stockholders of Palmer
Wireless, Inc.; references herein to PCC shall be deemed to be to any such
holding company from and after the consummation of any such reorganization.
16. Amendment; Waiver. This Agreement shall not be amended, altered or
-----------------
modified except by an instrument in writing duly executed by the parties hereto.
Neither the waiver by either of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights or privileges hereunder.
17. Headings. Section and subsection headings contained in this Agreement
--------
are inserted for convenience of reference only, shall not be deemed to be a part
of this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
18. Governing Law. This Agreement, the rights and obligations of the
-------------
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida (but not
including the choice of law rules thereof).
19. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties respecting the employment of Executive by the Company, there
being no representations, warranties or commitments except as set forth herein.
10
<PAGE>
20. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or
have caused this Agreement to be duly executed on their behalf, as of the day
and year first herein above written.
PRICE COMMUNICATIONS WIRELESS, INC.
By:
----------------------------------------------
Name: Robert Price
Title: President
THE EXECUTIVE:
-------------------------------------------------
William J. Ryan
11
<PAGE>
EXHIBIT A
FRINGE BENEFITS
---------------
1. Medical, dental, vision and prescription insurance
a. Family coverage. Claim payment daily.
b. Executive expense reimbursement by Company of all deductibles and
non-insured items. Paid quarterly.
2. $50,000 Term life policy - monthly premium
3. Long-term care insurance - monthly premium
a. Coverage-$1,000 per month for three years
4. Disability insurance protection- monthly premium
a. Short-term: 60% of Gross Salary. Benefits payable weekly for
maximum of 24 weeks.
b. Long-term: 60% of Gross Salary after short-term benefits expire.
Payable monthly until return to work, reach 65 or dies.
5. 401-K
a. Defer up to 10% of Base Salary
b. Company match of 50% up to 6% of Base Salary. Paid quarterly.
c. Annual payment by Company of 7% of Base Salary as a retirement
benefit. Annual payment.
6. Auto Allowance $6,000 annually. Paid bi-weekly.
7. Reimbursement of annual tax services and financial planning services.
Annual payment.
8. Automobile registration and automobile insurance reimbursement. Semi-
annual payment.
9. Club dues. Paid quarterly.
10. Free cellular mobile and portable service (demos).
12
<PAGE>
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of this 15th day
of August, 1997, by and between Price Communications Wireless, Inc. ("PCW"), a
Delaware corporation formerly known as Price Communications Cellular Merger
Corp., and M. Wayne Wisehart (the "Executive").
WHEREAS, Palmer Wireless, Inc., a Delaware corporation (the "Company"), and
the Executive are parties to an Amended Employment Agreement dated as of March
21, 1995 (the "Palmer Agreement") pursuant to which the Executive has been
employed as Chief Financial Officer, Treasurer and Vice-President of the
Company;
WHEREAS, PCW, Price Communications Corporation ("PCC"), the parent
corporation of PCW, and the Company are parties to an Agreement and Plan of
Merger dated as of May 23, 1997 (the "Merger Agreement") pursuant to which PCW
shall merge (the "Merger") with and into the Company, and the Company, which
concurrently with or subsequent to the Merger will change its name to Price
Communications Wireless, Inc., shall be the surviving corporation;
WHEREAS, as a result of the Merger, the Company shall succeed to and become
fully benefitted and bound by all of the rights and obligations of PCW,
including without limitation this Employment Agreement;
WHEREAS, simultaneously with, and conditioned upon the occurrence of, the
Effective Time of the Merger under the Merger Agreement, the Palmer Agreement
shall be hereby automatically terminated and superseded and replaced in its
entirety by this Agreement, and the Company shall employ the Executive and the
Executive shall be employed by the Company from and after the Effective Time, on
the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto agree as
follows:
1. Employment. On the terms and conditions set forth in this Agreement,
----------
the Company shall employ the Executive and the Executive shall be employed by
the Company for the term set forth in Section 2 hereof and in the position and
with the duties set forth in Section 3 hereof.
2. Term. The term of this Agreement shall commence on the Effective Time
----
of the Merger and end on December 31, 1999, provided, that the term of this
--------
Agreement shall be extended automatically for additional one (1) year periods on
December 31 of each year ("Year
<PAGE>
End") commencing on December 31, 1999 and each subsequent Year End, unless and
until either party provides written notice to the other party, in accordance
with Section 11 hereof, not less than ninety (90) days prior to such Year End
that such party is terminating this Agreement, which termination shall be
effective as of such Year End, or until sooner terminated as hereinafter set
forth.
3. Position and Duties. The Executive shall serve as Executive Vice-
-------------------
President, Treasurer and Chief Financial Officer of the Company, with such
duties and responsibilities as the board of directors of PCC (the "Board")
and/or the Chief Executive Officer of PCW or PCC may from time to time determine
and assign to the Executive. The Executive shall devote the Executive's
reasonable best efforts and substantially full business time to the performance
of the Executive's duties and the advancement of the business and affairs of the
Company.
4. Place of Performance. In connection with the Executive's employment
--------------------
by the Company, the Executive shall be based at the principal executive offices
of the Company, which the Company retains the right to change in its discretion,
or such other place as the Company and the Executive mutually agree, except for
required travel on Company business.
5. Compensation.
------------
5(a). Base Salary. The Company shall pay to the Executive an
-----------
annual base salary (the "Base Salary") at the rate of $300,000 per year. The
Base Salary shall be payable biweekly or in such other installments as shall be
consistent with the Company's payroll procedures.
5(b). Severance Payment. In consideration of the termination of the
-----------------
Palmer Agreement and in full discharge of all liabilities and obligations of the
Company thereunder, the Company shall pay to the Executive the aggregate sum of
$450,176 over two years commencing on the Effective Time of the Merger, such
payments to be made in equal installments during regular payroll periods of
Company. The obligation to make the payments in this Section 5(b) shall survive
any termination of this Agreement or expiration of the term of this Agreement.
5(c). Stock Options. At or promptly after the Effective Time, the
-------------
Company shall cause to be granted to the Executive options to purchase seventy-
five thousand (75,000) shares of Common Stock of PCC (the "Options") under the
Price Communications Corporation 1992 Long Term Incentive Plan (the "Option
Plan"). The exercise price per share of the Options shall be the Fair Market
Value, as such term is defined in the Option Plan, of such share on the business
day before the Effective Time. The Options shall become exercisable one year
from the Effective Time. The agreement under which the Options are granted
shall include anti-dilution protections typical for employee stock options in
the event of any stock dividend or distribution, stock split or reverse stock
split, split-up, combination or exchange of shares, recapitalization or similar
change affecting the Common Stock of PCC.
2
<PAGE>
5(d). Bonus. In the event that the Company's 1998 EBITDA (as such
-----
term is defined in Exhibit B hereto) exceeds by at least $1,000,000 its
projected EBITDA target for such year of $81,500,000 (the "Cash Flow Target"),
provided, that the Board shall make equitable adjustments ("Adjustments") in
- --------
good faith in such Cash Flow Target in the event that the Company sells or
purchases material cellular properties during such year, the Executive and other
key employees of the Company (collectively, the "Bonus Pool") shall be entitled
to receive a bonus as follows:
(i) First Tranche. If 1998 EBITDA exceeds the Cash Flow Target,
-------------
subject to any Adjustments, by at least $1,000,000, the Bonus Pool shall be
entitled to receive a total cash bonus equal to 22 1/2 % of the excess (up to an
excess amount of $1,000,000) of 1998 EBITDA above $81,500,000, 5% of which shall
be payable to the President and 17 1/2% of which shall be payable to such other
key employees of the Company, including the Executive, as the President of the
Company shall determine after consultation with the Chief Executive Officer of
PCC.
(ii) Second Tranche. If 1998 EBITDA exceeds the Cash Flow Target,
--------------
subject to any Adjustments, by at least $2,000,000, the Bonus Pool shall be
entitled to receive a total cash bonus equal to 27 1/2% of the excess (up to an
excess amount of $1,000,000) of 1998 EBITDA above $82,500,000, 5% of which shall
be payable to the President and 22 1/2% of which shall be payable to such other
key employees of the Company, including the Executive, as the President of the
Company shall determine after consultation with the Chief Executive Officer of
PCC.
(iii) Third Tranche. If 1998 EBITDA exceeds the Cash Flow Target,
-------------
subject to any Adjustments, by at least $3,000,000, the Bonus Pool shall be
entitled to receive a total cash bonus equal to 32 1/2% of the excess (up to an
excess amount of $1,000,000) of 1998 EBITDA above $83,500,000, 5% of which shall
be payable to the President and 27 1/2% of which shall be payable to such other
key employees of the Company, including the Executive, as the President of the
Company shall determine after consultation with the Chief Executive Officer of
PCC.
(iv) Fourth Tranche. If 1988 EBITDA exceeds the Cash Flow Target,
--------------
subject to any Adjustments, by at least $4,000,000, the Bonus Pool shall be
entitled to receive a total cash bonus equal to 37 1/2% of the excess of 1998
EBITDA above $84,500,000, 5% of which shall be payable to the President and 32
1/2% of which shall be payable to such other key employees of the Company,
including the Executive, as the President of the Company shall determine after
consultation with the Chief Executive Officer of PCC.
The Company's 1998 EBITDA shall be determined by the Company's
regularly employed independent certified public accountants, the determination
of which shall be conclusive and binding upon the Company and the Executive.
The Company and the President of the Company intend to agree upon an
appropriate bonus plan for 1999 prior to the end of the 1998.
3
<PAGE>
5(e). Other Benefits. The Executive shall be entitled to
--------------
participate in such plans and to receive such fringe benefits as are set forth
in Exhibit A attached hereto and made a part hereof.
---------
5(f). Vacation; Holidays. The Executive shall be entitled to all
------------------
public holidays observed by the Company and vacation days in accordance with the
applicable vacation policies for senior executives of the Company, which shall
be taken at a reasonable time or times.
5(g). Withholding Taxes and Other Deductions. To the extent
--------------------------------------
required by law, the Company shall withhold from any payments due Executive
under this Agreement any applicable federal, state or local taxes and such other
deductions as are prescribed by law or Company policy.
6. Expenses. The Company shall reimburse the Executive for all
--------
reasonable expenses incurred by the Executive (in accordance with the policies
and procedures in effect for senior executives for the Company) in connection
with the Executive's services under this Agreement. The Executive shall account
to the Company for such expenses in accordance with policies and procedures
established by the Company.
7. Confidential Information.
------------------------
7(a). The Executive covenants and agrees that the Executive will
not ever, without the prior written consent of the Board or a person authorized
by the Board, publish or disclose to any unaffiliated third party or use for the
Executive's personal benefit or advantage any confidential information with
respect to any of the Company's or any of its affiliates' products, services,
subscribers, marketing techniques, methods or future plans disclosed to the
Executive as a result of the Executive's employment with the Company, to the
extent such information has heretofore remained confidential (except for
unauthorized disclosures) and except as otherwise ordered by a court of
competent jurisdiction.
7(b). The Executive acknowledges that the restrictions contained
in Section 7(a) hereof are reasonable and necessary, in view of the nature of
the Company's business, in order to protect the legitimate interests of the
Company, and that any violation thereof would result in irreparable injury to
the Company. Therefore, the Executive agrees that in the event of a breach or
threatened breach by the Executive of the provisions of Section 7(a) hereof, the
Company shall be entitled to obtain from any court of competent jurisdiction,
preliminary or permanent injunctive relief restraining the Executive from
disclosing or using any such confidential information. Nothing herein shall be
construed as prohibiting the Company from pursuing any other remedies available
to it for such breach or threatened breach, including, without limitation,
recovery of damages from the Executive.
7(c). The Executive shall deliver promptly to the Company on
termination of employment, or at any other time the Company may so request, all
confidential memoranda, notes, records, reports and other documents (and all
copies thereof) relating to the Company's and its affiliates' businesses which
the Executive obtained while employed by, or
4
<PAGE>
otherwise serving or acting on behalf of, the Company or which the Executive may
then possess or have under his or her control.
8. Non-Competition.
---------------
8(a). Non-Competition. The Executive covenants and agrees that
---------------
the Executive will not, during the Executive's employment hereunder and for a
period of one (1) year thereafter (to the extent permitted by law), at any time
and in any state or other jurisdiction in which the Company or any of its
affiliates is engaged or has reasonably firm plans to engage in business, (i)
compete with the Company or any of its affiliates on behalf of the Executive or
any third party; (ii) participate as a director, agent, representative,
stockholder or partner or have any direct or indirect financial interest in any
enterprise which engages in the cellular business or any other business in which
the Company or any of its affiliates is engaged; or (iii) participate as an
employee or officer in any enterprise in which the Executive's responsibility
relates to the cellular business or any other business in which the Company or
any of its affiliates is engaged. The ownership by the Executive of less than
five percent (5%) of the outstanding stock of any corporation listed on a
national securities exchange conducting any such business shall not be deemed a
violation of this Section 8(a).
8(b). Injunctive Relief. In the event the restrictions against
-----------------
engaging in a competitive activity contained in Section 8(a) hereof shall be
determined by any court of competent jurisdiction to be unenforceable by reason
of their extending for too great a period of time or over too great a
geographical area or by reason of their being too extensive in any other
respect, Section 8(a) hereof shall be interpreted to extend only over the
maximum period of time for which it may be enforceable and over the maximum
geographical area as to which it may be enforceable and to the maximum extent in
all other respects as to which it may be enforceable, all as determined by such
court in such action.
8(c). Non-Solicitation. The Executive covenants and agrees that
----------------
the Executive will not, during the Executive's employment hereunder and for a
period of one (1) year thereafter induce or attempt to induce any employee of
the Company or any of the Company's affiliates to render services for any other
person, firm, or corporation.
9. Termination of Employment.
-------------------------
9(a). Death. The Executive's employment hereunder shall terminate
-----
upon the Executive's death.
9(b). By the Company. The Company may terminate the Executive's
--------------
employment hereunder under the following circumstances:
(i) If the Executive shall have been unable to perform all of the
Executive's duties hereunder by reason of illness, physical or mental disability
or other similar incapacity, which inability shall continue for more than three
(3) consecutive months, the Company may terminate the Executive's employment
hereunder.
5
<PAGE>
(ii) The Company may terminate the Executive's employment hereunder
for "Cause." For purposes of this Agreement, "Cause" shall mean (A) willful
refusal by the Executive to follow a written order of the Board of Directors,
(B) the Executive's willful engagement in conduct materially injurious to the
Company or any of its affiliates, (C) dishonesty of a material nature that
relates to the performance of the Executive's duties under this Agreement, (D)
the Executive's conviction for any felony involving moral turpitude, or (E)
unreasonable neglect or refusal on the part of the Executive to perform the
Executive's reasonably assigned duties and obligations hereunder (unless
significantly changed without Executive's consent). In addition, the Company
may terminate the Executive's employment for "Cause" if the normal business
operations of the Company are rendered commercially impractical as a consequence
of an act of God, accident, fire, labor controversy, riot or civil commotion,
act of public enemy, law, enactment, rule, order, or any act of government or
governmental instrumentality, failure of facilities, or other cause of a similar
or dissimilar nature that is not reasonably within the control of the Company or
which the Company could not, by reasonable diligence, have avoided.
9(c). By the Executive. The Executive may terminate the
----------------
Executive's employment hereunder for "Good Reason." For purposes of this
Agreement, "Good Reason" shall mean (i) the Company's failure to perform or
observe any of the material terms or provisions of this Agreement, and the
continued failure of the Company to cure such default within thirty (30) days
after written demand for performance has been given to the Company by the
Executive, which demand shall describe specifically the nature of such alleged
failure to perform or observe such material terms or provisions; (ii) a material
reduction in the scope of the Executive's responsibilities and duties; (iii) any
relocation of the Executive not consented to by the Executive so that the
Executive is not based in the State of Georgia or in (or within 50 miles of )
the licensed service areas currently served by Palmer Wireless, Inc.; (iv) any
termination by the Executive in the Executive's sole discretion within one (1)
year after the date of a Change in Control (as hereinafter defined) of PCC or
the Company; or (v) the Company's failure, by the earlier of the date of William
Ryan's termination, resignation or replacement as Chief Executive Officer of
Company or December 31, 1999, to promote Executive to the position of Chief
Executive Officer and President of the Company with a total compensation and
benefits package no less than that provided William Ryan for his services as
Chief Executive Officer and President of the Company. For purposes of this
Agreement, a "Change in Control" of PCC or the Company shall be deemed to have
occurred if after the Effective Time (A) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), other than (i) a wholly-owned subsidiary of PCC; (ii) any
person currently a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act) of PCC's securities; or (iii) (x) members of the Price family who
own capital stock of PCC on the date hereof, any affiliate of any such family
member that is wholly-owned directly or indirectly by any such family member, or
any "group" (as such term is used in Section 13(d) of the Exchange Act) that
includes one or more of such family members or affiliates, or (y) PriCellular
Corporation, becomes, after the date hereof, the beneficial owner, directly or
indirectly, of securities of PCC representing fifty (50%) percent or more of the
combined voting power of PCC's then outstanding securities; (B) during any two
(2) year period, individuals who at the beginning of such period constitute the
Board, including for this purpose any new director whose election resulted from
a vacancy on the Board
6
<PAGE>
caused by the resignation, mandatory retirement, death, or disability of a
director and was approved by a vote of at least two-thirds (2/3 rds) of the
directors then still in office who were directors at the beginning of the
period, cease for any reason to constitute a majority thereof; (C) PCC
consummates a merger or consolidation of PCC with or into another corporation
(other than a corporation described in clause (ii) or (iii) of clause (A)
above), the result of which is that the stockholders of PCC immediately prior to
the consummation of such merger or consolidation own less than sixty (60%)
percent of the combined voting power of the securities of the corporation
surviving or resulting from the merger or consolidation or of a corporation
owning, directly or indirectly, one hundred (100%) percent of the total equity
of such surviving or resulting corporation; (D) the sale in one or a series of
transactions of all or substantially all of the assets of PCC other than to an
entity described in clause (ii) or (iii) of clause (A) above or an entity of
which the stockholders of PCC immediately prior to the consummation of such sale
own directly or indirectly sixty (60%) percent or more of the combined voting
power of the securities thereof; or (E) any one transaction, or series of
transactions, the result of which is that the Company or substantially all of
the assets of the Company are owned by an entity or entities not owned or
controlled directly or indirectly by PCC, by any entity described in clause (ii)
or (iii) of clause (A) above, or by an entity of which the stockholders of PCC
immediately prior to the completion of such transactions own directly or
indirectly sixty (60%) percent or more of the combined voting power of the
securities thereof.
9(d). Mutual Termination Right. The Executive may terminate the
------------------------
Executive's employment hereunder, or the Company may terminate the Executives's
employment hereunder, in the event of the failure of the Company to achieve the
Cash Flow Target for 1998, subject to any Adjustments.
9(e). Notice of Termination. Any termination of the Executive's
---------------------
employment by the Company or the Executive (other than pursuant to Section 9(a)
hereof) shall be communicated by written "Notice of Termination" to the other
party hereto in accordance with Section 11 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon, if any, and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated.
9(f). Date of Termination. For purposes of this Agreement, the "Date
-------------------
of Termination" shall mean (i) if the Executive's employment is terminated by
the Executive's death, the date of the Executive's death; (ii) if the
Executive's employment is terminated pursuant to Section 9(b)(i) hereof, thirty
(30) days after Notice of Termination, provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period; (iii) if the Executive's employment is terminated
pursuant to Section 9(b)(ii), 9(c) or 9(d) hereof, the date specified in the
Notice of Termination, which shall be no later than 30 days after the giving of
such Notice of Termination or such later date as may be mutually agreed to by
the Executive and the Company; (iv) if the Executive's employment is terminated
pursuant to notice under Section 2 hereof, the Year End upon which such
termination is effective; and (v) if the Executive's employment is terminated
for any other reason, the date on which Notice of Termination is given.
7
<PAGE>
10. Compensation Upon Termination.
-----------------------------
10(a). If the Executive's employment is terminated by the Executive's
death, the Company shall pay to the Executive's estate, or as may be directed by
the legal representatives of such estate, the Executive's full Base Salary
through the Date of Termination and all other accrued and unpaid amounts, if
any, to which the Executive is entitled as of the Date of Termination in
connection with any fringe benefits under any plan or program of the Company
pursuant to Section 5(e) hereof and the payments provided in Section 5(b)
hereof, at the time such payments are due, and the Company shall have no further
obligations to the Executive under this Agreement.
10(b). If the Company terminates the Executive's employment pursuant
to Section 9(b)(i) hereof, the Company shall pay the Executive the Executive's
full Base Salary through the Date of Termination and all other accrued and
unpaid amounts, if any, to which the Executive is entitled as of the Date of
Termination in connection with any fringe benefits under any plan or program of
the Company pursuant to Section 5(e) hereof and the payments provided in Section
5(b) hereof, at the time such payments are due, and the Company shall have no
further obligations to the Executive under this Agreement; provided, that
--------
payments so made to the Executive during any period that the Executive is unable
to perform all of the Executive's duties hereunder by reason of illness,
physical or mental illness or other similar incapacity shall be reduced by the
sum of the amounts, if any, payable to the Executive at or prior to the time of
any such payment under disability benefit plans of the Company and which amounts
were not previously applied to reduce any such payment.
10(c). If the Company terminates the Executive's employment for Cause
as provided in Section 9(b)(ii) hereof, or if the Company or the Executive
terminates this Agreement under Section 2 hereof or if the Executive terminates
this Agreement under Section 9(d) hereof, the Company shall pay the Executive
the Executive's full Base Salary through the Date of Termination and all other
accrued and unpaid amounts, if any, to which Executive is entitled as of the
Date of Termination in connection with any fringe benefits under any plan or
program of the Company pursuant to Section 5(e) hereof and the payments provided
in Section 5(b) hereof, at the time such payments are due, and the Company shall
have no further obligations to the Executive under this Agreement.
10(d). If the Executive terminates the Executive's employment other
than for Good Reason, the Company shall pay the Executive the Executive's full
Base Salary through the Date of Termination and all other accrued and unpaid
amounts, if any, to which Executive is entitled as of the Date of Termination in
connection with any fringe benefits under any plan or program of the Company
pursuant to Section 5(e) hereof and the payments provided in Section 5(b)
hereof, at the time such payments are due, and the Company shall have no further
obligations to the Executive under this Agreement.
10(e). If the Company terminates the Executive's employment other
than for Cause, disability or death and other than pursuant to Section 2 or
Section 9(d) hereof, or the Executive terminates the Executive's employment for
Good Reason as provided in Section 9(c)(i),
8
<PAGE>
(ii), (iii), (iv) or (v) hereof, the Company shall pay the Executive (A) the
Executive's full Base Salary through the Date of Termination and all other
accrued and unpaid amounts, if any, to which the Executive is entitled as of the
Date of Termination in connection with any fringe benefits under any plan or
program of the Company pursuant to Section 5(e) hereof at the time such payments
are due; (B) the full Base Salary and any other amounts that would have been
payable to the Executive under Section 5(e) hereof from the Date of Termination
through the second anniversary of the Date of Termination (or benefits
comparable in value to the benefits provided under Section 5(e)), and any bonus
amount provided in the next sentence hereof, at the time such payments would
otherwise have been due in accordance with the Company's normal payroll
practices; and (C) the payments provided in Section 5(b) hereof at the time such
payments would otherwise have been due, and the Company shall have no further
obligations to the Executive under this Agreement. For purposes of clause (B) of
this paragraph, the Executive will be considered to be entitled pursuant to this
Section 10(e) to a bonus amount equal to the cash bonus, if any, payable to the
Executive pursuant to Section 5(d) hereof in respect of the Company's fiscal
year during which the Executive's Date of Termination occurs determined by
multiplying the amount of such bonus by a fraction of the numerator of which is
the number of days elapsed in such fiscal year prior to such Date of Termination
and the denominator of which is 365.
10(f). If the Company terminates the Executive's employment
pursuant to Section 9(d) hereof, the Company shall pay the Executive (A) the
Executive's full Base Salary through the Date of Termination and all other
accrued and unpaid amounts, if any, to which the Executive is entitled as of the
Date of Termination in connection with any fringe benefits under any plan or
program of the Company pursuant to Section 5(e) hereof at the time such payments
are due; (B) the full Base Salary and any other amounts that would have been
payable to the Executive under Section 5(e) hereof from the Date of Termination
through the second anniversary of the Date of Termination (or benefits
comparable in value to the benefits provided under Section 5(e)), at the time
such payments would otherwise have been due in accordance with the Company's
normal payroll practices; and (C) the payments provided in Section 5(b) hereof
at the time such payments would otherwise have been due, and the Company shall
have no further obligations to the Executive under this Agreement.
10(g). Mitigation. The Executive shall not be required to mitigate
----------
amounts payable pursuant to Section 10 hereof by seeking other employment
provided, however, that the Company's obligation to continue to provide the
- -------- -------
Executive with fringe benefits pursuant to Section 10(e) or Section 10(f) above
shall cease if the Executive becomes eligible to participate in fringe benefits
substantially similar to those provided for in this Agreement as a result of the
Executive's subsequent employment during the period that the Executive is
entitled to such fringe benefits.
11. Notices. All notices, demands, requests or other communications
-------
required or permitted to be given or made hereunder shall be in writing and
shall be delivered, telecopied or mailed by first class registered or certified
mail, postage prepaid, addressed as follows:
9
<PAGE>
(a) If to the Company:
Price Communications Wireless, Inc..
c/o Price Communications Corporation
45 Rockefeller Plaza
Suite 2300
New York, New York 10020
Telecopy: (212) 397-3755
Attention: Robert Price
(b) If to the Executive:
M. Wayne Wisehart
12800 University Drive
Ft. Myers, Florida 33907-5333
Telecopy: (813) 433-8213
or to such other address as may be designated by either party in a notice
to the other. Each notice, demand, request or other communication that shall be
given or made in the manner described above shall be deemed sufficiently given
or made for all purposes three (3) days after it is deposited in the U.S. mail,
postage prepaid, or at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the telecopy confirmation, the answer back
or the affidavit of messenger being deemed conclusive evidence of such delivery)
or at such time as delivery is refused by the addressee upon presentation.
12. Severability. The invalidity or unenforceability of any one or more
------------
provisions of this Agreement shall not affect the validity or enforceability of
the other provisions of this Agreement, which shall remain in full force and
effect.
13. Survival. It is the express intention and agreement of the parties
--------
hereto that the provisions of Sections 7 and 8 hereof shall survive the
termination of employment of the Executive. In addition, all obligations of the
Company to make payments hereunder shall survive any termination of this
Agreement on the terms and conditions set forth herein.
14. Assignment. The rights and obligations of the parties to this
----------
Agreement shall not be assignable, except that the rights and obligations of the
Company hereunder shall be assignable in connection with any subsequent merger,
consolidation, sale of all or substantially all of the assets of the Company or
similar reorganization of a successor corporation.
15. Binding Effect. The effectiveness of this Agreement shall be subject
--------------
to and conditioned upon the consummation of the Merger, and this Agreement shall
be of no force and effect if the Merger shall fail to be consummated for any
reason. Subject to any provisions hereof restricting assignment, this Agreement
shall be binding upon the parties hereto and shall inure to the benefit of the
parties and their respective heirs, devisees, executors, administrators, legal
representatives, successors and assigns. This Agreement may not be assigned by
the
10
<PAGE>
Executive, and shall not inure to the benefit of or be enforceable by any person
or entity other than as aforesaid, including without limitation any employee of
the Company or member of the "Bonus Pool" referred to above. The parties
recognize that PCC is currently studying a possible reorganization whereby PCC
may become a wholly-owned subsidiary of a newly organized holding company with
stockholders consisting of the stockholders of PCC immediately prior to such
reorganization together with certain stockholders of Palmer Wireless, Inc.;
references herein to PCC shall be deemed to be to any such holding company from
and after the consummation of any such reorganization.
16. Amendment; Waiver. This Agreement shall not be amended, altered or
-----------------
modified except by an instrument in writing duly executed by the parties hereto.
Neither the waiver by either of the parties hereto of a breach of or a default
under any of the provisions of this Agreement, nor the failure of either of the
parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall thereafter be
construed as a waiver of any subsequent breach or default of a similar nature,
or as a waiver of any such provisions, rights or privileges hereunder.
17. Headings. Section and subsection headings contained in this Agreement
--------
are inserted for convenience of reference only, shall not be deemed to be a part
of this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
18. Governing Law. This Agreement, the rights and obligations of the
-------------
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida (but not
including the choice of law rules thereof).
19. Entire Agreement. This Agreement constitutes the entire agreement
----------------
between the parties respecting the employment of Executive by the Company, there
being no representations, warranties or commitments except as set forth herein.
20. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be an original and all of which shall be
deemed to constitute one and the same instrument.
11
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or
have caused this Agreement to be duly executed on their behalf, as of the day
and year first herein above written.
PRICE COMMUNICATIONS WIRELESS, INC.
By:
----------------------------------------------
Name: Robert Price
Title: President
THE EXECUTIVE:
-------------------------------------------------
M. Wayne Wisehart
12
<PAGE>
EXHIBIT A
FRINGE BENEFITS
---------------
1. Medical, dental, vision and prescription insurance
a. Family coverage. Claim payment daily.
b. Executive expense reimbursement by Company of all deductibles and
non-insured items. Paid quarterly.
2. $50,000 Term life policy - monthly premium
3. Long-term care insurance - monthly premium
a. Coverage-$1,000 per month for three years
4. Disability insurance protection- monthly premium
a. Short-term: 60% of Gross Salary. Benefits payable weekly for
maximum of 24 weeks.
b. Long-term: 60% of Gross Salary after short-term benefits expire.
Payable monthly until return to work, reach 65 or dies.
5. 401-K
a. Defer up to 10% of Base Salary
b. Company match of 50% up to 6% of Base Salary. Paid quarterly.
c. Annual payment by Company of 7% of Base Salary as a retirement
benefit. Annual payment.
6. Auto Allowance $6,000 annually. Paid bi-weekly.
7. Reimbursement of annual tax services and financial planning services.
Annual payment.
8. Automobile registration and automobile insurance reimbursement. Semi-
annual payment.
9. Club dues. Paid quarterly.
10. Free cellular mobile and portable service (demos).
13
<PAGE>
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of this 2
day of September, 1997, by and between Price Communications Wireless, Inc.
("PCW"), a Delaware corporation formerly known as Price Communications Cellular
Merger Corp. and K. Patrick Meehan (the "Executive").
WHEREAS, Palmer Wireless, Inc., a Delaware corporation (the
"Company"), and the Executive are parties to an Amended Employment Agreement
dated as of March 28, 1997 (the "Palmer Agreement") pursuant to which the
Executive has been employed as Vice President and General Counsel of the
Company;
WHEREAS, PCW, Price Communications Corporation ("PCC"), and Palmer
Wireless, Inc. (the "Company") are parties to an Agreement and Plan of Merger
dated as of May 23, 1997 (the "Merger Agreement") pursuant to which PCW shall
merge (the "Merger") with and into the Company, and the Company, which
concurrently with or subsequent to the Merger will change its name to Price
Communications Wireless, Inc., shall be the surviving corporation;
WHEREAS, as a result of the Merger, the Company shall succeed to and
become fully benefited and bound by all of the rights and obligations of PCW,
including without limitation this Agreement.
WHEREAS, simultaneously with, and conditioned upon the occurrence of,
the Effective Time of the Merger under the Merger Agreement, the Palmer
Agreement shall be hereby automatically terminated and superseded and replaced
in its entirety by this Agreement, and the Company shall employ the Executive
and the Executive shall be employed by the Company from and after the Effective
Time, on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties hereto
agree as follows:
1. Employment. On the terms and conditions set forth in this
----------
Agreement, the Company shall employ Executive and Executive shall be employed
by the Company for the term set forth in Section 2 hereof and in the position
and with the duties set forth in Section 3 hereof.
2. Term. The term of this Agreement shall commence on the Effective
----
Time of the Merger and end on December 31, 1998, provided that the term of this
Agreement shall be extended automatically for additional one (1) year periods on
December 31 of each year ("Year End") commencing on December 31, 1998 and each
subsequent Year End, unless and until either party provides written notice to
the other party, in accordance with Section 9 hereof, not less than ninety (90)
days prior to such Year End that such party is terminating this Agreement, which
termination shall be effective as of such Year End, or until sooner terminated
as hereinafter set forth.
3. Position and Duties. The Executive shall serve as Vice
-------------------
President/General Counsel of the Company, with such duties and responsibilities
as the Chief Executive Officer of PCW may from time to time determine and assign
to the Executive. The Executive shall devote the Executive's reasonable best
efforts and substantially full business time to the performance of the
Executive's duties and the advancement of the business and affairs of the
Company.
<PAGE>
4. Place of Performance. In connection with the Executive's
--------------------
employment by the Company, the Executive shall be based at the principal
executive offices of the Company, which the Company retains the right to change
in its discretion.
5. Compensation and Related Matters.
--------------------------------
5(a) Base Salary. The Company shall pay to the Executive an
-----------
annual base salary (the "Base Salary") at the rate of $180,000 per year, payable
in biweekly or other such installments consistent with the Company's payroll
procedures.
5(b) Severance Payment. In consideration of the termination
-----------------
of the Palmer Agreement and in full discharge of all liabilities and obligations
of the Company thereunder, the Company shall pay to the Executive the aggregate
sum of $373,586 over two years commencing on the Effective Time of the Merger,
such payments to be made in equal installments during regular payroll periods of
Company. The obligation to make the payments in this Section 5(b) shall survive
any termination of this Agreement or expiration of the term of this Agreement.
5(c) Stock Options. At or promptly after the Effective Time,
-------------
the Company shall cause to be granted to the Executive options to purchase
30,000 shares of Common Stock of PCC (the "Options") under the Price
Communications Corporation 1992 Long Term Incentive Plan (the "Option Plan").
The exercise price shall be the Fair Market Value, as defined in the Option
Plan, on the business day of the Effective Time. The Options shall become
exercisable one year from the Effective Time.
5(d) Other Benefits. The Executive shall be entitled to
--------------
participate in such plans and to receive such fringe benefits that are offered
by the Company.
6. Non-Competition.
---------------
6(a) Non-Competition. The Executive covenants and agrees
---------------
that the Executive will not, during the Executive's employment hereunder and for
a period of one (1) year thereafter (to the extent permitted by law), at any
time and in any state or other jurisdiction which the Company or any of its
affiliates is engaged or has reasonably firm plans to engage in business, (i)
compete with the Company or any of its affiliates on behalf of the Executive or
any third party, (ii) participate as a director, agent, representative
stockholder or partner or have any direct or indirect financial interest in any
enterprise which engages in the cellular business or any other business in which
the Company or any of its affiliates is engaged; or (iii) participate as an
employee or officer in any enterprise in which Executive's responsibility
relates to the cellular business or any other business in which the Company or
any of its affiliates is engaged. The ownership by Executive of less than five
percent (5%) of the outstanding stock of any corporation listed on a national
securities exchange conducting any such business shall not be deemed a violation
of this section 6(a).
6(b) Injunctive Relief. In the event the restrictions against
------------------
engaging in a competitive activity contained in Section 6(a) hereof shall be
determined by any court of competent jurisdiction to be unenforceable by
reason of their extending for too great a period of time or over too great a
geographical area or by reason of their being too extensive in any other
respect, Section 6(a) hereof shall be interpreted to extend only over the
maximum period of time for which it may be enforceable and to the maximum
extent in all other respects as to which it may be enforceable, all as
determined by such court in such action.
2
<PAGE>
7. Termination.
-----------
7(a) Death. The Executive's employment hereunder shall terminate
-----
upon the Executive's death.
7(b) By the Company. The Company may terminate Executive's
--------------
employment hereunder under the following circumstances:
(i) If the Executive shall have been unable to perform all of the
Executive's duties hereunder by reason of illness, physical or mental disability
or other similar incapacity, which inability shall continue for more than three
(3) consecutive months, the Company may terminate the Executive's employment
hereunder.
(ii) The Company may terminate the Executive's employment hereunder
for "Cause". For purposes of this Agreement "Cause" shall mean (A) willful
refusal by the Executive to follow a written order of the Board of Directors,
(B) the Executive's willful engagement in conduct materially injurious to the
Company or any of its affiliates, (C) dishonesty of a material nature that
relates to the performance of the Executive's duties under this Agreement, (D)
the Executive's conviction for any felony involving moral turpitude, or (E)
unreasonable neglect or refusal on the part of the Executive to perform the
Executive's reasonably assigned duties and obligations hereunder (unless
significantly changed without Executive's consent). In addition, the Company
may terminate the Executive's employment for "Cause" if the normal business
operations of the company are rendered commercially impractical as a consequence
of an act of God, accident, fire labor controversy, riot or civil commotion, act
of public enemy, law, enactment, rule, order, or act of government or
governmental instrumentality, failure of facilities, or other cause of a similar
or dissimilar nature that is not reasonably within the control of the Company or
which the Company could not, by reasonable diligence, have avoided.
7(c) By the Executive. The Executive may terminate the Executive's
-----------------
employment with "Good Reason". For the purposes of this Agreement "Good Reason"
shall mean (i) the Company's failure to perform or observe any of the material
terms or provisions of this Agreement, and the continued failure of the Company
to cure such default within thirty (30) days after written demand for
performance has been given to the Company by the Executive, which demand shall
describe specifically the nature of such alleged failure to perform or observe
such material terms or provisions; or (ii) a material reduction in the scope of
the Executive's responsibilities and duties.
7(d) Notice of Termination. Any termination of the Executive's
---------------------
employment, by the Company or the Executive (other that pursuant to Section 7(a)
hereof) shall be communicated by written "Notice of Termination" to the other
party hereto in accordance with Section 9 hereof. For purposes of this
Agreement, a "Notice of Termination" shall mean a notice which shall indicate
the specific termination provision in this Agreement relied upon, if any, and
shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination the Executive's employment under the provision
so indicated.
7(e) Date of Termination. For the purposes of this Agreement, the
-------------------
"Date of Termination" shall mean (i) if the Executive's employment is terminated
by the Executive's death, the date of the Executive's death; (ii) if the
Executive's employment is terminated pursuant to Section 7(b)(i) hereof, thirty
(30) days after Notice of Termination, provided that the Executive shall not
have returned to the performance of the Executive's duties on a full-time basis
during such 30-day period; (iii) if the Executive's employment is terminated
pursuant to Section 7(b)(ii) or 7(c) hereof, the date specified in the Notice of
Termination, which shall be no later than 30 days after
3
<PAGE>
the giving of such Notice of Termination or such later date as may be mutually
agreed to by the Executive and the Company; (iv) if the Executive's employment
is terminated pursuant to notice under Section 2 hereof, the Year End upon which
termination is effective; and (v) if the Executive's employment is terminated
for any other reason, the date on which Notice of Termination is given.
(8) Compensation Upon Termination.
-----------------------------
8(a) If the Executive's employment is terminated by the Executive's
death, the Company shall pay to Executive's estate or as may be directed by the
legal representatives of such estate, the Executive's full Base Salary through
Date of Termination and all other accrued and unpaid amounts, if any, to which
Executive is entitled as of the Date of Termination in connection with any
fringe benefits under any plan or program of the Company pursuant to Section
5(d) hereof and the payments provided in 5(b) hereof, at the time such payments
are due, and the Company shall have no further obligations to the Executive
under this Agreement.
8(b) If the Company terminates the Executive's employment pursuant to
Section 7(b)(i) hereof, the Company shall pay the Executive the Executive's full
Base Salary through the Date of Termination and all other accrued and unpaid
amounts, if any, to which the Executive is entitled as of the Date of
Termination in connection with any fringe benefits under any plan or program of
the Company pursuant to section 5(d) hereof and the payments provided in 5(b)
hereof, at the time such payments are due, and the Company shall have no further
obligations to the Executive under this Agreement; provided that payments so
--------
made to the Executive during any period that the Executive is unable to perform
all of the Executive's duties hereunder by reason of illness, physical or mental
illness or other similar incapacity shall be reduced by the sum of the amounts,.
if any, payable to the Executive at or prior to the time of any such payment
under disability benefit plans of the Company and which amounts were not
previously applied to reduce any such payment.
8(c) If the Company terminates the Executive's employment for Cause
as provided in Section 7(b)(ii) hereof, or if the Company or the Executive
terminates this Agreement under Section 2 hereof, the Company shall pay the
Executive the Executive's full Base salary through the Date of Termination and
all other accrued and unpaid amounts, if any, to which Executive is entitled as
of the Date of Termination in connection with any fringe benefits under any plan
or program of the Company pursuant to Section 5(d) hereof and the payments
provided in 5(b) hereof, at the time such payments are due, and the company
shall have no further obligations to the Executive under this Agreement.
8(d) If the Executive terminates the Executive's employment other
than for Good Reason, the Company shall pay the Executive the Executive's full
Base Salary through the Date of Termination and all other accrued and unpaid
amounts , if any, to which Executive is entitled as of the Date of Termination
in connection with any fringe benefits under any plan or program of the Company
pursuant to Section 5(d) hereof and the payments provided in 5(b) hereof, at the
time such payments are due, and the Company shall have no further obligations to
the Executive under this Agreement.
8(e) If the Company terminates the Executive's employment other than
for Cause, disability or death and other than pursuant to Section 2 hereof or
the Executive terminates the Executive's employment for Good Reason as provided
in Section 7(c)(i), or (ii) hereof, the Company shall pay the Executive (A) the
Executive's full Base Salary through the date of Termination and all other
accrued and unpaid amounts , if any to which Executive is entitled as of the
Date of Termination in connection with any fringe benefits under any plan or
program of the Company pursuant to Section 5(d) hereof at the time such payments
are due, and (B) the full Base
4
<PAGE>
Salary and any other amounts that would have been payable to Executive under
Section 5(d) hereof from the Date of Termination through the first anniversary
of the Date of Termination (or benefits comparable in value to the benefits
provided under Section 5(d)); (C) the payments provided in Section 5(b) hereof
at the time such payments would otherwise have been due and the Company shall
have no further obligations to the Executive under this Agreement.
9. Notices. All notices, demands, requests or other communications
-------
required or permitted to be given or made hereunder shall be in writing and
shall be delivered, telecopied or mailed by first class registered or certified
mail, postage prepaid, addressed as follows:
9(a) If to the Company:
Price Communications Wireless, Inc.
c/o Price Communication Corporation
45 Rockefeller Plaza
Suite 2300
New York, New York 10020
Telecopy: (212)397-3755
Attn: Robert Price
9(b) If to Executive:
K. Patrick Meehan, Esq.
12800 University Drive, Ste. 500
Fort Myers, FL 33907-5337
or to such other address as may be designated by either party in a notice to the
other. Each notice, demand, request or other communication that shall be given
or made in the manner described above shall be deemed sufficiently given or made
for all purposes three (3) days after it is deposited in the U.S. mail, postage
prepaid, or at such time as it is delivered to the addressee (with return
receipt, the delivery receipt, the telecopy confirmation, the answer back or the
affidavit of messenger being deemed conclusive evidence of such delivery) or at
such time as delivery is refused by the addressee upon presentation.
10. Survival. It is the express intention and agreement of the
--------
parties hereto that the provisions of Section 6 hereof shall survive the
termination of employment of the Executive. In addition, all obligations of the
Company to make payments hereunder shall survive any termination of this
Agreement on the terms and conditions set forth herein.
11. Binding Effect. The effectiveness of this Agreement shall be
--------------
subject to and conditioned upon the consummation of the Merger, and this
Agreement shall be of no force and effect if the Merge shall fail to be
consummated for any reason. Subject to any provisions hereof restricting
assignment, this Agreement shall be binding upon the parties hereto and shall
inure to the benefit of the parties and their respective heirs, devisees
executors, administrators, legal representatives, successors and assigns. This
Agreement may not be assigned by the Executive, and shall not inure to the
benefit of or be enforceable by any person or entity other that as aforesaid
including without limitation any employee of the Company.
12. Governing Law. This Agreement, the rights and obligations of the
-------------
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of Florida (but not
including the choice of law rules thereof).
5
<PAGE>
13. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each shall be an original and all of which shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement,
or have caused this Agreement to be duly executed on their behalf, as of the day
and year first herein above written.
PRICE COMMUNICATIONS WIRELESS, INC.
/s/ Robert Price
By:_________________
Name: Robert Price
Title: President
THE EXECUTIVE:
/s/ K. Patrick Meehan
______________________
K. Patrick Meehan
6
<PAGE>
EXHIBIT 12.1
PALMER WIRELESS, INC.
STATEMENT RE: COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(1)
(IN THOUSANDS)
<TABLE>
<CAPTION>
SIX
MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------------ ---------------
1992 1993 1994 1995 1996 1996 1997
-------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Fixed charges:
Interest expense....... $ 8,326 $ 9,027 $12,769 $21,424 $31,524 $16,006 $16,113
Portion of rent expense
representative of
Interest.............. 227 384 531 821 1,172 586 682
-------- ------- ------- ------- ------- ------- -------
Total Fixed Charges..... $ 8,553 $ 9,411 $13,300 $22,245 $32,696 $16,592 $16,795
======== ======= ======= ======= ======= ======= =======
Earnings:
Income From operations
before minority
interest share of
income and income
taxes................. $(12,605) $(7,435) $ 2,298 $ 4,682 $ 9,286 $ 3,731 $ 8,333
Fixed Charges per
above................. 8,553 9,411 13,300 22,245 32,696 16,592 16,795
-------- ------- ------- ------- ------- ------- -------
Total Earnings.......... $ (4,052) $ 1,976 $15,598 $26,927 $41,982 $20,323 $25,128
======== ======= ======= ======= ======= ======= =======
Ratio of Earnings to
Fixed Charges(2)....... -- -- 1.17 1.21 1.28 1.22 1.50
</TABLE>
- --------
(1) The following data is presented on a historical basis and does not reflect
the pro forma effects of the Acquisition or the indebtedness of the Company
used to fund the Acquisition.
(2) The ratio of earnings to fixed charges is determined by dividing the sum
of earnings before extraordinary items and accounting changes, interest
expense, taxes and a portion of rent expense representative of interest by
the sum of interest expense and a portion of rent expense representative
of interest. The ratio of earnings to fixed charges is not meaningful for
periods that result in a deficit. For the years ended December 31, 1992
and 1993 the deficit of earnings to fixed charges was $12,605 and $7,435,
respectively.
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF PRICE COMMUNICATIONS WIRELESS, INC.
Name Name Under Which
State of Incorporation Subsidiary Does Business
- --------------------------------------------------------------------------------
Price Communications Delaware
Wireless II, Inc.
- --------------------------------------------------------------------------------
Price Communications Delaware
Wireless III, Inc.
- --------------------------------------------------------------------------------
Price Communications Delaware
Wireless IV, Inc.
- --------------------------------------------------------------------------------
Price Communications Delaware
Wireless V, Inc.
- --------------------------------------------------------------------------------
Price Communications Delaware
Wireless VI, Inc.
- --------------------------------------------------------------------------------
Price Communications Delaware
Wireless VII, Inc.
- --------------------------------------------------------------------------------
Price Communications Delaware
Wireless VIII, Inc.
- --------------------------------------------------------------------------------
Price Communications Delaware
Wireless IX, Inc.
- --------------------------------------------------------------------------------
Palmer Wireless Holdings, Delaware Cellular One
Inc.
- --------------------------------------------------------------------------------
CEI Communications, Inc. Delaware
- --------------------------------------------------------------------------------
Cellular Dynamics Georgia Cellular One
Telephone Company of
Georgia
- --------------------------------------------------------------------------------
Cellular Systems of Delaware Cellular One
Southeast Alabama, Inc.
- ------------------------------------------------------------------------------
Dothan Cellular Telephone Alabama Cellular One
Company, Inc.
- --------------------------------------------------------------------------------
Montgomery Cellular Delaware
Holding Co., Inc.
- --------------------------------------------------------------------------------
Montgomery Cellular Alabama Cellular One
Telephone Company, Inc.
- --------------------------------------------------------------------------------
Panama City Florida
Communications, Inc.
- --------------------------------------------------------------------------------
Albany Cellular Partners Georgia Cellular One
- --------------------------------------------------------------------------------
Columbus Cellular Georgia Cellular One
Telephone Company
- --------------------------------------------------------------------------------
Macon Cellular Telephone New Hampshire Cellular One
Systems Limited Partnership
- --------------------------------------------------------------------------------
Panama City Cellular Florida Cellular One
Telephone Company, Ltd.
- --------------------------------------------------------------------------------
Panhandle Cellular Florida
Partnership
- --------------------------------------------------------------------------------
Savannah Cellular Limited Delaware Cellular One
Partnership
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Price Communications Wireless, Inc.
(Formerly Palmer Wireless, Inc.):
We consent to the inclusion of our report dated January 30, 1997, except for
Note 10 which is as of February 1, 1997, with respect to the consolidated
balance sheets of Palmer Wireless, Inc. and subsidiaries, as of December 31,
1996 and 1995 and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1996, which report appears in the Form S-4 of Price
Communications Wireless, Inc. and to the reference to our firm under the heading
"Experts" in the Prospectus.
KPMG Peat Marwick LLP
Des Moines, Iowa
November 6, 1997
<PAGE>
EXHIBIT 25.1
Conformed Copy
_____________________________________________________________________________
_____________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an Application to Determine Eligibility of a trustee Pursuant to
Section 305(b) ____
BANK OF MONTREAL TRUST COMPANY
(EXACT NAME OF TRUSTEE AS SPECIFIED IN ITS CHARTER)
New York 13-4941093
(JURISDICTION OF INCORPORATION OR ORGANIZATION (I.R.S. EMPLOYER
IF NOT A U.S. NATIONAL BANK) IDENTIFICATION NO.)
77 Water Street
New York, New York 10005
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Mark F. McLaughlin
Bank of Montreal Trust Company
77 Water Street, New York, New York 10005
(212) 701-7602
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
____________________________________
PRICE COMMUNICATIONS WIRELESS, INC.
(EXACT NAME OF OBLIGOR AS SPECIFIED IN ITS CHARTER)
Delaware 13-3956941
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
45 Rockefeller Plaza
New York, New York 10020
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
______________________________________
11 3/4% Senior Subordinated Notes due 2007
(Title of the indenture securities)
________________________________________________________________________________
________________________________________________________________________________
<PAGE>
- 2 -
ITEM 1. GENERAL INFORMATION.
--------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
Federal Reserve Bank of New York
33 Liberty Street, New York N.Y. 10045
State of New York Banking Department
2 Rector Street, New York, N.Y. 10006
(b) Whether it is authorized to exercise corporate trust powers.
The Trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
------------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
The obligor is not an affiliate of the trustee.
ITEM 16. LIST OF EXHIBITS.
-----------------
List below all exhibits filed as part of this statement of eligibility.
1. Copy of Organization Certificate of Bank of Montreal Trust Company to
transact business and exercise corporate trust powers; incorporated
herein by reference as Exhibit "A" filed with Form T-1 Statement,
Registration No. 33-46118.
2. Copy of the existing By-Laws of Bank of Montreal Trust Company;
incorporated herein by reference as Exhibit "B" filed with Form T-1
Statement, Registration No. 33-80928.
3. The consent of the Trustee required by Section 321(b) of the Act;
incorporated herein by reference as Exhibit "C" with Form T-1
Statement, Registration No. 33-46118.
4. A copy of the latest report of condition of Bank of Montreal Trust
Company published pursuant to law or the requirements of its
supervising or examining authority, attached hereto as Exhibit "D".
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939 the
Trustee, Bank of Montreal Trust Company, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 12th day
of September, 1997.
BANK OF MONTREAL TRUST COMPANY
By: /s/ Amy S. Roberts
-------------------------
Amy S. Roberts
Vice President
<PAGE>
EXHIBIT "D"
STATEMENT OF CONDITION
BANK OF MONTREAL TRUST COMPANY
NEW YORK
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Due From Banks $ 594,897
-----------
Investment Securities:
State & Municipal 17,099,800
Other 100
-----------
TOTAL SECURITIES 17,099,900
Loans and Advances
Federal Funds Sold 2,000,000
Overdrafts 17,218
-----------
TOTAL LOANS AND ADVANCES 2,017,218
-----------
Investment in Harris Trust, NY 8,036,150
Premises and Equipment 122,818
Other Assets 2,721,789
--------- -----------
10,880,757
-----------
TOTAL ASSETS $30,592,772
===========
LIABILITIES
Trust Deposits $ 6,408,362
Other Liabilities 659,021
-----------
TOTAL LIABILITIES 7,067,383
-----------
CAPITAL ACCOUNTS
Capital Stock, Authorized, Issued and
Fully Paid - 10,000 Shares of $100 Each 1,000,000
Surplus 4,222,188
Retained Earnings 18,298,208
Equity - Municipal Gain/Loss 4,993
-----------
TOTAL CAPITAL ACCOUNTS 23,525,389
-----------
TOTAL LIABILITIES
AND CAPITAL ACCOUNTS $30,592,772
===========
</TABLE>
I, Mark F. McLaughlin, Vice President, of the above-named bank do hereby
declare that this Report of Condition is true and correct to the best of my
knowledge and belief.
Mark F. McLaughlin
June 30, 1997
We, the undersigned directors, attest to the correctness of this
statement of resources and liabilities. We declared that it has been examined
by us, and to the best of our knowledge and belief has been prepared in
conformance with the instructions and is true and correct.
Sanjiv Tandon
Kevin O. Healey
Steven R. Rothbloom
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
OFFER TO EXCHANGE
11 3/4% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
11 3/4% SENIOR SUBORDINATED NOTES DUE 2007
OF
PRICE COMMUNICATIONS WIRELESS, INC.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON , 1997
(THE "EXPIRATION DATE")
UNLESS EXTENDED BY PRICE COMMUNICATIONS WIRELESS, INC.
EXCHANGE AGENT:
BANK OF MONTREAL TRUST COMPANY
BY MAIL, BY OVERNIGHT
COURIER OR BY HAND:
Bank of Montreal Trust Company
77 Water Street, 4th Floor
Attn: Amy Roberts,
Corporate Trust Department
New York, NY 10005
BY FACSIMILE:
(212) 701-7684
CONFIRM BY TELEPHONE:
(212) 701-7653
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION TO A NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
The undersigned acknowledges receipt of the Prospectus dated , 1997 (the
"Prospectus") of Price Communications Wireless, Inc. (the "Company") which,
together with this Letter of Transmittal (the "Letter of Transmittal"),
describes the Company's offer (the "Exchange Offer") to exchange $1,000 in
principal amount of a new series of 11 3/4% Senior Subordinated Exchange Notes
due 2007 (the "New Notes") for each $1,000 in principal amount of outstanding
11 3/4% Senior Subordinated Notes due 2007 (the "Old Notes"). The terms of the
New Notes are identical in all material respects (including principal amount,
interest rate and maturity) to the terms of the Old Notes for which they may
be exchanged pursuant to the Exchange Offer, except that the offering of the
New Notes will have been registered under the Securities Act of 1933, as
amended (the "Securities Act") and, therefore, the New Notes will not bear
legends restricting the transfer thereof.
The undersigned has checked the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
PLEASE READ THE ENTIRE LETTER OF TRANSMITTAL AND THE PROSPECTUS CAREFULLY
BEFORE CHECKING ANY BOX BELOW.
<PAGE>
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE
PROSPECTUS AND THIS LETTER OF TRANSMITTAL MAY BE DIRECTED TO THE EXCHANGE
AGENT.
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the Certificate Numbers and Principal
Amounts should be listed on a separate signed schedule affixed hereto.
DESCRIPTION OF OLD NOTES TENDERED HEREWITH
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGREGATE
PRINCIPAL
NAME(S) AND ADDRESS(ES) AMOUNT PRINCIPAL
OF REGISTERED HOLDER(S) CERTIFICATE REPRESENTED AMOUNT
(PLEASE FILL IN) NUMBER(S)* BY NOTES* TENDERED**
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by book-entry Holders.
** Unless otherwise indicated, the Holder will be deemed to have tendered
the full aggregate principal amount represented by Old Notes. See
Instruction 2.
2
<PAGE>
This Letter of Transmittal is to be used either if certificates for Old
Notes are to be forwarded herewith or if delivery of Old Notes is to be made
by book-entry transfer to an account maintained by 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. Delivery of documents
to a book-entry transfer facility does not constitute delivery to the Exchange
Agent.
Unless the context requires otherwise, the term "Holder" for purposes of
this Letter of Transmittal means any person in whose name Old Notes are
registered on the books of the Company or any other person who has obtained a
properly completed bond power from the registered holder or any person whose
Old Notes are held of record by DTC who desires to deliver such Old Notes by
book-entry transfer at DTC.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent
on or prior to the Expiration Date may tender their Old Notes according to the
guaranteed delivery procedure set forth in the Prospectus under "The Exchange
Offer--Guaranteed Delivery Procedures."
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution: _____________________________________________
----------------------------------------------------------------------------
The Depository Trust Company:
Account Number: ____________________________________________________________
Transaction Code Number: ___________________________________________________
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s):_______________________________________________
----------------------------------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery: _____________________
----------------------------------------------------------------------------
IF DELIVERED BY BOOK-ENTRY TRANSFER:
Account Number: ____________________________________________________________
[_]CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ______________________________________________________________________
Address: ___________________________________________________________________
----------------------------------------------------------------------------
3
<PAGE>
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the above-described principal amount
of Old Notes. Subject to, and effective upon, the acceptance for exchange of
the Old Notes tendered herewith, the undersigned hereby exchanges, assigns and
transfers to, or upon the order of, the Company all right, title and interest
in and to such Old Notes. The undersigned hereby irrevocably constitutes and
appoints the Exchange Agent as the true and lawful agent and attorney-in-fact
of the undersigned (with full knowledge that said Exchange Agent acts as the
agent of the undersigned in connection with the Exchange Offer) to cause the
Old Notes to be assigned, transferred and exchanged. The undersigned
represents and warrants that it has full power and authority to tender,
exchange, assign and transfer the Old Notes and to acquire New Notes issuable
upon the exchange of such tendered Old Notes, and that, when the same are
accepted for exchange, the Company will acquire good and unencumbered title to
the tendered Old Notes, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim. The undersigned also
warrants that it will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of tendered Old
Notes or transfer ownership of such Old Notes on the account books maintained
by DTC.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under "The Exchange Offer." The undersigned recognizes that as a
result of these conditions (which may be waived, in whole or in part, by the
Company), as more particularly set forth in the Prospectus, the Company may
not be required to exchange any of the Old Notes tendered hereby and, in such
event, the Old Notes not exchanged will be returned to the undersigned at the
address shown below the signature of the undersigned.
By tendering, each Holder of Old Notes represents to the Company that (i)
the New Notes acquired pursuant to the Exchange Offer are being obtained in
the ordinary course of business of the person receiving such New Notes,
whether or not such person is such Holder, (ii) neither the Holder of Old
Notes nor any such other person has an arrangement or understanding with any
person to participate in the distribution of such New Notes, (iii) if the
Holder is not a broker-dealer or is a broker-dealer but will not receive new
Notes for its own account in exchange for Old Notes, neither the Holder nor
any such other person is engaged in or intends to participate in a
distribution of the New Notes and (iv) neither the Holder nor any such other
person is an "affiliate" of the Company within the meaning of Rule 405 under
the Securities Act. If the tendering Holder is a broker-dealer (whether or not
it is also an "affiliate") that will receive New Notes for its own account in
exchange for Old Notes, it represents that the Old Notes to be exchanged for
the New Notes were acquired by it as a result of market-making activities or
other trading activities, and acknowledges that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale
of such New 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 New Notes, the undersigned is not deemed to admit that it
is an "underwriter" within the meaning of the Securities Act.
All authority herein conferred or agreed to be conferred shall survive the
death, bankruptcy or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Tendered Old Notes
may be withdrawn at any time prior to the Expiration Date.
Certificates for all New Notes delivered in exchange for tendered Old Notes
and any Old Notes delivered herewith but not exchanged, in each case
registered in the name of the undersigned, shall be delivered to the
undersigned at the address shown below the signature of the undersigned.
4
<PAGE>
TENDERING HOLDER(S) SIGN HERE
----------------------------------------------------------------------------
----------------------------------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated: _____________________, 199
(Must be signed by registered Holder(s) exactly as name(s) appear(s) on
certificate(s) for Old Notes or by any person(s) authorized to become
registered Holder(s) by endorsements and documents transmitted herewith or,
if the Old Notes are held of record by DTC, the person in whose name such
Old Notes are registered on the books of DTC. If signature by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative
capacity, please set forth the full title of such person.) See Instruction
3.
Name(s):____________________________________________________________________
----------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):______________________________________________________
Address:____________________________________________________________________
----------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.: _______________________________________________
Taxpayer Identification No.: _______________________________________________
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTION 3)
Authorized Signature: ______________________________________________________
Name: ______________________________________________________________________
Title: _____________________________________________________________________
Address: ___________________________________________________________________
Name of Firm: ______________________________________________________________
Area Code and Telephone No.: _______________________________________________
Dated: _____________________, 199
5
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES. Certificates for
all physically delivered Old Notes or confirmation of any book-entry transfer
to the Exchange Agent's account at DTC of Old Notes tendered by book-entry
transfer, as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile thereof, and any other documents required
by this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth herein on or prior to the Expiration Date.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE OLD NOTES AND ANY
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDER AND, EXCEPT
AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
ACTUALLY RECEIVED BY THE EXCHANGE AGENT. IF SUCH DELIVERY IS BY MAIL, IT IS
SUGGESTED THAT REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, BE USED.
Holders whose Old Notes are not immediately available or who cannot deliver
their Old Notes and all other required documents to the Exchange Agent on or
prior to the Expiration Date or comply with book-entry transfer procedures on
a timely basis may tender their Old Notes pursuant to the guaranteed delivery
procedure set forth in the Prospectus under "The Exchange Offer--Guaranteed
Delivery Procedures." Pursuant to such procedure: (i) such tender must be made
by or through an Eligible Institution (as defined therein); (ii) on or prior
to the Expiration Date the Exchange Agent must have received from such
Eligible Institution, a letter, telegram or facsimile transmission setting
forth the name and address of the tendering Holder, the names in which such
Old Notes are registered, and, if possible, the certificate numbers of the Old
Notes to be tendered; and (iii) all tendered Old Notes (or a confirmation of
any book-entry transfer of such Old Notes into the Exchange Agent's account at
DTC) as well as this Letter of Transmittal and all 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
letter, telegram or facsimile transmission, all as provided in the Prospectus
under "The Exchange Offer--Guaranteed Delivery Procedures."
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders, by execution of this Letter of Transmittal
(or facsimile thereof), shall waive any right to receive notice of the
acceptance of the Old Notes for exchange.
2. PARTIAL TENDERS; WITHDRAWALS. Tenders of Old Notes will be accepted in
all denominations of $1,000 and integral multiples in excess thereof. If less
than the entire principal amount of Old Notes evidenced by a submitted
certificate is tendered, the tendering Holder must fill in the principal
amount tendered in the box entitled "Principal Amount Tendered." A newly
issued certificate for the principal amount of Old Notes submitted but not
tendered will be sent to such Holder as soon as practicable after the
Expiration Date. All Old Notes delivered to the Exchange Agent will be deemed
to have been tendered unless otherwise indicated.
Tenders of Old Notes pursuant to the Exchange Offer are irrevocable, except
that Old Notes tendered pursuant to the Exchange Offer may be withdrawn at any
time prior to the Expiration Date. To be effective, a written, telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Exchange Agent. Any such notice of withdrawal must specify the person named in
the Letter of Transmittal as having tendered Old Notes to be withdrawn, the
certificate numbers of the Old Notes to be withdrawn, the principal amount of
Old Notes delivered for exchange, a statement that such a Holder is
withdrawing its election to have such Old Notes exchanged, and the name of the
registered Holder of such Old Notes, and must be signed by the Holder in the
same manner as the original signature on the Letter of Transmittal (including
any required signature guarantees) or be accompanied by evidence satisfactory
to the Company that the person withdrawing the tender has succeeded to the
beneficial ownership of the Old Notes being withdrawn. The Exchange Agent will
return the properly withdrawn Old Notes promptly following receipt of notice
of withdrawal. If Old Notes have been tendered pursuant to the procedure for
book-entry transfer, any notice of withdrawal must specify the name and number
of the account at DTC to be credited with the withdrawn Old Notes or otherwise
comply with DTC's procedures.
6
<PAGE>
3. SIGNATURE ON THIS LETTER OF TRANSMITTAL; WRITTEN INSTRUMENTS AND
ENDORSEMENTS; GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed
by the registered Holder(s) of the Old Notes tendered hereby, the signature
must correspond with the name(s) as written on the face of certificates
without alteration, enlargement or any change whatsoever.
If any of the Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If a number of Old Notes registered in different names are tendered, it will
be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the registered Holder or
Holders of Old Notes listed and tendered hereby, no endorsements of
certificates or separate written instruments of transfer or exchange are
required.
If this Letter of Transmittal is signed by a person other than the
registered Holder or Holders of the Old Notes listed, such Notes must be
endorsed or accompanied by separate written instruments of transfer or
exchange in form satisfactory to the Company and duly executed by the
registered Holder, in either case signed exactly as the name or names of the
registered Holder or Holders appear(s) on the Old Notes.
If this Letter of Transmittal, any certificates or separate written
instruments of transfer or exchange are signed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing, and, unless waived by the Company, proper evidence
satisfactory to the Company of their authority so to act must be submitted.
Endorsements on certificates or signatures on separate written instruments
of transfer or exchange required by this Instruction 3 must be guaranteed by
an Eligible Institution.
Signatures on this Letter of Transmittal need not be guaranteed by an
Eligible Institution, provided the Old Notes are tendered: (i) by a registered
Holder of such Old Notes and the certificates for New Notes to be issued in
exchange therefor are to be issued (or any untendered amount of Old Notes are
to be reissued) to the registered Holder; or (ii) for the account of any
Eligible Institution.
4. TRANSFER TAXES. The Company shall pay all transfer taxes, if any,
applicable to the transfer and exchange of Old Notes to it or its order
pursuant to the Exchange Offer. If, however, New Notes are to be delivered to,
or are to be registered or issued in the name of, any person other than the
registered Holder of the Old Notes tendered hereby, or if a transfer tax is
imposed for any reason other than the transfer of Old Notes to the Company or
its order pursuant to the Exchange Offer, the amount of any such transfer
taxes (whether imposed on the registered Holder or any other person) will be
payable by the tendering Holder. If satisfactory evidence of payment of such
taxes or exception therefrom is not submitted herewith, the amount of such
transfer taxes will be billed directly to such tendering Holder.
Except as provided in this Instruction 4, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes listed in this Letter of
Transmittal.
5. WAIVER OF CONDITIONS. The Company reserves the absolute right to waive,
in whole or in part, any of the conditions to the Exchange Offer set forth in
the Prospectus.
6. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any Holder whose Old Notes
have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated below for further instructions.
7. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating to the
procedure for tendering, as well as requests for additional copies of the
Prospectus and this Letter of Transmittal, may be directed to the Exchange
Agent at the address and telephone number set forth below. In addition, all
questions relating to the Exchange Offer, as well as requests for assistance
or additional copies of the Prospectus and this Letter of Transmittal, may be
directed to the Company at 45 Rockefeller Plaza, New York, New York 10020.
Attention: Ashley B. Dixon (212) 757-5600.
7
<PAGE>
8. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or Old
Notes will be resolved by the Company, whose determination will be final and
binding. The Company reserves the absolute right to reject any or all Letters
of Transmittal or tenders that are not in proper form or the acceptance of
which would, in the opinion of the Company's counsel, be unlawful. The Company
also reserves the right to waive any irregularities or conditions of tender as
to the particular Old Notes covered by any Letter of Transmittal or tendered
pursuant to such letter. None of the Company, the Exchange Agent or any other
person will be under any duty to give notification of any defects or
irregularities in tenders or incur any liability for failure to give any such
notification. The Company's interpretation of the terms and conditions of the
Exchange Offer shall be final and binding.
9. DEFINITIONS. Capitalized terms used in this Letter of Transmittal and not
otherwise defined have the meanings given in the Prospectus.
IMPORTANT: THIS LETTER OF TRANSMITTAL OR A FACSIMILE THEREOF (TOGETHER WITH
CERTIFICATES FOR OLD NOTES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL
OTHER REQUIRED DOCUMENTS) OR A NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED
BY THE EXCHANGE AGENT ON OR PRIOR TO THE EXPIRATION DATE.
8
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
OFFER TO EXCHANGE
11 3/4% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
11 3/4% SENIOR SUBORDINATED NOTES DUE 2007
OF
PRICE COMMUNICATIONS WIRELESS, INC.
Registered holders of outstanding 11 3/4% Senior Subordinated Notes due 2007
(the "Old Notes") who wish to tender their Old Notes in exchange for a like
principal amount of 11 3/4% Senior Subordinated Exchange Notes due 2007 (the
"New Notes") and, in each case, whose Old Notes are not immediately available
or who cannot deliver their Old Notes and Letter of Transmittal (and any other
documents required by the Letter of Transmittal) to Bank of Montreal Trust
Company (the "Exchange Agent") prior to the Expiration Date, may use this
Notice of Guaranteed Delivery or one substantially equivalent hereto. This
Notice of Guaranteed Delivery may be delivered by hand or sent by facsimile
transmission (receipt confirmed by telephone and an original delivered by
guaranteed overnight delivery) or mail to the Exchange Agent. See "The
Exchange Offer--Guaranteed Delivery Procedures" in the Prospectus.
The Exchange Agent for the Exchange Offer is:
BANK OF MONTREAL TRUST COMPANY
BY MAIL, BY OVERNIGHT
COURIER OR BY HAND:
Bank of Montreal Trust Company
77 Water Street, 4th Floor
Attn: Amy Roberts,
Corporate Trust Department
New York, NY 10005
BY FACSIMILE:
(212) 701-7684
CONFIRM BY TELEPHONE:
(212) 701-7653
Delivery of this Notice of Guaranteed Delivery to an address other than as
set forth above or transmission of instructions 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 the Letter of Transmittal is required to be
guaranteed by an Eligible Institution, such signature guarantee must appear in
the applicable space provided on the Letter of Transmittal for Guarantee of
Signatures.
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that 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, branch, agency or
correspondent in the United States, hereby guarantees to deliver to the
Exchange Agent at its address set forth above, the certificates representing
the Old Notes, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
and any other documents required by the Letter of Transmittal within five New
York Stock Exchange, Inc. trading days after the date of execution of this
Notice of Guaranteed Delivery.
Name of Firm: ____________________________ _________________________________
(AUTHORIZED SIGNATURE)
Address: _________________________________ Title: __________________________
__________________________________________ Name: ___________________________
(ZIP CODE) (PLEASE TYPE OR PRINT)
Area Code and Telephone Number: __________ Date: ___________________________
NOTE: DO NOT SEND NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. NOTES SHOULD
BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE>
EXHIBIT 99.3
INSTRUCTION TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER OF PARTICIPANT FROM OWNER
OF
PRICE COMMUNICATIONS WIRELESS, INC.
11 3/4% SENIOR SUBORDINATED NOTES DUE 2007
TO REGISTERED HOLDER AND/OR PARTICIPANT OF THE BOOK-ENTRY TRANSFER FACILITY:
The undersigned hereby acknowledges receipt of the Prospectus dated ,
1997 (the "Prospectus") of Price Communications Wireless, Inc., a Delaware
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
meaning as ascribed to them in the Prospectus.
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 Old Notes held by you for the account of
the undersigned.
The aggregate face amount of the Old Notes held by you for the account of
the undersigned is (fill in amount):
$ of the 11 3/4% Senior Subordinated Notes due 2007.
With respect to the Exchange Offer, the undersigned hereby instructs you
(check appropriate box):
[_] To TENDER the following Old Notes held by you for the account of
the undersigned (insert principal amount of Old Notes to be tendered,
if any):
$ of the 11 3/4% Senior Subordinated Notes due 2007.
[_] NOT to TENDER any Old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old 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 representation 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 New Notes acquired pursuant to the Exchange Offer are being obtained in
the ordinary course of business of the undersigned, (ii) neither the
undersigned nor any such other person has an arrangement or understanding with
any person to participate in the distribution of such New Notes, (iii) if the
undersigned is not a broker-dealer, or is a broker-dealer but will not receive
New Notes for its own account in exchange for Old Notes, neither the
undersigned nor any such other person is engaged in or intends to participate
in the distribution of such New Notes and (iv) neither the undersigned nor any
such person is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act of 1933, as amended (the "Securities Act"). If the
undersigned is a broker-dealer (whether or not it is also an "affiliate") that
will receive New Notes for its own account in exchange for Old Notes, it
represents that such old Notes were acquired as a 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 New 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 New Notes, the
undersigned is not deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
<PAGE>
SIGN HERE
Name of beneficial owner(s): __________________________________
Signature(s): _________________________________________________
Name(s) (please print): _______________________________________
Address: ______________________________________________________
Telephone Number: _____________________________________________
Taxpayer Identification or Social Security Number: ____________
Date: _________________________________________________________
2
<PAGE>
EXHIBIT 99.4
OFFER TO EXCHANGE
11 3/4% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
11 3/4% SENIOR SUBORDINATED NOTES DUE 2007
OF
PRICE COMMUNICATIONS WIRELESS, INC.
To Our Clients:
We are enclosing herewith a Prospectus, dated , 1997, of Price
Communications Wireless, Inc. (the "Company"), a Delaware corporation, and a
related Letter of Transmittal (which together constitute the "Exchange Offer")
relating to the offer by the Company to exchange its 11 3/4% Senior
Subordinated Exchange Notes due 2007 (the "New 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
11 3/4% Senior Subordinated Notes due 2007 (the "Old 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 , 1997, UNLESS EXTENDED.
The Offer is not conditioned upon any minimum number of Old Notes being
tendered.
We are the holder of record and/or participant in the book-entry transfer
facility of Old Notes held by us for your account. A tender of such Old 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 Old Notes held by us for your account.
We request instructions as to whether you wish to tender any or all of the
Old 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 Old Notes will
represent to the Company that (i) the New Notes acquired in the Exchange Offer
are being obtained in the ordinary course of business of the person receiving
such New Notes, whether or not such person is such holder, (ii) neither the
holder of the Old Notes nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes, (iii) if the holder is not a broker-dealer or is a broker-dealer but
will not receive New Notes for its own account in exchange for Old Notes,
neither the holder nor any such other person is engaged in or intends to
participate in a distribution of the New Notes and (iv) neither the holder nor
any such other person is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act. If the tendering holder is a broker-dealer
(whether or not it is also an "affiliate") that will receive New Notes for its
own account in exchange for Old Notes, we will represent on behalf of such
broker-dealer that the Old Notes to be exchanged for the New 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 New 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 New Notes, such broker-
dealer is not deemed to admit that it is an "underwriter" within the meaning
of the Securities Act.
Very truly yours,
<PAGE>
EXHIBIT 99.5
OFFER TO EXCHANGE
11 3/4% SENIOR SUBORDINATED EXCHANGE NOTES DUE 2007
FOR ANY AND ALL OUTSTANDING
11 3/4% SENIOR SUBORDINATED NOTES DUE 2007
OF
PRICE COMMUNICATIONS WIRELESS, INC.
To Registered Holders and Depository
Trust Company Participants:
We are enclosing herewith the material listed below relating to the offer by
Price Communications Wireless, Inc. (the "Company"), a Delaware corporation,
to exchange its 11 3/4% Senior Subordinated Exchange Notes due 2007 (the "New
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 11 3/4% Senior Subordinated Notes due 2007 (the "Old Notes")
upon the terms and subject to the conditions set forth in the Company's
Prospectus, dated , 1997, and the related Letter of Transmittal (which
together constitute the "Exchange Offer").
Enclosed herewith are copies of the following documents:
1. Prospectus dated , 1997;
2. Letter of Transmittal;
3. Notice of Guaranteed Delivery;
4. Instruction to Registered Holder and/or Book-Entry Transfer
Participant from Owner; and
5. Letter which may be sent to your clients for whose account you hold
Old 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 , 1997, UNLESS
EXTENDED.
The Offer is not conditioned upon any minimum number of Old Notes being
tendered.
Pursuant to the Letter of Transmittal, each holder of Old Notes will
represent to the Company that (i) the New Notes acquired in the Exchange Offer
are being obtained in the ordinary course of business of the person receiving
such New Notes, whether or not such person is such holder, (ii) neither the
holder of the Old Notes nor any such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes, (iii) if the holder is not a broker-dealer or is a broker-dealer but
will not receive New Notes for its own account in exchange for Old Notes,
neither the holder nor any such other person is engaged in or intends to
participate in a distribution of the New Notes and (iv) neither the holder nor
any such other person is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act. If the tendering holder is a broker-dealer
that will receive New Notes for its own account in exchange for Old Notes, you
will represent on behalf of such broker-dealer that the Old Notes to be
exchanged for the New 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 New 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 New
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 Owner contains an authorization by the beneficial owners of
the Old Notes for you to make the foregoing representations.
<PAGE>
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 Old Notes pursuant to the Offer. The Company will
pay or cause to be paid any transfer taxes payable on the transfer of Old
Notes to it, except as otherwise provided in Instruction 4 of the enclosed
Letter of Transmittal.
Additional copies of the enclosed material may be obtained from the
undersigned.
Very truly yours,
Bank of Montreal Trust Company
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF PRICE COMMUNICATIONS WIRELESS, INC. OR BANK OF MONTREAL 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.
2
